ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

Advanced Insulation HPT Invention for Turnover Improvement EDCI 528 Lauren Parker Purdue University

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

Advanced Insulation, whose name has been changed for anonymity, is a small, local insulation company. The company focuses on weatherization and creating greater utility efficiency in residential and commercial buildings. With only fourteen employees, the company has increased its territory and reputation within the field as a reputable organization that focuses on quality workmanship. The biggest human performance issue facing the organization today is the high turnover rate of employees. The work is labor intensive, and to meet specification and certification standards many training hours are required within the first 90 days for new employees. Finding skilled labor is difficult. As of June 2013, Dubois County has an unemployment rate of 6.2% (Dubois County, 2013). With a strong wood manufacturing industry there is a high demand for skilled labor from other local organizations. Background checks and behavioral interviews are not being conducted for all new hires. Often if someone is referred to the owner by a friend or another employee an offer is made before either of these precautions has been completed. Turnover has been high in 2013 and several large jobs have been split with another company after two recent hires had to be fired for failing drug tests. The foremen are increasingly frustrated after being assigned workers to their crews that soon after need to be terminated. In four separate instances thus far this year the commercial foremen have been forced to terminate individuals employment because of issues that could have been uncovered during the selection process. Profitability has certainly been lost by the constant turnover. When an employee has to be terminated, the personnel resources become limited for ongoing jobs. Other employees are forced to work longer hours, travel further, and learn new jobs on a shortened schedule after employees are terminated. Also, depending on the reason why an employee was terminated, the

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

amount of paperwork and time spent documenting incidents is wasteful and counterproductive to the goals of the job at hand. Then after an indeterminate amount of time, a new hire is found that is deemed suitable for the open position. Each time a new employee is hired, productivity is lost in the time it takes to train the new hire how to perform their job duties. According to the turnover calculator used by Drake Consulting & Staffing Services the overall cost of the turnover of four employees hired on at $10 an hour, which is the low end of the pay scale, cost Advanced Insulation an estimated $145,344.00 thus far in 2013 (Cost of Turnover Calculator, 2013). This estimate includes approximate costs for termination, costs for time searching for and selecting a replacement, training costs, and opportunity costs for lost time on jobs. Below, see in the Figure 1 the calculations completed to suggest this estimate. Profitability has not been the only side effect of the hiring procedural practices currently in place. Employee morale is also being negatively affected. With so few employees capable of meeting the standards of work accepted by jobs, the workload shifts onto the shoulders of the most experienced employees after an employee is terminated. Jobs are usually bid out six months to a year ahead of the actual work that is performed. The changing personnel have forced employees to work through weekends and holidays to meet the obligations of accepted contracts.

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

Figure 1 (Cost of Turnover Calculator, 2013)

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

Intervention Categories Several intervention strategies need to be applied to help resolve this performance issue. Each category addresses a different need of the overall solution. Without the implementation of all the suggested intervention strategies, the turnover issue could remain an issue for Advanced Insulation (Stovolitch, 2004, p. 117). Performance Aid Interventions One such intervention category is the use of performance aids. The use of a structured performance aid allows for the removal of an obstacle (Stovolitch, 2004, p 117). This obstacle is hindering an individual or system from performing their duty properly. For Advanced Insulation, this obstacle is the behavioral practices of the owner while hiring employees. The inconsistent application of a hiring procedure has allowed unqualified employees into the crews. The use of a behavioral interview guide as a performance aid would greatly increase the number of qualified employees who make it through the selection process and into training with crews. Below in Figure 2 is a behavioral interview guide created that the owner and hiring foreman should utilize. The guide utilizes the idea of leadership competencies necessary to perform the duties of the job. When interviewing, the questions are laid out in a synchronous manner to allow conversation to flow naturally. The questions are written in a way to reveal the candidates attitudes and aptitudes for the work. Results should be clearly marked with the color coded system explained earlier in Figure 2. Applying this consistent approach to each position that needs to be filled would increase the likelihood of uncovering the qualifications of a candidate.

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

Figure 2

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

Environmental Interventions Environmental interventions are also necessary to resolve the performance gap identified in the hiring practices at Advanced Insulation. The current environment allows for too much flexibility in the hiring practices and is a leading cause in the high turnover rate. Creating a standard process for hiring new employees and on-boarding them will help improve productivity and improve the bottom line profitability of the business (Recruitment & Selection Hiring Process, 2013). Using the performance aid provided above and creating a written employee selection process will serve as the intervention. Below in Figure 3 is a recruitment process that Advanced Insulation could repeatedly use in its hiring practices. Figure 3 Advanced Insulation Recruitment Process Step Task Advertise position opening and post Identify proper application on website forums to advertise position Review applications Filter applications for basic requirements may include initial phone screening Conduct behavioral interview with Schedule and perform candidates interviews with potential hiresComplete rubric evaluation for each candidate Select candidate based on rubric Complete paperwork score compared to other interviewed for Background candidates- Submit job offer Screening and DOT 10 panel drug test After satisfactory results from Prepare new hire background screening and drug test paperwork and are confirmed, schedule first day employee handbook information

