Introduction

A story about reducing annual employee turnover in manufacturing from 225% to 20%. If you are having employee turnover problems in your organization, and you want to reduce it, this article will describe how to go about doing that....



It's 1977. Malden Mills is a textile manufacturing company housed in a cluster of red brick buildings on the Merrimack River in Lawrence, Massachusetts. These buildings, built in the 1800's, are a remnant of a golden age of textile manufacturing in New England.

Malden Mills is the only large textile company left in the Northeast. Others fled to the South long ago, for lower labor costs. To survive in the New England, Malden Mills uses new textile technology to lower labor costs.

2700 employees work in 4 divisions (Fur, Cloth, Woven, and Flock). Except for two small plants in Maine and New Hampshire, most work in Lawrence.

Aaron, is Founder, President, CEO and Owner. It's privately-held. He expects everyone to act like an owner - to look at the company through his eyes.

Aaron doesn't much care about chains of command. If a problem effects the bottom line, he wants to know about it. Management can't block a problem, cover it up, or smooth it over.

His company organization chart is upside down. Production employees on top. Management and staff on the bottom. He values production employees far more than line managers or staff. He walks the shop floor getting suggestions directly from employees.

He pays hourly employees well, the highest hourly wages in the area. Employees love him for it. There is no union. He listens to them.

In 1977, I'm hired as Manager of Training and OD. My boss Bob, a former priest, is the Personnel Manager.

The Flock Division, 150 employees, makes lots of money - more than the other divisions. The flocking process, a new technology, makes high quality carpets, sold at a premium. It's hard for production to keep up with sales. Orders are pouring in.

Wikipedia Definition

Flocking is the process of depositing many small fiber particles (called flock) onto a surface. It can also refer to the texture produced by the process, or to any material used primarily for its flocked surface. Flocking of an article can be performed for the purpose of increasing its value in terms of the tactile sensation, aesthetics, color and appearance.

Flock Division

It's a dirty manufacturing process. Employees, no sooner hired, quit. It's hard to keep production staffed. Aaron fears a failure to keep up with demand.

I'm asked to find out why employee turnover is so high, and to fix it. Harold, an industrial engineer in his 50's, works for me. Frank, in his early 20's, is a new Personnel Manager in Flocking. The 3 of us set out to get at the causes of turnover and to fix it.

The Division Manager sees us as outsiders, looking at us with a mixture of tolerance and distrust. Parker accepts us as a necessary evil. He views turnover as a training problem.

Parker has a poor reputation at Malden Mills. He often kicks outsiders out of the Division. No Division managers want to work with him. He has an "at war" mentality. His division is treated, by other Divisions, as if it had the plague. Flocking is called, "Parker Enterprises."

There was a wall of distrust on the production floor. In the first minute Parker asks: "Who are you and what do you want?"

Parker is obsessed with confidentiality. No one could tell anyone else anything. Parker would assign two supervisors the same task. Neither supervisor knew it. He tells another supervisor to do a 3-6 month project in 2 weeks. When not done in 2 weeks, he assigns it to another.

Records are either non-existent, or kept in a wall safe in Parkers office. Supervisors are inexperienced. And, selected without much thought as to their ability to handle the job.

It's a 3 shift operation. Supervisors move from job to job, shift to shift, department to department, from week to week, and, day to day. They seldom get to know their people, their department, or their shift. Promotions and demotions are handled just as quickly.

We see that morale is low. People are frustrated. No one cares about the work. Many quit or are fired. Others stay for the pay but their hearts are not in it. We call it "mental turnover".

I attend a supervisor safety meeting, summarize notes, and send them, via email, to the supervisor. Parker finds out a note comment, "A push for production is not balanced with a concern for safety." He comes close to booting us out of the Flock Division. What I didn't know is that Parker reads everyone's emails before anyone gets it.

Two months into our initiative, Malden has a cash shortage. 45 salaried employees are laid off. Harold and I weren't. Bob, my boss, convinces the CEO we could get turnover reduction results in Flocking. CEO to Bob; "Prove it".

The CEO does his own review of Flocking. He replaces Parker with a new Division Manager, Dave, and new Production Manager, Marshall. Both are good technically and with people.

Flocking is in chaos. Turnover is high. But, we have no idea how high. No #'s are collected. Supervisors hire, orient, and train new employees, only to have them leave - a revolving door.

We're told to focus on orientation and training. We knew that wouldn't work. To orient and train people who leave makes no sense. We had to get at the source of the turnover.

