Insolvencies up Care Down!

This is a subject close to my heart.  As a trainer, I often deliver courses which require an annual update.  In some organisations I never deliver an update because all of the original staff have left and I only ever run induction courses.  In other organisations with a positive approach not just to their service users but their staff I see the same people for many years running.

Yesterday there was an article published www.publicfinancenews.co.uk about the increase in insolvencies in the care sector.  A 49% increase in the first 6 months of this year!

This normally brings a rash of arguments against private sector being involved in the care industry.  It doesn't however address some of the issues as to why there is currently a problem.  In any blame structure there is a normal willingness to blame everyone else for your problems (something most of us were discouraged from doing as children).  This article is no different in that it lays much of the blame on the current "climate" of cost cutting and poor economic factors.  It doesn't really address some of the major issues which affect all areas of care both public and private sector and that's the huge turnover in staff.

For example, it would be interesting to note that while there is no doubt that Southern Cross (as one example) did have an issue with an increase in rents, they did also have another common issue that created a series of problems.

• Staff turnover was reduced by 3.6% to 26.3% by December 2010
• Average staff pay: £13,855.96
• Number of staff : 36,699

Source here: source

Now, by my calculations, if they were experiencing a 26.3% staff turnover on 36,699 staff then they are losing and recruiting on average 9,500 (approx) staff per annum.

Now, let's assume that all of these staff needed to be recruited, trained, interviewed etc by Southern Cross, then, we can also assume that this cost a significant amount of money.

One estimate given to me is for every £1 spent on a persons salary at least £0.20 of that is made up in their first year of recruitment, training and development, some would say that is a low estimate.


This money would be both direct  in terms of paying a trainers to train and indirect in terms of paying a manager to interview at least once when they could have been managing their service instead.

• Recruitment, advertising and agency costs
• Administration of the resignation, recruitment and selection process
• this would include the interviewers salary for interview, preparation etc
• Lost knowledge and skills of departing employee
• Lost productivity of vacant position
• potentially bringing in temporary/agency staff to cover
• Induction training for the new employee
• including the cost of CRB's
• Lower knowledge and productivity of new employee during training
• mistakes made, wasted time
• The impact of employee turnover on care and staff relationships
• As mastercard would say "Priceless"

Once you take into account these costs and the added cost that every 4 years they essentially have a totally new staff group, it's hardly a surprise that there were difficulties.

So, how could/should organisations reduce staff  turnover?  This is where care organisations should be looking at the other sectors which are successful in retaining staff.  What do they have in place?  What do they do to encourage people (especially good ones) to stay?

It's not always about the money!

If you;

• treat people well
• train them appropriately
• don't treat them like the enemy
• encourage rather than punish
• listen rather than dictate and
• treat them as you would wish to be treated were you doing their job

then, perhaps we could reduce turnover and save a fortune as well as creating a long term consistant, happy workforce who connect with the people they're trying to support.