By / 1 year ago

The High Cost of Employee Turnover

“The cost of employee replacement can be staggering when you stop to put a pencil to it. Employee retention is our biggest challenge. It would be easy if profit didn’t matter. We can only pay what the market will bear, so we must find other ways to attract top talent and retain them. Any thoughts?”

Signed, Staggering

Dear Staggering,
Do you recall those famous words… “Houston, I think we have a problem!”? These words, associated with the ill-fated Apollo 13 NASA mission, are applicable to your firm and any other who is experiencing a great deal of employee turnover. This is no chicken vs. egg query. Without a competent and experienced, performance-oriented staff, executing a profitable, winning corporate strategy is unlikely if not impossible.

My LBM industry mentor, Harry J. Seigle, had a slogan hanging in his office that served as a reminder for him, and all who entered, as to what was the key for developing and maintaining a successful business. It read, “A businessman doesn’t build a business. He builds an organization and the organization builds the business.” Very simply, beyond a need due to growth or possibly Jack Welch’s bottom 10%, your ongoing investment in your staff should be paramount. Before self. Before customers. Before profits. Build the staff and the rest will come.

As to where to begin, I think it starts with you. You have to be willing to develop a culture within your company where everyone feels important and what they have to offer, beyond their assigned job description, is valued. It isn’t just Millennials who crave transparency, recognition, inclusion, and upward mobility.

Once your company agrees to those essential elements of a 21st-century business culture, with a few key members of your staff critically evaluate the balance of your staff. You only want to do this once. As best-selling author Jim Collins wrote in Good To Great: Why Some Companies Make The Leap…and Others Don’t, you have to identify who belongs on the bus, who doesn’t, and then make sure they are all in the right seats.For those that clearly don’t, take your time finding their replacements needed to complete the core of your staff.

The next step in your corporate re-set is to convene your key staff for at a minimum eight hours of Strategic Planning. All department heads and outside sales staff must be included. I have known far too many LBM dealers who did little or no forward planning and either failed to take advantage of changes in their markets and/or continued down the same insane path of greater annual expectations without internal corporate change.

Going forward, the use of everyone’s combined talents and ideas will help you formulate a specific winning strategy and action plan appropriate for your market. This strategy can follow the very effective SWOT agenda, focusing on what you already do well (Strengths), what needs improvement (Weaknesses), a myriad of immediate Opportunities, and those outside concerns that warrant recognition (Threats).

Like the NASA Apollo 13 mission, where the problem’s solution led to strengths in systems and people previously untapped, your improvements in corporate culture and inclusion of your present and enhanced staff will serve as one of your strengths in the future.

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Scott Hartmann

Scott Hartmann has spent the past 35 years leading established construction supply companies to greater levels of success. As the founder of Hartmann & Co., he now provides management consulting services to independent LBM dealers. He can be reached at or visit