No one thought we could reduce turnover. Impossible. We knew we could. We had the support of the CEO, the Personnel Manager, the Flock Division Manager and Production Manager.

Collecting Turnover Data

Dave and Marshall stabilize production, improving capital equipment, work flow, housekeeping, storage, etc. Supervisors are put on a single shift, and kept there.

We collect turnover #'s, creating a New Hire and Termination Registers + a Manning Chart. and Monthly Turnover Report. The CEO, Bob, Dave, and Marshall get this data.

New Hire Register: A record of the number of new hires each month. Example: Joe Lopez is a re-hire. He works in Department 2280 on the second shift. He returned from an extensive illness. And, he is a class 6 Winder paid $4.53/hour.

Termination Register: A record of monthly terminations. For example: Paul Mitchell, Department 2230 worked 1st shift as a Floor Hand. Charlie McCarron his supervisor. He terminates July 16th. He's a voluntary quit - a temporary hire.

Manning Chart: # and type of Division jobs + # and type of people in those jobs. Example: It records the number of accidents by job title monthly. Terminations are tracked by job title and shift. Job titles are standardized (prior to this there were e 3-4 different job titles for every job).

Monthly Turnover Report: Monthly turnover data. Example: Richard Ramos hired on August 24, 1978 is terminated on June 6, 1979. Discharged for alcohol. He worked for 40 weeks.

Layoffs and temporary hires (e.g. summer hires) are excluded from the #'s. Also, those terminated and re-hired within 6 months are excluded. With extended illnesses we are not sure who was coming back to work or not.

An 18 week base period is set. Employee turnover is 225% for the base period. Of the 27 Division jobs, 22 had turnover. The top 11 jobs account for 78% of the turnover.

225% turnover means the entire workforce turns over 2 1/4 times during a year. This means that you would have to hire 225 people to get 100 to stay at year end.

We focused on the top 11 jobs that accounted for a 345% base period turnover. The Hopper Operator job, the heart of production, had 75 base period terminations or 556% turnover.

We held turnover reduction meetings with employees from the top 11 high turnover jobs

Turnover Reduction Meetings

Thirty meeting were held with 91 production operators from all 3 shifts. Meetings held from November 1977 through January 1978 in a small room away from the production area. No supervisors allowed. Meetings ran from 30-60 minutes.

Two simple questions are asked:

1) What are the causes of employee turnover?

2) What suggestions did you have to improve employee turnover?

Employees are surprised that we are asking for their opinions and ideas. Someone cares. Causes and solutions poured out. We did not judge. We wrote everything on flip charts. When they were "empty", we stopped. We summarized meeting results for management.

So what are the causes of employee turnover? Poor working conditions? Pay them more money? Train them better? Better management? Better selection?

We asked many managers at Malden Mills. Time after time, the answers came back citing one major cause of turnover. And, one major solution. We often heard that training was the solution. If we had better training, turnover would go down.

Poor training and poor selection do contribute to employee turnover. But, people don't leave for one reason. Its like a scale. Aggravations on one side. Positive parts of the job on the other. When the negatives outweigh the positives they leave.

Hopper Operator - A Turnover Example

Bob Jones is a new Hopper Operator. He's 22. Bob's a high school grad. He's held two other jobs since high school. His physical exam is Thursday morning. He starts work on the 2nd shift at 2:30 that afternoon.

Bob looks forward to the job. He needs the money. But, he's not sure what the job is. He gets to the parking lot for his shift. He's dazed by the number of cars in the parking lot and the random way they are parked. He drives around in circles a few times. A car pulls out. He squeezes into an open spot.

He gets to the Security Guard Shack at 2:20 PM. The guard shows him the rack of time cards. There are hundreds of them. It takes a few minutes, but he finds his time card.

It's 2:25 PM. No one tells him how time card punching works. After getting some help from someone else clocking in, he gets to the production floor a few minutes late.

There are two hopper lines, line 1 and line 2. He's assigned to line 2. Line 2 runs twice as fast as line 1. The working conditions are also twice as bad as line 1. The pay is the same.

Bob enters the door to production line 2. He has an expensive coat on and lunch bag in hand. The supervisor tells him to put it on a nail outside the door to line 2. Bob sees other coats hung on nails covered with flock dust and adhesive. Bob, hesitant to leave his coat there, is assured by the line leader that the coat will still be there when he returns.

