Our profession supports best practices as a means to improve organizational performance. The approach is to be always alert to what others are doing in an attempt to stay at the leading edge of practices — or at least not be left behind.
The Transformative CEO, co-authored by my colleague Robert Reiss, presents interesting data that relates to best practices:
“The average amount of training a new retail industry employee receives is seven to eight hours per year. The average turnover among retail industry employees is 120 percent a year. … At The Container Store, first-year, full-time employees receive 263 hours of training. Employee turnover at The Container Store is less than 10 percent per year.”
The issue is the relationship between training investments and employee turnover. The industry average data reflects low human capital investment and high turnover, while The Container Store data reflects high human capital investment and low turnover. These practices sit at exactly the opposite ends of the investment/turnover continuum.
What do we know for certain about this data? Only one set constitutes a best practice in terms of business performance. So, which practice is it?
One of the immediate conclusions we can draw relates to a well-entrenched corporate myth about training: “If we invest in our people they will leave for a better job.”
The data for The Container Store busts this myth. The company invests in learning and development for employees, employees stay and they stay with the company at a much greater rate than for the retail industry as a whole. Further evidence is available from Chrysler Corp. Chrysler set out to deploy sales training to salespeople in the Chrysler dealer network.
In the past Chrysler dealers were reluctant to invest in sales training for new hires under the belief that high turnover among new hires made such training investments wasteful. The fear/myth was that once trained, the salesperson will depart for a better job. As a result, the dealers decided to withhold sales training until after new employees had been at the dealership for at least a year. They reasoned that by waiting, the risk of training new employees only to have them leave was avoided.
Chrysler developed new sales training and measured the sales of trained employees and their performance relative to a comparison group. Research into retention was done across the entire Chrysler dealer network. In the first year, retention for new, untrained salespeople was 38.3 percent, but for those trained in the first year retention was 97.8 percent.
According to The Container Store data, training does not increase turnover, it decreases it. But the main message is not about individual case studies regarding training and turnover at individual companies. It’s easy to dismiss such evidence based on the belief that, “That may be true for them, but it is not true for our company (or industry). We’re different.”
The point I want to make is about best practices. We use the term freely as though we know what constitutes a best practice. Many times the wisdom of the crowd anoints one practice or another based on belief and consensus, not rigorous scientific inquiry.
In the case of training and turnover in the retail industry, it is impossible that both the industry practice of low training and high turnover versus The Container Store’s high training and low turnover are both best. In the end, only one of these approaches is indeed best. The conversation here is not only about selecting the best. It is also about the unspoken — avoiding the worst.
Beliefs, myths and crowd wisdom are not enough. It is important that we do the research and definitively determine the best practice. The industry deserves it.
Michael E. Echols is the vice president of strategic initiatives at Bellevue University and the author of ROI on Human Capital Investment. He can be reached at editor@CLOmedia.com.
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