Staff or employee turnover refers to the number of employees who leave a certain company and are substituted for new ones.
Back when I worked in Groupon Dubai, we would lose at least one employee a week. It was scary knowing that you could be let go or even worse, forced to quit so easily! Management must have thought it instilled an environment of hard work in the workforce, but was this high staff turnover rather beneficial or destructive to the overall team morale? Continue reading to see some of the effects of high and low staff turnover.
Fear Versus Security
Having a high employee turnover in a business instills fear in the employees who work there and reduces their overall morale. They know that it’s easy for the organisation to replace them if need be.
On the other hand, low staff turnover means that the company values its employees and appreciates their work, which in turn makes workers more secure about their jobs and more productive.
High Cost Of High Turnover
High staff turnover means higher costs for a business. As my boss once explained to me, a company spends a lot of money hiring and training new staff. Companies with low staff turnover spend more time interviewing potential employees to make sure they’re exactly right for the positions they are interviewing for before making a final decision.
Achieving A Low Turnover
So how does a company achieve and maintain a low staff turnover? Studies show that decent salaries and better communication between managers and its employees greatly reduces employee turnover by enabling employees to work for longer periods of time at an organization. Finally, being able to progress and get promoted in a company also reduces employee turnover.
To put it in a nutshell, it makes sense for companies to have a low staff turnover for several reasons, including lower costs, better employee morale, and higher productivity.
When you think about the 1% that is the success rate of most startups (at least in the United States but generally worldwide), you wonder how people calculate the expected return and assess their profitibality with regards to such an endaveour. Melanie says it best in her enlightening blog post incentivizing people to build lifestyle businesses instead of startups in which she basically calculates the expected return (after taking into consideration success rates and other relevant statistics) of hyper growth startups that end up exiting at $100M+ valuations and lifestyle businesses that make around $1M in revenues a year. The expected return, after taking into consideration the 1% success rate of the former, spliting equity between co-founders, and the success rate of actually making it into a $100M+ exit ends up being around 3 Grand. Not what you expected right? That’s because you’d have to multiply $100,000,000 by 1% then again by 50% then again by 2% then finally by 33% (which is the highest amount that the founder will probably own after dilution at the said exit) and you get exatly $3,300. Remember, this is NOT the value that a founder would get if successful, but rather it is the expected return based on the realistic probabilities outlined above.
According to statistics, the success rate of small businesses in the US is 44%, a surprising leap from the mere 1% for startups. Doing similiar calculations to the aforementioned gives us an expected return of around $356,400 with an expected exit of $3.6M. Ok that’s not as cool as the former exit of $100M+ but look at the odds.
What I suggest most aspiring entrepreneurs should do is plug one more thing into the equation in order to make both of the above expected values more precise, and that’s your credentials, in addition to the how, when and where. For instance, whether you have relevant experience, whether you have succeeded at a similiar endaveour before and whether you have relevant mentors all factor in to highly increase (or maintain constant) your chances at startup success. As for the other way around, I don’t really believe that not having the aforementioned criterea will decrease your chances with regards to the calculations we just made, because the percentages that we took into consideration don’t actually factor in relevant outstanding credentials.
Original image credits: Idyllic Software
From leasing residences, to sharing rides, to clubbing together to finance creative projects, sharing has become increasingly popular in today’s economies worldwide and has recently been used to spur innovative business models and generate considerable amounts of revenue. A research done by Roland Berger strategy consultants suggests that this specific sharing economy is going to further preside throughout the upcoming years.
The Uber company – which offers ride-sharing services – originating from California and now operating in more than 30 cities worldwide, was valued at $18 billion. Airbnb, the service that allows people to lease residences, has more than 800,000 entries in more than 192 countries and is valued at approximately $10 billion. Finally, Kickstarter, a large and global crowdfunding platform for creative projects (such as movies, games, music albums and other projects) has an estimated valuation of $1 billion.
This ‘swapping’ economy is largely owing to the technological innovations that have been happening in the past decade relating to communication, specifically in how they have faciliateted and completely changed human and other communications. In fact, all facets of our lives now seem to be dominated by online communication. The world is progressively being transformed into one global network. Humans, devices and programs are continually interlinked and exchange information in realtime as if the world was one compressed little community.
Prospects in this new sharing economy have already become visible, as per some of the aforementioned examples, with the majority of them relating to mobility. Moreover, young new entrepreneurs have been generating original and innovative ideas relating to this sharing economy incessantly. Some more examples of companies taking advantage of this economy are the following: swap.com, zopa, Bcycle, CouchSurfing, BookMunch, ZiLok.com, carpooling.com and zipcar.