Joe, the line leader, escorts Bob to the hopper on line 2. Joe explains quickly "You press this button, take this flock, and dump it down there. Do you understand?" Bob, dumfounded by the dirt, dust, flock, and heat, nods yes.

Joe introduces Bob to other Hopper Operators. He tells them to break Bob in. Most have only been there a few days themselves. Bob asks, "What does this fuzz machine do anyway?" He gets a blank stare.

Bob is handed a face mask. After a few minutes on line 2, Bob is covered from head to toenail with flock dust. He rubs the dust out of his irritated eyes. A fellow worker shouts, "You will get used to it."

It's hot and his mask gets sweaty, making it hard for him to take a breath. The line is moving fast. It's hard to keep up. The production line stops for no one.

After a time, one of Bob's co-workers, Paul, asks Joe, the line leader, if he can show Bob where the break area is. Joe says yes. Bob finds that the break area is in another department, far from line 2. He spends most of his break, getting there.

Bob is left alone in the break area as Paul is asked to go back to relieve the Blade Operator. Paul misses his break.

Bob, before sitting down in the break area, cleans flock dust from the table. He finds he's eating flock dust in his food and drinking it in his coffee. The smell of diesel fuel from the forklift trucks fills his nostrils.

Returning to line 2, he understands what the duties of a Hopper Operator are. A Hopper Operator, who has been there 3 weeks, takes a liking to Bob. He explains how the line works. Bob, after 4 hours on the job, now knows what grids, hoppers and spreaders are.

After a meal break, Bob needs to find a bathroom. He roams about before someone finally shows him where it is. The rancid odor lets Bob know he's in the right place. One look at the bathroom and Bob debates whether or not to wait until he goes home.

When Bob returns to flock line 2, the other Hopper Operators all leave for their lunch break. He's left to run the 7 hopper flock line by himself. The line leader says it's OK.

Bob's alone on line 2 with 7 hoppers to fill. The line is moving at 90 feet per minute. He runs around filling hoppers. The sweat pours off . A bag of flock breaks and spreads on the floor. He'll have to clean that up later. The are 7 hoppers to fill. And, the line keeps running.

As the 2nd shift draws to a close, Bob realizes he hasn't spoken to his supervisor all day. He hasn't seen or heard from his line leader either. His clothes are covered with flock dust.

Bob drives home after his first day. He wonders what he has gotten himself into. His clothes are covered with flock dust. He needs the job. And, is not a quitter. He returns the next day.

Bob continues to pick up bits and pieces of misinformation about his pay, benefits, the union, the absentee policy and a host of other topics over the next 7 weeks. He tolerates the flock dust as part of the job. It's on every piece of clothing he owns. It's on his furniture at home.

Bob wonders when he is going to get his next raise. He is not sure of his career path in the company. He hears that line 1 operators make more money than line 2 operators, even though he is told they are paid the same hourly rate. Bob asks his supervisor if he can move to line 1. He's told to "forget about it."

There is no job bidding system. He has no idea how to move to line 1, how wage increases occur, or how pay decisions are made. He sees himself working a long time as a Hopper Operator on line 2.

Bob feels he can handle more than this boring tedious job, but sees no way out. His supervisor has not recognized his abilities, nor is he aware of Bob's discontent. In fact, most of the time, he's not even aware of Bob. The few conversations he has had were about the poor quality of his work and his coming in late a couple of times.

Finally, one evening on line 2, with the temperature approaching 110 degrees, he reaches toward the electric grid railing and gets a 40,000 volt shock. While not harmed, the shock awakened him to the thankless, dirty, and unrewarding job he was doing. Not once, was he ever recognized by his boss for doing something good on the job.

Overcome by the futility, Bob walks off the job, closing the door on Malden Mills for good. Another turnover statistic.

Turnover Reduction Changes

After the turnover meetings, 13 change recommendations are made. Many relate to the working conditions described in the Bob Jones Hopper Operator example. Recommendations are also made for each of the other high turnover jobs. 10 other recommendations were made for the Division as a whole. Of these 10, 9 were implemented.

The base period turnover rate of 225% was reduced to 100% in January, 1978. Most of the managers under Parker are replaced. The supervisors stayed. During the next 6 months employee turnover stabilized at 85%.

A new goal was set to reduce turnover to 20%. A new approach was needed. We needed supervisor support. Earlier efforts to work with the supervisors did not work. Supervisors did not see themselves responsible for turnover reduction.

Don't blame me was the mindset. There is nothing I can do about it.

