A version of this will appear in *Security Management, May 2006*.

**Turnkey Turnover Solutions:**

**Powerful Tools and Experts are Available!**

Eddie G. Bitzer III, M.A. and Roger G. Johnston, Ph.D., CPP

Vulnerability Assessment Team

Los Alamos National Laboratory

# Introduction

It\'s early in World War II, and the US is scrambling to put together an
effective fighting force. But how to you select and place millions of
former civilians into military positions that will suit their abilities
and temperament? The Army turned to industrial/organizational (I/O)
psychologists. To solve this problem, the I/O psychologists developed
the Army General Classification Test (AGCT), which later evolved into
the Armed Services Vocational Aptitude Battery (ASVAB) still used today.
Although it would be an exaggeration to say that I/O psychologists won
the war\--that honor is reserved for those who fought and died on
battlefields around the world\--they did have a major impact on the US
war effort by placing soldiers in appropriate jobs. The results were
deemed so successful, that after the war, I/O psychologists came into
great demand by the military, intelligence agencies, other branches of
government, and private industry. The field of I/O psychology has
continued to advance and grow. Security managers can benefit from this
expertise\--especially for helping them deal with the crippling problem
of security guard turnover.

In our post 9/11 world, the demand for private security and protection
professionals is skyrocketing. The constant threat of terrorism and the
pervasive fear that follows have helped to drive this need. In response,
private security guard companies have had a somewhat difficult time
keeping up with the increased demand. These trends, combined with the
extremely competitive contract bid process, which drives wages down, has
put contract security firms in quite a conundrum. On the one hand, they
are forced to slash wages to offer competitive terms when bidding for
contracts. On the other hand, security personnel are in high demand, yet
the contracting companies have only modest wages to offer. This puts a
great deal of strain on recruiting and hiring. To compensate, private
security firms are scrambling to hire anyone willing and able to fulfill
the job requirements.

But there is an additional, and perhaps more serious, problem that is
putting stress on these organizations. Turnover rates for security
guards have been estimated to be approximately 100%-300% per year. That
means that a medium sized security firm that has enough work to employ
1,000 guards and has a turnover rate of 150% must employ about 2,500
people over the course of the year to meet its annual workload. In
addition, this same organization would end up employing guards with an
average tenure of about five months---hardly enough time to develop
expertise at their post before they leave the organization and are
replaced with a new employee.

This revolving door of guard personnel can have troublesome
consequences. First of all, customers who contract for guard services
are likely to have certain expectations about the performance and
professionalism of the security services they hire. Sending a constant
stream of different guards to the customer can cause significant
dissatisfaction that may lead to the cancellation of, or failure to
renew, existing contracts. Another potential problem associated with
high turnover goes right to the heart of security. It is well understood
that the most important security vulnerability for organizations is
disgruntled current and former employees. Any organization that suffers
turnover of 100% to 300% must assume there is likely to be a significant
amount of employee disgruntlement. Moreover, these potentially
disgruntled employees are security guards who likely had keys, pass
codes and knowledge that could grant them access to critical areas.
Obviously this is a recipe for possible disaster. And finally, one must
consider the actual dollar cost of turnover. Looking at our fictitious
1,000-guard security firm discussed earlier, we see just how
dramatically that high turnover can affect a company's bottom line.

To be concrete, let's assume that a contracting security firm bills
2,000 hours per year, at \$15 per hour, for each of its 1,000 guards.
That corresponds to a total of \$30 million of revenue in the course of
a year. The US Department of Labor estimates that the cost of turnover
is 33% of the salary of each employee who terminates. Assuming the
guards are paid \$9 per hour, their yearly salary (excluding benefits)
would equal \$18,000 and it would cost our firm approximately \$6,000 to
replace each departing individual. With a 150% annual turnover rate,
this firm would have to employ 2,500 guards to meet its obligations and
thus has to replace 1,500 guards over the course of the year. Using
these numbers, we find that turnover is costing our fictitious
organization approximately \$9 million per year. Put another way,
turnover accounts for 30% of the organization's gross receipts. (See
Figure 1 below for costs at other turnover rates). Clearly this is a
serious matter. And one that has received attention in the past (e.g.
see How to Turn Around Turnover, November 2002).

Table 1

Turnover Rates and Related Outcomes for Contract Security firms
employing 1,000 guards, under the assumption that guards' time is billed
at \$15 per hour and they are paid \$9 per hour.

