Employee Turnover Causes Client Turnover

This article is the true and current story of a professional services company struggling with a serious hiring problem. People are their product and they've been experiencing a major issue with hiring the wrong candidates and the negative impacts that has caused.

I won't use real names in this article for fear of making the situation for Acme Services Company even worse than it is. They are facing an uphill struggle to avoid a major contraction without immediate and substantive action. If we used their actual name, they would risk losing even more business.

Read on to find out how things turned out...

The problem was brought to my attention after speaking with their head of corporate sales. I'll refer to this individual by the pseudonym John. I've known John professionally since he came onboard at Acme six months ago to lead their sales effort. It's his responsibility to get business clients to hire Acme and bring Acme's people onsite to provide their services on an hourly basis.

John has a lot of experience in the field, working in the industry for nearly 30 years and with great success at previous jobs. He took this job almost as a favor, as he's known Acme's owners for many years, and it is his intention to retire after this gig.

Acme has experienced dramatic growth in the last year and part of John's job was to help them refine and improve their hiring process to keep up. It's been a challenge from day one.

"One of the biggest challenges I faced when I started," John told me, "was cleaning up their staffing issues."

Poor retention is killing us. It's killing sales.

John's experience in the industry gave him insight into the correlation between sales and customer service operations. "If you're not providing quality service to your customers, they'll find another provider. You can't provide quality service if you don't hire good people who are motivated to do a good job," John said.

Acme pays its front-line staff about $5 an hour above minimum wage, and most of their applicants are in their early 20s. The overwhelming majority have no education beyond high school. For many applicants, their job at Acme will be their first in that career track. This creates a particular problem that John discovered once he came on board.

"Many of our new hires work with us for 3-6 months, just long enough to get trained, and then they leave for better paying jobs elsewhere." After identifying this problem, John convinced the owners to raise starting pay. That wasn't enough, though.

John lamented, "Even though we're paying these kids competitive wages, we still lose most of them within a few months. They don't seem to have the work ethic and drive for the job."

As John and I were discussing the issue, I asked him if they have changed their screening and recruiting practices at all in response to their turnover issues. "We experimented with a few tweaks here and there, but we made no big changes until recently."

Acme contacted eRep and began a trial program where they conducted a Top Performer Profile™ for one of their biggest job categories, and are asking all candidates to take the Core Values Index (CVI) to compare against that TPP.

Even though it's still in the early phases of the project, I asked John if he'd seen any improvement so far.

"Yes! We just hired two new people that have already proven to be great hires. I need two dozen more just like them," he said, smiling. Then his mood darkened a little, "I just hope it's not too late. I had two clients fire us last week because some of our existing people were either consistently late or had other work ethic issues."

When I asked John to elaborate, he went on a rant for half an hour talking about how bad hires was his biggest obstacle to sales. One thing he said really stood out to me. "I can land new contracts easily enough. But keeping existing clients from leaving is the challenge, and it all goes back to having quality people out on the job."

"Employee turnover leads to client turnover."

John had participated in the TPP and CVI program with eRep from the start. "I have always been skeptical of psychometric assessments," he said. "And I was skeptical about the CVI, too. But, the people we've hired through eRep have outperformed the others 100% of the time. I'm becoming a CVI believer. It shows great promise."

I checked in with John a few months later. The results were mixed, but not for the reason I expected.

"We're hiring almost exclusively through the eRep TPP and CVI program now, and those hires are doing really well."

I asked if any of those employees had left to work for the competition.

"None. They're all still with us and working hard," John beamed. "We still have a problem, though."

"What's that?" I asked.

"I'm breaking company sales records signing new contracts and we may not be able to hire enough new top performers to keep up."

He paused before adding, "I know what you're going to ask me next, too. We haven't lost a single client once we started moving in the people hired through the CVI."

John's smile said it all.