The Economic Benefits of the ESQ-CC

Thousands of dollars are invested in each call center employee in salary and training costs. Turnover rates up to 30% are frequent in call centers and it can take nine months of employment for companies to obtain a return on investment from new employees. The ESQ-CC can identify impulsive job applicants as well as those with less organizational commitment. This will allow you to better target your employee investment, increase margins and reduce turnover costs.

The following are key counterproductive behaviours that can affect your organization's profit margins. Where they will help to illustrate economic impact, examples of each are included for Fictitious Call Center Inc., a fictitious call center with 1500 employees:

• Commitment/Job Satisfaction (Risk of Turnover)
• Loafing (Abuse of Idle Time)
• Lateness/Absenteeism (Bogus Sick Days)
• Sabotage of Production or Property
• On-the-Job Substance Abuse
• Safety Violations
• Theft
• Conclusion

Commitment/Job Satisfaction

The ESQ-CC measures "Commitment/Job Satisfaction" which among other things may be used to predict both voluntary, and involuntary turnover (termination). Personality plays a critical role in determining an applicant's risk of lackluster performance. Some people simply derive more satisfaction from work in general, while others dislike work, rules, and being managed. Often these individuals will perform at or below the lowest tolerable limits of performance. The ESQ-CC allows you to screen out individuals with low Commitment/Job Satisfaction.

A high turnover rate will result in unnecessary loss of both reputation and customer satisfaction. Turnover adds significant pressure to profit margins. The common sources of these costs are:

1. Recruitment of replacements, including administrative expenses, advertising, screening and interviewing.
2. Services associated with selection, such as security checks, processing of references, and possibly, psychological testing.
3. Lost productivity associated with the interim period before a replacement can be placed on the job.
4. Lost productivity due to the time required for a new worker to get up to speed on the job.
5. Lost productivity associated with the time that coworkers must spend away from their work to help a new worker.
6. Costs of training, including supervisory and coworker time spent in formal training, as well as the time that the worker in training must spend off the job.
7. Costs associated with the period prior to voluntary termination when workers tend to be less productive.
8. In some cases costs associated with the communication of proprietary trade secrets, procedures, and skills to competitive organizations.
9. Public relations costs associated with having a large number of voluntary or involuntary terminations in the community spreading gossip about the organization.
10. Increased unemployment insurance costs.

The US Department of Labour estimates that the costs listed above total, on average, 30% of the departing employee's annual salary or wage.

Fictitious Call Center Inc. has 1500 employees and an annual turnover rate of 30%. If call center employees are paid an average of $12.50 per hour, work 37.5 hours per week for 50 weeks per year and we apply the Department of Labour rule of costing turnover at 30% of an employee's annual salary, then the cost of turnover to Fictitious Call Center Inc. is $3,164,062.50 per year.

The ESQ-CC will help you select employees that are more committed, productive, and service-oriented, thereby reducing both voluntary and involuntary turnover. Click here to read an Overview of Employee Turnover Research.

Abuse of Idle Time, Time-theft, and Loafing

Loafers (those spending an average of 20% of their time on non-work-related activities) scored significantly higher on the ESQ-CC counterproductivity scale than non-loafers.

For example, assume that an employee at Fictitious Call Center Inc. is paid $12.50 per hour and Abuses Idle Time or remove themselves from the call rotation for approximately 20% of each shift. This "time theft", lost productivity, wasted overhead and other attendant expenses will cost their employer $13,315 per annum. This amounts to a total cost of $66,575 per loafing employee over a five-year period. If 10% of Fictitious Call Center Inc's employees Abuse Idle Time, then this equates to an annual cost of $1,997,250. Applying the ESQ-CC to the selection process will screen out 2/3 of the worst loafers over time for a savings of $1,331,506 annually.

Assume that Fictitious Call Center Inc. will process 1350 applicants to replace 450 employees in a year due to 30% turnover. Without using the ESQ - 45 of them, or 10% will be chronic loafers costing the company $599,175 per year. With the ESQ-CC, Fictitious Call Center Inc. will identify the worst 2/3 of loafers at a cost of $17,550, for a net productivity recovery of $377,905. In fact, the gains will be higher since the worst offenders will be those identified by the ESQ-CC.

Lateness/Absenteeism

There are several costs associated with absenteeism in the workforce, including loss of productivity, customer dissatisfaction and reallocation of staff. Some individuals claim to be sick when they simply feel like a vacation day. Chronic absenteeism is prevalent in today's society. In 1998 about 4% of full-time workers in the United States, and more than 6% of full-time workers in Canada took unauthorized time off of work (CCH Unscheduled Absence Survey; Statistics Canada). Those respondents who had reported a history of 'bogus' sick days score below the 50th percentile on the ESQ-CC, thereby failing.

Sabotage of Production or Property

In a research study, it was found that 14% of respondents who reported a history of sabotage at the workplace scored on average in the 24th percentile on the ESQ-CC. The ESQ-CC is able to identify those with a history of causing damage or lost production through deliberate vandalism or sabotage, without inquiring directly into such behaviour.

On-the-job Substance Abuse

10% of employees consume more than five glasses of alcohol in a workday, and approximately 70% of illicit drug users are employed (Williams-Harold, 1998). To save your company's resources and reputation, use the ESQ-CC to screen out those individuals who are likely to engage in substance abuse during the workday. Respondents who admitted to drinking on over 4% of their shifts also failed the ESQ-CC during anonymous testing, scoring an average of 5%.

Safety Violations

The Insurance Research Council estimates that over 3 million employees experience on-the-job injuries per year. While insurance protects businesses from the costs associated with medical bills, Safety Services of CyperComp states that the costs not covered by insurance are four or five times higher than those that are. The following are examples of how these uninsured costs indirectly affect the productivity and profits of an organization:

1. employee wages (e.g. wages to the injured employee and their replacement);
2. repairing damaged equipment or products;
3. time invested in investigating the accident and filling out paperwork;
4. overtime by other employees and supervisors to compensate for the loss of production;
5. increased insurance premiums;
6. the costs associated with a possible lawsuit (e.g. lawyer's fees, settlement, bad publicity).

Disregarding safety regulations can result in serious accidents or death to the employee or coworkers and in substantial costs to the employer. Furthermore, adherence to safety regulations is an indication of employees' willingness to follow organization rules, procedures and policies. There is a direct relationship between frequency of safety infractions and ESQ-CC scores. Those who most frequently reported safety violations failed the ESQ-CC.

Theft

On average, 44% of all inventory shrinkage is due to employee theft. Employees tend to steal significantly more than shoplifters. In fact, 20% to 40% of employees in the retail, manufacturing, supermarket, restaurant, and healthcare industries report a history of theft. From unauthorized giveaways to friends and family to serious theft, the ESQ-CC is able to screen those individuals likely to engage in thievery. During anonymous testing, individuals who reported the highest levels of theft scored, on average, at the 15th percentile.

Conclusion

Clearly, an organization can realize substantial benefits through the use of the ESQ-CC, identifying those individuals most likely to succeed. According to the Society of Human Resource Management more than 50% of potential employees misrepresent themselves on their job applications. The ESQ-CC will save your organization time and money by making your employee selection processes more efficient and effective.