+-----------+----------+----------+----------+----------+----------+
| Turnover  | 100%     | 150%     | 200%     | 250%     | 300%     |
| Rate      |          |          |          |          |          |
+-----------+----------+----------+----------+----------+----------+
| Total     | 2,000    | 2,500    | 3,000    | 3,500    | 4,000    |
| Employees |          |          |          |          |          |
| Hired per |          |          |          |          |          |
| Year      |          |          |          |          |          |
| (TEH)     |          |          |          |          |          |
+-----------+----------+----------+----------+----------+----------+
| Billable  | 2        | 2        | 2        | 2        | 2        |
| Hours     | million  | million  | million  | million  | million  |
+-----------+----------+----------+----------+----------+----------+
| Gross     | \$30     | \$30     | \$30     | \$30     | \$30     |
| Receipts  | million  | million  | million  | million  | million  |
+-----------+----------+----------+----------+----------+----------+
| Cost of   | \$6      | \$9      | \$12     | \$15     | \$18     |
| Turnover  |          |          | million  | million  | million  |
| (TEH --   | million  | million  |          |          |          |
| 1,000)    |          |          |          |          |          |
+-----------+----------+----------+----------+----------+----------+
| Turnover  | 20%      | 30%      | 40%      | 50%      | 60%      |
| as a % of |          |          |          |          |          |
| Gross     |          |          |          |          |          |
| Receipts  |          |          |          |          |          |
+-----------+----------+----------+----------+----------+----------+

Table 1 shows just how serious this problem truly is. If your
organization's turnover is 100%, relatively low for contract security
firms, than 20% of your company's gross income is wasted on turnover
costs. Think about that. For every hour that is billed, at say \$15, a
full \$3 goes to turnover costs. That's before you have made payroll,
adjusted for taxes, or covered any expenses. And, that's only if you are
doing WELL in terms of turnover compared to the rest of the industry. If
your organization's turnover is at the high end of the range, then you
are in serious trouble. No organization can thrive when 60% of its
pre-tax income is wasted. Obviously, any firm that can keep turnover at
a moderate level will have a dramatic competitive advantage over others
in the industry.

Some might argue that high turnover is inherent in the industry and
simply unavoidable. To this we say nonsense. Granted, low wages, lack of
benefits, shift work, and the temporary or part-time nature of many
security jobs, plus a number of other challenges, makes recruiting and
retaining guards difficult. But these are challenges that many other
industries have successfully addressed, and the security industry must
as well.

So what can be done? Industrial/Organizational Psychologists have long
been interested in ways of reducing turnover. Over the years they have
developed a number of programs that have proven to be quite successful
for other industries. It seems likely that, with thoughtful planning and
careful execution, adopting one or more of these programs could
significantly reduce turnover in the security field as well.

It is, after all, much easier to reduce turnover from 100% to 75% than
from 25% to 0%, yet the reductions in cost are identical. It is
important to offer a couple of notes of caution, however. First, it may
be *easier* to reduce an already inflated turnover rate, but achieving
reductions in turnover is never *simple*. As such, it is vitally
important to find someone who is trained in diagnosing and treating
these types of organizational issues. Certainly don't be hesitant in
seeking external assistance \-- the ROI for investing in a reputable
consultant could easily be as high as 3,000%. In fact, it would likely
be beneficial to take this approach. The key is to find someone who is
in fact, reputable. It might be worth checking to see if your local
university has an I/O Psychology program. If not, perhaps someone in the
Organizational Behavior/Management Department could help. The point is,
anyone can *call* himself or herself a business consultant but that
doesn't mean they *are* (most managers and business owners who have
dealt with consultants know this already). There is no serious
accreditation or certification necessary to advertise consulting
services. If there were, it would be a safe bet that there would be a
lot fewer "consultants" in the world. But there are many fewer still
that are rigorously trained to deal with this type of organizational
issue. And bigger isn't always better, either. Often with the largest
consulting companies, unless you are willing to spend millions of
dollars all you will get is a standardized solution that they have sold
to a number of other companies in a number of other industries. You'll
likely overpay for a program that underperforms since every organization
faces unique challenges in addressing turnover; some are unique to the
individual organization and some are inherent to a particular industry.
Second, don't rely exclusively on your HR department or generalists to
solve these issues. In most cases they are not equipped to deal with all
of the complex legal, statistical and theoretical considerations that
are involved in making changes of this kind. But don't cut them out of
the process either. Experience has shown that the most successful
consulting relationships are collaborations between those that know the
company intimately and those that specialize in strategies to help the
company attain its goals.

With that said, we now turn to a discussion of strategies to reduce
turnover. For ease of organization, the programs are divided into two
categories; pre- and post-hire. It is important to recognize that not
all of these strategies are ideal for all organizations. You must
carefully consider the individual operating environment that your
organization faces, and then decide how to proceed. Extensive research
has been conducted on each of these techniques. What follows are
summaries; much more information is available on any of these
techniques.

