Case Study: Reducing Employee Turnover Caused by High Overtime
This company was experiencing severe problems with employee turnover. The underlying cause of this turnover problem was excessive overtime.
Located in a small town with several other labor intensive companies, the company constantly competes for labor, often operating with less than a full complement of personnel. This staffing shortfall was resulting in substantial overtime which, in turn, created even higher turnover. Overtime policies allowed senior employees to accept or decline overtime work as they saw fit. When the senior employees chose not to work overtime, the newer employees were forced to work tremendous amounts of overtime, especially during the undesirable periods (i.e. on weekends). The high overtime levels meant that new hires frequently worked long stretches of days in a row causing them to seek greener pastures.
Employees wanted predictability, a choice in the type of schedule they worked, and reasonable time off to spend with their families.
A business analysis indicated that considerable productivity improvement would be realized if most of the operation changed from a combination of high production on weekdays and limited production on weekends to moderate, steady production seven days a week.
In the end, two schedules were implemented. One schedule was a traditional 5-day schedule using 8-hour shifts. The second schedule, used by half of the operation, was a 7-day shift schedule using 12-hour shifts.
Employees on the 7-day schedule were protected from working a scheduled weekend off. They also received about 10% more income and 78 more days off than those on the 5-day schedule.
Interestingly, the company had no problem filling the employee positions on the 7-day schedule. The increased predictability, income and number of days off actually made the 7-day schedule more popular than the 5-day schedule.
After six months on the new schedule, the workforce was surveyed to provide a “before and after” picture. Using indices to measure performance, the change is shown below:
- Communication: +5.5%
- Management’s openness to workforce input: +13.8%
- Employees feeling that they are a part of the company: +11.9%
- General quality of work environment: +21.1%
- Facility rating relative to other companies in the area: +21.2%
- Schedule predictability: +40.6%
- Schedule flexibility: +47.5%
These improvements in employee perception regarding the company and the work environment resulted in a greater than 50% reduction in turnover.
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