This article originally appeared on New Deal 2.0.
Sunday's New York Times reported that accounting firms lead corporate America in offering workplace flexibility. Employees can reduce their hours, take the summer off, take off a few years and then return to their prior jobs... whatever they need. And the firms are committed to ensuring that flexible options don't hurt prospects for advancement.
Why are the accounting firms out in front? For a simple reason: they do the numbers. It costs 1.5 times a worker's annual salary to replace a professional who leaves. So when workplace flexibility cuts PricewaterhouseCoopers' turnover from 24% to 15%, that's real money.
Meanwhile, at the other end of the wage spectrum, employers are struggling with turnover rates as high as -- I kid you not -- 500%. A study of retail stores found that two-thirds had turnover rates in excess of 80%, according to researchers Susan Lambert and Julia Henly, whose path-breaking work has defined a field. Of course, replacing sales staff does not cost as much as replacing an accountant. But the costs do add up. Even under the conservative assumption that it costs 30% of a salary to replace an hourly worker, replacing 300 employees means you've tossed away $1.8 million, according to workforce management consultant Lisa Disselkamp. And employers hire a lot more sales staff, nursing assistants, airline catering personnel, and hotel housekeepers than they do accountants.
Absenteeism is a big problem, too. In one flagship department store, 80% of associates were on probation due to absenteeism. Employers typically see sky-high turnover and absenteeism rates as unavoidable, on the theory that hourly workers have disordered lives and lack workplace readiness. What kind of people don't come to work and quit at the drop of a hat? But if you look a little deeper, you see a different picture.
One mother who worked at a flagship department store worried she would be fired if her preschool-age daughter got sick again, and wondered out loud how she would make it through the flu season. A nursing assistant told a researcher that she got sick days -- but also demerits for taking them under her employer's "no fault absenteeism" policy. So she risked being fired for absenteeism if she used her sick days.
One problem is the design of "no fault absenteeism" systems. But that's only the beginning. The underlying problem is "just-in-time scheduling," which focuses on maintaining a tight fit between labor supply and labor demand. The key to global competitiveness, many employers feel, is to control their labor costs. That may be true, but the way employers currently design just-in-time scheduling creates a bleed of cold, hard cash.
To maintain a tight fit between, say, sales staff and customers, employers today send workers home after they have reported for work if demand is lower than expected. Employers tend to offer only part-time work so they can design schedules that change from week to week and give less than a week's notice of next week's schedule. Meanwhile, the low-wage workforce tends to rely on relatives for child care -- relatives whose schedules are equally unstable. And of course because many employees have only part-time hours, they need to get other jobs to survive. So their employers are competing not only with workers' children, but also with their employees' other employers (who offer equally unstable schedules) as well as with the employers of those relatives their workers rely on for childcare.
No wonder absenteeism is stratospheric and turnover terrific. Meanwhile, employers bemoan high labor costs, but assume that it is workers' inherent irresponsibility that's to blame.
Now hear this: it's the workers' responsibilities that are to blame. They cannot leave toddlers home alone. They need to take grandma to get treatment for her ulcerating diabetes sores. They need to get to work at the employer who held out the possibility of full-time work. Anyone who would ignore these... well, you probably wouldn't want to hire them anyway.
Employers of hourly workers need to do what accounting firms do: the numbers. Once employers start taking into account the way the current design of just-in-time scheduling fuels turnover and absenteeism, they will redesign it to achieve greater schedule effectiveness. WorkLife Law's new report, Improving Work-Life Fit in Hourly Jobs: An Underused Cost-Cutting Strategy in a Globalizing World, provides concrete tools to help organizations redesign just-in-time scheduling so they can control labor costs much more effectively than most are doing so today.