# Pre-Hire Turnover Reduction Strategies

Pre-hire turnover reduction strategies are aimed at preemptively
eliminating job candidates who are at a high risk for turnover. This
type of screening can come in two forms. The hiring agency can actively
look to screen out candidates (using, for example, personality testing
and bio-data to aid in selection), or the candidates can remove
themselves from consideration for the job (which is the purpose of a
realistic job preview). Either is an acceptable route, as long is the
end result is a reduction in turnover.

## Personality Testing in Selection

Personality testing has long been of interest to individuals hiring in
the public safety and security fields. For example, candidates for
positions as police officers are routinely given personality tests. And
indeed, this practice has begun to find its way into the private
security industry. In both cases, however, the hiring organization is
most interested in the presence of clinical psychological problems that
would make a guard or officer unfit for duty. To make this assessment,
candidates are often given the Minnesota Multiphasic Personality
Inventory-2 (MMPI-2), or other similar types of tests. And while these
tests are very good at diagnosing and screening individuals with
abnormal personalities, by definition the vast majority of job
applicants screened will be considered normal. As such, tests like the
MMPI-2 are useful for screening unfit officers, however they can
contribute very little to the reduction in turnover.

However, there are a number of personality tests that are designed to
assess individuals with normal personalities. Many of these, and the
ones that make the most sense to use, are based on theories of
personality called Five Factor Personality Models (or the Big 5). Big 5
personality theories assert, and research supports, that there are
really only about 5 broad categories of personality into which all other
personality traits fit. These 5 categories include 1) conscientiousness,
2) openness to experience, 3) extraversion, 4) agreeableness, and 5)
emotional stability (aka neuroticism). A full explanation of each of
these categories of personality traits is not possible here, but
virtually any current Personality Psychology textbook can provide such
information. What is important is that many of these personality traits
have been found to correlate with turnover. For example, a recent review
of research has shown that emotional stability has an average
correlation with turnover of about .25. This means that by using a
measure of emotional stability to screen out applicants prone to
turnover, it may be possible for organizations to reduce their turnover
by about 0.25^2^=6.25%. Although this doesn't sound like a huge
reduction, if we refer back to our fictitious 1,000 guard firm, a
reduction in turnover of 6.25% amounts to an actual dollar savings of
\$562,500 per year. Clearly this is a substantial supplement to any
organization's bottom line.

One added bonus to the use of five factor models of personality is that
most measures of these personality traits are relatively short (usually
less than 50 questions compared to the hundreds of items on the MMPI)
which requires less time for administration and thus less upfront
investment in potential candidates. In addition, the MMPI requires a
trained psychologist to interpret the results for each individual test.
The interpretation of results for five factor measures is usually much
more straightforward. A psychologist may be required to set up the
initial system, but after that it can be run fairly smoothly by
knowledgeable HR professionals.

## Bio-Data in Selection

The use of bio-data, at least at the most basic level, is actually
something that is fairly common. Any organization that requires an
application or resume is familiar with the collection of bio-data.
Bio-data is simply information from an individual's past such as work
experience or educational history. However, most organizations fail to
use bio-data to the extent that is possible. Many organizations simply
look at applications to get a feel of someone's experience, and
sometimes they will use the information to contact past employers or
references. However, it is possible to develop a somewhat basic
calculation that puts value on certain aspects of applicants' pasts. By
plugging each individual's information into this equation, it is
possible to predict with some accuracy which applicants are most at risk
for turnover.

## Realistic Job Previews

It is becoming more and more common for Industrial/Organizational
Psychologists and HR professionals to view the interview not only as
part of the selection process (where the hiring organization gathers
information to make a decision on employment), but also as part of the
recruitment process (where job applicants gather information in order to
make a decision about accepting a job). One sign of this shift in
understanding is the development of the Realistic Job Preview (RJP). The
idea behind an RJP is fairly straightforward, and summed up quite well
by the name. An RJP is simply an attempt to provide accurate information
about the nature of a particular job to all job applicants before
hiring. This includes not only what the duties of the job are (e.g.,
walking a patrol, checking ID badges), but also what the job is like
(e.g., tedious or tiring) and what working conditions may be encountered
(e.g., night work, being outdoors and exposed to heat or cold).

