A big number is scary. Used well, it becomes a budget. Here's how to split it into three clear decisions.
This article is part of the Small Business Series: 13 short, practical articles for small and mid-sized businesses that want to compete with the big players without being their size. They all revolve around one idea: what your people know how to do is your biggest advantage, as long as it doesn't live only in someone's head. We'll look at how to put it in writing, teach it fast, prove it to your customers and measure it. A new article every Monday.
If you ran the calculator, you have your number
If you joined the webinar on October 20, you already know what turnover costs you in a year. If you missed it, figure it out here with your own data. It takes three minutes.
Your result is ready. Leave your details to see it. We'll also send you the three decisions to start bringing it down.
Use your own currency. The result is an estimate based on your own data: it helps you size the problem and track whether it goes down. It is not an accounting figure.
To show what to do with that number, we'll use an example. The numbers are made up. They're just here to show the thinking.
A company has 60 people in frontline roles. About 30 people leave each year. It found a hidden cost of $1,500 for each person who leaves.
30 exits × $1,500 = $45,000 a year.
Most people react to a number like that in one of two ways. "It's the cost of doing business." Or "You can't lower turnover in this industry." Both lead to the same place: doing nothing.
Change the question: it's not a loss, it's a budget
You're already spending that $45,000. Every year. It doesn't show up as a line in your budget. But it still leaves your bank account.
So the question isn't whether you'll spend money on this. You already do. The question is what you spend it on. You can keep paying for the same problem. Or you can pay to shrink it.
You don't have to stop turnover for this to be worth it. You just have to lower the cost of each exit. If each new hire learns faster, makes fewer mistakes and takes less of the supervisor's time, each exit costs less. Even if people keep leaving.
Say that company cuts the cost of each exit by a third. It goes from $1,500 to $1,000.
30 exits × $500 difference = $15,000 a year freed up.
This isn't a promise. It's the goal you'll measure.
Decision 1: what to document first
Don't document everything. Start where the most expensive part of the learning curve lives:
- The tasks new people get wrong most often.
- The tasks only one person knows how to do.
- The tasks where a mistake costs money or customers.
Pick three. This table helps you decide:
| Task | Who knows it today? | What does it cost if it goes wrong? | Is it documented? |
|---|---|---|---|
| E.g.: closing the register | Only the night shift lead | High: cash shortages and hours of review | No |
Decision 2: what to certify
To certify means to check that a person knows something and keep a dated record of the result. You don't need to certify everything either. Only what causes harm if it's done wrong:
- People's safety.
- Handling money.
- What you promise the customer.
- The quality of your product or service.
And remember what we covered in article 4: certifying once isn't enough. When the procedure changes, you check again.
Decision 3: what to measure
Three metrics. No more. Measure them today, before you change anything. Then measure them again at 90 days:
| Metric | What it tells you |
|---|---|
| Weeks until a new hire works on their own | Whether the learning curve is getting shorter. |
| Mistakes or waste in the first 30 to 60 days | Whether new people make fewer mistakes. |
| Exits before 90 days | Whether the first weeks are keeping people. |
Your number doesn't have to be exact. It has to be yours, and you have to figure it the same way every time. What matters is whether it goes down from one quarter to the next.
Your 30-day plan
- Week 1: pick the three tasks you'll document and the procedures you'll certify.
- Week 2: document the three tasks in a short format, with questions at the end.
- Week 3: build the certification tests and give them to your current team.
- Week 4: record your baseline for the three metrics and assign the new material to the next group of hires.
In SHIFT LMS, all three decisions live in one place. What you document becomes courses. What you certify becomes tests with a result and a date. What you measure becomes reports you can pull up when you need them.
Frequently asked questions
I missed the webinar. Can I still follow this plan?
Yes. Estimate your cost per exit with the method from the first article in the series. Even a rough number works as a starting point.
How soon will I see a difference?
It depends on how many people you hire. The first sign shows up with the first group of new hires who go through the process. Did they work on their own sooner than the group before?
What if the number goes up after I start?
Sometimes that happens because you now measure things you couldn't see before. That's why you should always measure the same way and look at the trend over several quarters.
All 13 articles in the series
- September 28When the person who knew leaves, what they knew leaves too
- October 5Your onboarding lives in one person's head (and that person gets tired)
- October 1215 people start on Monday. Today is Thursday.
- October 19Your best employee stopped performing. Don't fire them yet.
- October 26You know what turnover costs you. Here's what to do with that number. ← you are here
- November 2The 40-page manual nobody read
- November 9The question that knocks you out of the bid
- November 16Your distributor sells your product badly. The distributor isn't the problem.
- November 23Your know-how lives in three people. That's why you can't open the fourth location
- November 30What you need to be able to prove if there's an accident tomorrow
- December 7The appendix that wins proposals
- December 14Much of your turnover happens in the first 90 days
- December 212027 budget: how to justify training when no department asks for it
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