Responsibility HR administrator

HR administrator

Hiring Manager/Owner

Hiring Manager/Owner/HR administrator HR administrator

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

The recommended solution to this issue would be to apply a recruitment and new employment policy. I would strictly enforce that everyone hired must pass a DOT 10-panel drug screening (more stringent and more accurate than a non-DOT), pass a background screening, and sit for a behavioral interview with both the company owner and the hiring manager which crew the employee would be on. Creating a process that is consistent will help increase the longevity of new hires employment and in effect bring down the turnover costs (Stovolitch, 2004, p. 119). New hires still may not choose to stay with the company for other reasons, but the foreman would at least be able to stop having to deal with all the paperwork associated with positive drug screens on job locations. Implementing this solution would also help the companys reputation as a desirable employer in the area. Emotional Interventions In order to lower turnover rates, Advanced Insulation will need to consider an emotional intervention as well. As Stovolitch states, Motivation is an internal state and is a response to external events. (2004, p. 128). As a result of each turnover, employees must deal with the increased workload, long work hours, and the task of training new employees under mounting pressure to complete jobs. There is an immeasurable cost associated with the frustration felt by other employees whenever turnover occurs. Enhancing employees motivation to help reduce turnover rates could be achieved by establishing an employee incentive bonus plan. Research has shown that money is not the most effective motivator as a long term solution (ChamorroPremuzic, 2013), but in this case it makes the most sense to show employees how continued performance will reap financial rewards. An incentive plan should be developed by the owner and crew foremen for all positions. The plan should include a way for all employees to visibility track the crew and organizational

ADVANCED INSULATION HPT INTERVENTION FOR TURNOVER IMPROVEMENT

success and progress. The plan should show metrics around profitability by jobs, attendance, and job rotational flexibility over a selected period of time. By making this progress visible, employees will be encouraged to increase productivity with the goal of reaching their incentive goals. Setting the expectation as to the goal at hand will help improve crew communication and

decrease pressures on foremen when on-boarding new employees. This emotional intervention enhances motivation by incentivizing employees to work as a team and accomplish a common goal (Stolovitch, 2004, p. 129). Further details on the structure and pay out of this incentive plan will have to be discussed with the owner and management at Advanced Insulation for the implementation to be successful. Evaluation Plan After implementing the changes with the interventions, an evaluation plan must also be set into motion. To provide a thorough review of the current practices and to reveal if the interventions have been successful Kirkpatricks four levels of evaluation should be applied (Kirkpatrick, 2006, p. 16). For the first level an employee satisfaction survey could also be used to mark the success of the incentive plan and overall morale of the organization. At the second level evaluation the turnover cost calculation should be conducted again and compared to the initial findings. If the cost has lowered then the intervention has been successful. The level three evaluation should take into consideration the turnover rate for the second half of 2013. If the rate decreases, then the interventions with the change in hiring practices and incentive plans may be having a positive effect. And finally in the final evaluation level, the overall profitability of the company should be compared year over year at the conclusion of 2013. Success would be shown by the cost savings to the company. Levels one through four of the evaluations will

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ensure that the interventions are working to improve the profitability and turnover rates at Advanced Insulation. Conclusion Each of these interventions will only be effective if implemented with each other. Individually the interventions may have an impact on the turnover rate, but after some time passes the other issues will emerge and require more solutions as well. Overall it is essential for the future profitability of Advanced Insulation for these interventions to be applied as soon as possible.

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Resources Chamorro-Premuzic, T. (2013, April 10). Does Money Really Affect Motivation? A Review of the Research. In Harvard Business Review. Retrieved July 28, 2013, from http://blogs.hbr.org/cs/2013/04/does_money_really_affect_motiv.html Cost of Turnover Calculatator (n.d.). In Drake International. Retrieved July 28, 2013, from http://us.drakeintl.com/hr-tools/cost-of-turnover-calculator.aspx#result Dubois County, Indiana (2013). In Stats Indiana: Data Everyone Can Use. Retrieved July 23, 2013, from http://www.stats.indiana.edu/profiles/profiles.asp?scope_choice=a&county_changer=18037&but ton1=Get+Profile&id=2&page_path=Area+Profiles&path_id=11&panel_number= Kirkpatrick, D. L., & Kirkpatrick, J. D. (2006). Evaluating Training Programs: The Four Levels (Third ed., pp. 1-26). San Francisco, CA: Berrett-Kouhler Publishers, Inc. Stolovitch, H. D., & Keeps, E. J. (2004). Training Ain't Performance (pp. 1-18). Alexandria, VA: ASTD Press. Recruitment & Selection Hiring Process. (n.d.). In University of California Riverside Human Resources. Retrieved July 28, 2013, from http://hr.ucr.edu/recruitment/guidelines/process.html