Research on RJPs has shown that when done correctly they can be very
helpful at combating turnover. Why this is the case, however, is not
well understood. Some organizational scientists believe that information
gained by applicants during an RJP allows them to decide if the job is
right for them, and then withdraw from consideration for the job if it
is not. In essence, you give the applicant information early on that he
or she would otherwise acquire while doing the job. This allows the
applicant to make the withdrawal decision (which they would have made
anyway) before your organization has invested a large amount of time and
money training and equipping that individual. Others have more complex
explanations for why RJPs seem to be effective. Some believe that
turnover, much like politics or the stock market, is an expectations
game. These theorists believe that RJPs lower the expectations that
individuals have when they accept a job, which makes it easier for the
organization and the job to meet those expectations. With expectations
being met, the employee experiences job satisfaction, thus reducing the
probability of turnover. Still others believe that RJPs cause
individuals to believe that the organization is more committed and
honest to them and therefore they are more committed to the
organization. Regardless of the mechanisms that cause RJPs to work, the
fact is that they do, and they can significantly reduce the rate of
turnover.

There are a number of different questions that must be asked when
developing an RJP. What information to communicate, when and how to do
it, and to whom it should be given are particularly critical. Answers to
each of these questions, and the many others you will face, depend in
large part on the ultimate goals of the RJP and the organization.

# Post-Hire Turnover Reduction Strategies

Post-hire turnover reduction strategies are aimed at attempting to
reduce turnover after individuals have joined the organization. As a
result, these efforts could be viewed as more reactive in nature.
Nevertheless, when implemented thoughtfully and applied consistently,
these too can be effective at reducing turnover.

## Organizational Socialization/Orientation

Commitment to an organization is a powerful way to counter high turnover
rates, as well as a number of other counterproductive work behaviors.
There are a number of ways to build commitment to an organization, but
one fairly straightforward way is by requiring all employees to complete
organizational socialization training or orientation. This type of
intervention takes new employees and teaches them what they need to know
to function appropriately as an organizational member. This is different
than teaching them the job skills; socialization is teaching them the
organizational and people skills necessary to function. This is where
you would teach things such as the organization's mission, the proper
work attitude and even simple things like when is payday. Through this
process, you are showing individuals the proper way to behave as well as
showing them that you are concerned about their adjustment to a new job.
It shows commitment to the workforce and elicits commitment in return.
And it does all of this before a new hire can begin work and potentially
be contaminated by disgruntled workers with bad attitudes and work
habits.

## Supervisor Training

A recent study conducted by the Gallup Organization revealed some very
interesting information about the nature of employee turnover in
general. The number one reason individuals left their organization was
not due to low pay, lack of benefits, or the work itself. The reason
employees left the organization was due to conflicts with their
supervisor. It appears that many individuals form opinions of their
organization based on their interactions with their immediate
supervisors. To them, "management" is the organization and their first
point of contact for management is the direct supervisor. Therefore, if
the relationship between supervisor and subordinate is poor, the
possibility of turnover is high.

To combat this problem, it is vital to invest in management development.
Traditional training programs on interpersonal skills, communication,
customer service and motivational skills could all be beneficial. But
training for the sake of training is pointless. Supervisors must
understand why the training is important and they must be encouraged to
apply the lessons and skills they learn in training to their jobs.

## Higher Pay

Despite the fact that pay isn't the main reason that individuals leave
their jobs, it can still have a major impact on turnover. Certainly the
nature of the security business dictates that competitive bidding leaves
little room for paying guards extravagantly. However, as Table 1
suggests, a large amount of a security firm's gross income is wasted on
turnover costs. However, if an organization can bring its turnover under
some degree of control, more money is then available for paying
employees better, and providing other amenities such as benefits.
Looking at our fictitious organization, let's assume they adopted a
couple of the practices we have described above. By doing so, they are
able to reduce their turnover from 150% to 100%. (Although this is a
significant reduction, an annual turnover rate of 100% is still nothing
to brag about.) This reduction in turnover puts 10% of the
organization's gross receipts back into their coffers. We know that the
organization charges \$15 per hour for guard services, so this means
that an extra \$1.50 per hour is available. Using some of that money to
raise wages gives the organization a competitive advantage against those
organizations paying less. The organization will get more and better
quality applicants, which allows them to be even more selective about
whom to hire, thus potentially reducing turnover even more. In this way
positive feedback cycle is possible.

Despite the almost overwhelming nature of the turnover epidemic in the
security world, there is hope. With a little guidance, forward thinking
security managers can dramatically reduce turnover from the astronomical
levels they are currently experiencing. By doing so, they can use these
gains as a competitive advantage over other organizations. While the
turnover epidemic slowly kills those organizations that choose not to
respond, those that do can be cured and vaccinated against future
damage. And ultimately it will be these organizations that survive and
thrive.