Anyone who works for a carpet maker in Dalton, Georgia, and goes out to lunch with co-workers had better be careful: there’s a good chance competitors are within earshot. That’s because the northern Georgia town is the home of the entire U.S. carpet industry, with all major players based there. That makes employee turnover an enormous business issue. If a worker can make a little more money just by pulling into a different parking lot, then why not?
Beaulieu of America, the industry’s third-largest company at about $1 billion in annual revenue, was so beset by turnover woes, in fact, that it was motivated to radically transform its culture over the past five years. The results are remarkable: in 2005, Beaulieu’s turnover rate was a horrific 50%. Today it has dropped to 17%.
That amounts to huge savings because, says CFO Del Land, replacing a worker costs about $5,000. Based on that, in 2005, when the company’s workforce numbered 7,000 (today it stands at about 5,800), replacing departed workers cost $17.5 million.
How did Beaulieu do it? The family-run company’s owners, Carl Bouckaert and Mieke Hanssens, had tried for years to create a family-type atmosphere, without much success. Various consultants, incentives, and other efforts were tried, to little effect. “The employees laughingly called them things like ‘the fruit-of-the-month club,’” Land says.
But in 2005, Beaulieu management met with HPWP, a consulting firm that promotes a “high-performance workplace” environment. Suddenly, the lights came on. As in a surreal movie scene, the owners decided to try HPWP’s approach after a single, one-hour meeting.
They began by aligning the company’s actions with its message. Or, put another way, they began to communicate with and treat employees as adults, thereby developing mutual respect and trust across all levels of the organization. “So many companies say they want to be employee-friendly, but their actual policies say something different,” says Land. “That was true of us.”
For example, to get time off under the company’s bereavement policy, an employee had to submit either a death certificate or a newspaper obituary. And at manufacturing facilities, security officials would randomly inspect employees’ cars at the end of a shift to make sure they hadn’t stolen anything.
Beaulieu worked with HPWP to identify those and other policies (like allocating the best parking spaces to executives) that told hourly workers they were second-class citizens. The policies were abolished. “You don’t frisk your family members for silverware after Thanksgiving dinner,” says Sue Bingham, the consulting firm’s founder and principal.
What really helped with the turnover rate, however, was the adoption of a high-performance workplace practice: having teams make hiring decisions. Rather than the typical scenario, in which a supervisor decides whom to hire, the employees who will be the new worker’s peers make the choice.