Headcount or Employee Loyalty what has more value

I was having a conversation with a colleague the other day. He was telling me about how they had switched suppliers of outsourced customer service. And then he shared the frustration.

With his old supplier, when he received a customer complaint they would play a recording of the call. In some cases the call would be fine. In others my friend would suggest that the rep get some re-training. When completed they supplier would call to say the rep is coming back out onto the floor. Mike felt this was a good solution.

This recently happened with the new supplier. They listened to the call, Mike suggested some retraining and then never heard back. So a few weeks later he asked. He was told that the rep had been fired.

“Oh, had the rep experienced a series of complaints”, Mike asked? “No.” was the reply. Mike asked why they did not retrain the individual. He was told, “That’s what was wrong with the previous operation. Why your costs were so high, you did not have enough turnover so your salaries were too high”.

Did you catch that? The manager at the new firm would rather spend money recruiting, training, and losing productivity (and customers) in order to save salary costs as opposed to investing in retraining and coaching to have an experienced staff that delivers better results.

I have not seen the books, but I would suggest that the productivity of a talented, productive, loyal workforce offsets by a significant factor the increased salary costs.

Something to consider:

  • Do you see your operational costs as a whole or do you see salaries as separate from results?
  • What is more important, controlling your costs or optimizing your revenues and margins?

One Comment:

  1. Speaking as a reformed accountant I would say that this is what happens when your company is run by accountants! Firing employees and then hiring someone new may look like it holds down the costs of training, but in reality it ends up costing the business much more. Unfortunately there is no line on the Income Statement for “Revenue Forgone Because No Employee Was Present” or “Customers Lost Due to Lack of Service”. The cost of recruiting and training new employees gets lost in the overall expense of doing business. And if HR costs are viewed as a department then the mandate may come down to “reduce costs of recruitment”. That is often translated (erroneously) to mean “cut back on recruitment efforts” when the real meaning might be, “train the people and lower the rate of turnover”.

    Reading the quote from the manager here I was reminded of the quote, “Seldom correct, but never in doubt.”

    Thanks for posting this.

    Dave

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