A Message from the President A Message from the President Expect Healthy Turnover - But Fight Unhealthy Turnover

Healthy turnover happens when an employee needs to pursue a new future in order to use his or her talent and strength in a fresh venue Some turnover is inevitable We will lose great team members because of life situations outside of our control, or even the employee's control Unhealthy turn-over, on the other hand, must be avoided. The cost of unhealthy turnover directly affects profitability and indirectly affects every item on the income statement.

Studies show, that companies with the highest retention rates also earn the best profits. Turnover is, therefore, one of our leading indicators of profitability Our leadership team's monthly review of turnover helps us catch trends in both healthy and unhealthy turnover We work to get beneath the numbers to the real story of what is happening This assessment provides us an early warning system about sustainable real profits. If a manager is having turnover problems with sales associates, then that manager's hiring practices and procedures may need a refresher, or perhaps supplemental assistance from the training department in order to remedy this negative pattern.

There is a direct correlation between store manager continuity and profitability. Continuity pays off big time Continuity meaning the same manager at the same location over time Managers tend to sink their roots in their neighborhood store much like any small business owner would do. Their customers can count on them being in the same store day after day. Continuity is a fancy way of saying that relationships, trust, history, and experience matter immensely in the human psyche - and for profitability.

I find it perplexing that so many retailers and companies feel compelled to use what they call "management rotation " This so-called best practice rotates store managers under the guise of keeping them fresh through cross-training; if you want to keep them fresh, then don't give them boring work! Managers need to provide them with the opportunity to cultivate depth of experience and a sense of ownership. Let's say two seasoned managers are producing more than a half a million in store profits each year, and then we switch the managers. We could expect that both stores might fall to first-year profit levels, or about half their prior-year productivity Why? Because while each manager has all the same knowledge, they do not have the team relationships in their new store, each is in a rebuilding mode In time, these managers will very likely build both stores back to championship status again, but why start all over again? Changing out talented managers is a rare happening at our company Now you know why it is very expensive to lose momentum and performance.

The loss of productive team members for reasons within our control is tragic. We hire people for a lifetime and make significant up-front investment in their training and development Turnover cuts short the return on investment