The Case
Ingram Content Group (ICG) is part of a long tradition of successful companies built by the Ingram family.  Dedicated to helping content reach its designation by providing a broad range of physical and digital services, Ingram has been a partner to publishers, booksellers, and libraries for more than four decades.  ICG leads the industry in physical distribution, supply chain management, and fulfillment services with access to all markets both domestic and international.  On average, ICG ships 2.4 million units each week to over 85,000 customers from four distribution centers.

People Problem
Employee turnover had been a chronic problem for Ingram’s distribution and fulfillment division for years.  Rising steadily until it hit a rate of 81.7 percent enterprise-wide at the end of 2002, and 102 percent in the flagship distribution center in La Vergne, Tennessee.  For Operations/Logistics leadership, the revolving door of talent was disruptive in their efforts to operate at best-of-industry standards. For the rest of the C-staff, the attitude was one of resignation; in essence, high turnover in the Operations groups was viewed as a fact of life.
 
Getting the Attention of Leadership
For Operations/Logistics leadership, excessive turnover was a disruptive factor in their efforts to effectively manage their facilities.  Intuitively, they all knew that there was a significant human capital expense negatively impacting the bottom line.  HR under the leadership of Wayne Keegan, HR had been tracking turnover data and benchmarking against the data provided by the Department of Labor for Wholesale Trade.  However, this practice alone was not capturing the financial impact of excessive turnover in terms that would prompt management to make a cost/benefit determination of focusing the attention, resources, and efforts of the organization on this matter.

Initially, HR explored two highly accepted methods for determining the cost of turnover: (1) capturing the individual expense items impacted by a separation event; and (2) using the more simple calculation of six months of base pay plus benefits for each nonexempt separation and one year for each exempt separation.   Although these are valid and widely used methodologies for calculating the cost of turnover, the expense numbers reported from these methods were such that they failed to pass the “reasonableness” test.

When outlining the expense implications to executive management on any human capital issue, the HR leader needs to be aware that even C-staff or board leaders have a tipping point for reality, or reasonableness.  Presenting a number that reaches a level where the sheer size, no matter how well laid out,  simply shuts down the audience’s willingness to accept the number as valid will significantly reduce the chances of influencing executive leadership to take action.