Just hire better people and we'll be OK.

How can I stop a heart attack, a pregnancy, or prevent someone from going back to school.

Turnover is high and will always be high

The other divisions get the best people and we get the bottom of the barrel

We had to get the supervisors to believe they could make a difference in reducing turnover. We held turnover reduction meetings with the supervisors in August, 1978. Supervisors, slowly, began to take responsibility for turnover reduction.

We developed 20 more recommendations. A Supervisor Termination Record was created. It showed what it cost the Division to lose people. Example: it showed Dave Vallone leaving to go back to school. This cost $1121.. The total cost for one supervisor for the first 6 months of 1979 was $9605. This record put the responsibility for reducing turnover squarely on the shoulders of the supervisors.

Supervisors had to take responsibility for the turnover reduction. We kept giving their results right back to them. Two additional tools were created; 1) Summary of Accomplishments Chart (SOA), 2) a Turnover Prevention Review (TPR).

The SOA showed: month to month comparison of # terminations, rehires, net terminations, average workforce, annual turnover %, and annual % turnover year-to-date. Comparisons were made for each category with the previous year. On the bottom of the SOA chart is a Record of Accomplishments for the best previous month, quarter, 6 month period, and year.

TPR meetings are held between 3 levels of management (Division Manager, Production Manager, and Supervisor, + HR) monthly and quarterly. Individual improvement goals are set.

In September, 1978, it was clear supervisors needed to take responsibility for absenteeism as well. Supervisors had done very little to confront and resolve absenteeism. If an employee was absent a lot, and a poor worker, we would hear about it. If an employee was absent and a good worker, we would not hear about it. Supervisor protected the good, and often absent worker.

I wrote up absenteeism case studies of the Divisions worst absentee cases. We wrote absenteeism policies and procedures. And, wrote guidelines for handling absenteeism reviews.

Before the start of the program to reduce absenteeism, the absentee rate was 8.1%. It dropped to 1.97% during the last quarter of 1980.

It was clear, for a long time, supervisors were playing the "either" "or" game. You can reduce turnover, but you can't reduce absenteeism. Or, you can reduce absenteeism, but you can't reduce turnover.

Our conclusion was that during the first 6 months of 1981, supervisors were keeping absentee employees to make their turnover #'s look good. We told them "we want low turnover, and low absenteeism". We had to accept some higher turnover during this period to get the absentee rate down.

One final tool was developed - A Performance Summary. All supervisors and their managers got to see how each supervisor in the Division stood relative to all other supervisors. It was like a pro baseball player seeing the batting average in the newspaper, along with all other players.

Goals were set: 20% turnover, 2% absenteeism, 20% for accident incidents. Month and YTD figures were available for each category.

Several factors are working against turnover going down. The emphasis on absenteeism in the last half of 1978 increased turnover a lot. While absentee employees were given several chances to improve, many failed to do so. A 47 employee layoff occurred in November, 1978. 15 experienced employees were later rehired, 15 inexperienced employees were also rehired.

Two flock lines, and several new flock products are added. This increased the # of high turnover Hopper Operator jobs. 27 Flock Division jobs were increased to 48.

Despite this, employee turnover continued to decline. 57% for 1979, 29% in 1980, and 24% in the first quarter of 1981. In April, 1981, the turnover rate was 18%.

The accident rate also dropped along with the turnover rate. It was 103% in the base period, 70% in 1978, 39% in 1980, and 42% if the first quarter of 1981.

While all of this was happening, the Division Manager and Production Manager were making lots of improvements with new machinery installed, housekeeping put in order, congestion relieved, improvements in bathrooms, showers, lockers, and cafeteria.

Conclusions

What are the causes of employee turnover? What can be done to improve employee turnover?

There are many causes of employee turnover.

There are many things that can be done to reduce it

First, you have to have the mindset/vision that it can be done. Many feel overwhelmed with a problem they feel cannot be solved. It's too big. It can't be done. Why try? Someone has to stand up and say it can be done. You also need the support of top management.

You need to ask the people effected by the problem? They will tell you what the causes are. And, what the solutions are. All you have to do is ask. Then do what they say to do. If you don't follow through with suggested solutions, you will only add to the problem.

Focus on what can be done to solve the problem. Don't focus on who is to blame, who is right and who is wrong, or who gets the credit. Don't spend needless hours debating what has to be done from afar. Or, what others have done. Just ask the people impacted, and they will tell you.