It is no secret that labor expenses account for a sizable portion of a dairy operation’s expenses, ranking as the second highest expense for most producers. While there are many areas to address with the evolving employee landscape, one of the most crucial factors in reducing your labor costs is limiting employee turnover.
New employees can cost significantly more than existing employees, in fact up to 50% more. This is due to the costs of training, uniforms and a general slump in production due to decreased productivity during the introductory period. For example, if an employee making $50,000/year leaves, it may cost up to $75,000 to bring in a new employee at the same wage.
With these numbers, it can be assumed that one major way to create a more efficient labor cost on farm is by limiting the labor turnover rate. In today’s competitive labor climate this may be easier said than done, however strategic training practices, communication, management and education can be the difference in big hits to the bottom line.
Training for Current and New Hires:
While many producers focus heavily on day one training protocols for new hires, there is great value that can be added by continued on-farm training for existing employees. By looking at current training practices and consistently analyzing them, a producer can ensure that continued training is being provided to all employees, helping them keep up on the ever-evolving landscape of agriculture today. The training may also include creating versatile employees by teaching them additional responsibilities outside of their day-to-day routine.
Communication with Employees:
As with any operation, communication is key between levels of management and the employees. Keeping open lines of communication through consistent and organized team meetings and updated Standard Operating Procedures is crucial. Additionally, adding formal performance and salary reviews offers an effective way to help the employee understand their performance in the eyes of their supervisor. Problems between employees, personal issues and concerns with an individual’s employment can quickly be addressed limiting a wildfire of negative energy spreading through employees. With openly communicated expectations, plans and goals for the farm as well as the employee, everyone can find themselves on the same team with the same purpose in mind and a desire to benefit the operation.
Education:
Producers can often create stronger and more efficient employees by taking advantage of simple educational opportunities available. This may be through local extensions, schools or vendors working with the producers. Continuously educating employees provides them with a feeling of value while increasing their potential on the operation. Investments in employee education are crucial in limiting the larger cost of employee turnover.
While farms continue to look for ways to improve their bottom lines, an often-overlooked aspect of limiting labor turnover can make a massive difference. By promoting a positive culture with opportunity, these impactful costs can be limited allowing producers to focus on continued profitability and sustainability on the operation.
Zach Lensmire is a Dairy Consulting Analyst for AgriGrowth Solutions, a highly collaborative team of financial consultants with strong dairy backgrounds which represent and work for the best interests of dairy producers. Zach assists consultants with preparing financial reports, organizing financial data and helping to create a collaborative environment with clients.
