PsyMax Solutions Newsletter Volume 1, Number 1: Increasing Profitability by Increasing Employee Retention

In This Inaugural Issue:

1. Introduction to the PsyMax Solutions Newsletter
2. Case Study: Increasing Profitability by Increasing Employee Retention
3. Human Resource News and Trends: Integrating Assessment and Development to Build your Talent Bench Strength by HR.com
4. Public Eye: PsyMax Solutions in the News

1. Introduction to the PsyMax Solutions Newsletter

The PsyMax Solutions newsletter is delivered as a free service by PsyMax Solutions to clients, associates, partners and friends who need to consider the challenges of hiring the right people and developing key talent. We hope this newsletter educates you on the biggest challenge for any company.

Please share your ideas or suggestions about the newsletter with PsyMax by emailing us at newsletter@psymaxsolutions.com.

2. Case Study: Increasing Profitability by Increasing Employee Retention

This article reviews recent studies on employee career satisfaction and turnover and describes how one national retailer increased profits by improving their processes for hiring the right people for the right jobs.

Organizations and their employees are at a crossroads. Today, many companies are cautiously optimistic that the economy is improving and profits are on the rise, but they are still taking a "wait and see" attitude before they add workers. Employees, on the other hand, are feeling increasingly fatigued and overworked. Because of the poor job market, many workers have stayed in their jobs even if they have been unhappy. However, as the job market improves, many competent, but dissatisfied, employees will quit their current jobs to join new organizations seeking more satisfying employment.

Losing good employees is costly and it drives down corporate profitability. Consider the employee turnover rates for the following industries:

What are the costs of turnover? Several studies suggest that when an organization loses an employee, the cost to the organization in staffing expenses and lost productivity is 150% of the employee's salary.

"The loss of productivity during position vacancy and the diminished productivity during the new employee's transition period are significant aspects of the total cost of turnover. High levels of job satisfaction can lead to lower turnover rates, which can greatly contribute to an employer's bottom line". Ed Potter — President – Employment Policy Foundation

Consider an organization with 1,000 employees and a 15% turnover rate. Assume that the average employee compensation is $30,000 (including salary, benefits, etc.). The annual cost of turnover for that organization is $6.75 million (if 15% of the 1,000 employees need to be replaced at a cost of $45,000 each).

Recent studies confirm that organizations should be concerned about increases in turnover impacting their profitability levels. According to a CareerBuilder.com survey, almost a third of workers are unhappy with their jobs. Over 40% of dissatisfied workers are planning to leave their jobs. Individuals are not just unhappy with their jobs, but their lack of career growth and career direction. The top reasons they cited for being unhappy with their careers included:

• •   Too few promotional opportunities
• •   Lack of on-the-job training and development opportunities
• •   Inadequate guidance and coaching from boss
• •   Insufficient moral support from the organization

Organizations can improve their employee retention and profitability by using professionally developed and validated tools to help them hire and develop the right people for the right jobs. Borders Group uses the PsyMax Solutions Work Style Assessment (WSA) inventory to put the right people in the right jobs. Borders Group has over 32,000 employees and operates over 1,200 Borders and Waldenbooks stores around the world. The organization, headquartered in Ann Arbor, Michigan, is a publicly held Fortune 500 company with annual sales of $3.7 billion.

Since 2002, Borders has used the WSA inventory as a predictive tool to assist in the selection of its store and district managers. As a first step, Borders worked with psychologists at PsyMax Solutions to develop a success profile of the most critical work styles for performing these jobs. They continue to use the WSA inventory work style and degree-of-fit scores as part of the hiring process.

A recent independent study published by Cornell University documented that the WSA inventory has had a significant effect on store profits at Borders. The District Managers' WSA inventory scores over the last two years were analyzed. There was a significant relationship between District Managers' work styles, as measured by the WSA inventory, and annual district profitability. Specifically, District Managers who scored better on four dimensions (Manage Conflict, Drive For Results, Positive Outlook, and Performance Feedback) generated a total of $11 million more in profits than District Managers who scored poorly on the dimensions.

Dan Smith, Borders' Senior Vice President of Human Resources, said "Plain and simple PsyMax Solutions Work Style Assessment works. Borders' success is determined by the management team at each location, and PsyMax helps us to identify the candidates with the characteristics that we know drive sales most. PsyMax has been a proven producer." The PsyMax Solutions tools will also help address employees' career growth needs and help retain the right workers in the rights jobs.

3. Human Resource News and Trends: Integrating Assessment and Development to Build your Talent Bench Strength by HR.com

This webcast features nationally-known organizational learning and leadership expert Karen Elmhirst from HR.com. Karen talks about how to integrate your post-hire development and coaching programs with your pre-employment recruitment processes.

Here is a quote from the webcast from Dr. Charles Handler, CEO of Rocket-Hire, "Assessment data has a lifespan that should extend well beyond hiring. Smart companies carry the momentum forward by helping new hires immediately understand how and where they fit well so they can begin to contribute right away. The data, along with effective coaching can help these new hires address road blocks with precise behavioral suggestions. The first year is such a formative time. Supporting new employees in this way helps establish their satisfaction and organizational commitment for the long term."

The webcast will be available online at HR.com until April 16, 2005. Please view the webcast by logging onto HR.com. If you are currently not a member, registration is free.

4. Public Eye: PsyMax Solutions in the News

• •   PsyMax Solutions and CareerBoard Announce Strategic Alliance. Organizations combine best-in-class applicant sourcing and assessment tools to help employers reduce time and money spent hiring top talent. Read the full press release.
• •   PsyMax Solutions Launches a Breakfast Series where leading professionals discuss the human resource issues facing today's organization. Register for our next Breakfast Series event.
• •   PsyMax Solutions to Exhibit at Society for Industrial/Organizational Psychology Conference. The 20th Annual SIOP Conference will be help in Los Angeles on April 15-17, 2005.
• •   PsyMax Solutions to Speak and Sponsor at Akron SHRM Conference on April 14, 2005. This event will feature presentations by both Scott Warrick, President of Scott Warrick and Associates and Fred Elabed of PsyMax Solutions. Fred will present new trends in "On-Demand and Integrated Selection, Development, and Coaching Reports and Programs". This event will be both a luncheon from 11:00-1:00pm and a workshop from 1:30pm-4:30pm. The event will be held at the Sheraton Suites, Cuyahoga Falls. To register for this event or learn more please visit the Akron SHRM website.

About PsyMax Solutions

PsyMax Solutions offers an on-demand and integrated Human Capital website that provides world class assessment, interviewing, development, coaching, career, and 360° reports and programs for employees and managers. The PsyMax Solutions product suite is based on the work of psychologists who have conducted and written reports for over 20,000 managers. Our product suite generates results equal in quality, but at a fraction of the cost.

The PsyMax Solutions product suite is ready for immediate use without time-consuming and expensive consulting and IT set-up costs. In minutes you can create your own customized Human Capital website and use our integrated product suite to align your recruitment and development processes. To learn more about PsyMax Solutions, please visit us on the web at www.psymaxsolutions.com, e-mail us at info@psymaxsolutions.com, or call us at 866.774.2273.

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