Last week I was talking with a business owner who operated several franchises in the Chicago area. She wanted to do some teamwork training, and when she went to her Controller, he talked her out of it. He said, “Look, our numbers our fine. Sales are where they need to be, and we are making a profit”. That was his whole argument. Here is what he did not pay attention to:
The employee turnover rate was 20% above the industry average.
The absenteeism was up 40% over last year.
Their district supervisor referred to the store managers as a “bunch of dummies”.
Most of us would say that these symptoms are not good, and very costly. We wouldn’t have to be brilliant to predict that this company is headed for trouble. Eventually, the sales numbers will go down, and by that time, the river may be too wide for crossing.
These folks could take a lesson from commercial airline pilots: Airline pilots have many gauges. Gauges are indicators. Pilots look at them constantly, making sure there is nothing heading in the wrong direction. If they see that their hydraulic pressure dropping, they don’t wait until it goes to zero. They take action.
The same thinking would be wise here. With rising costs and pricing pressure, owners can ill afford high turnover. The cost of re-training, lost relationships, and low engagement should be enough to pay attention to and respond to these serious indicators.
Summing up, in my life time I have observed Sears to be the nation’s largest retailer. Presently, their future is in serious question. Then there is General Motors: At one point there were only five countries in the world richer than GM. In 2008, they were in serious financial trouble. Watch those gauges…and respond quickly!
