Controllable vs. Uncontrollable Costs
Controllable vs. Uncontrollable CostsAs a manager, being able to distinguish between the controllable versus uncontrollable costs can be the difference between the failure and the success of the organization. To a large degree, employee turnover is a controllable cost. Employees leave organizations for numerous reasons. Some causes may be related to employees being dissatisfied for reasons completely within the company’s control, like feeling undervalued and/or underpaid. Other reasons for high employee turnover may out of the control of managers, like illness, death or relocation.
Fifteen years ago, I was within days of requesting a separation from the Air Force, due to feeling as though I was not valued by my senior leadership. I felt as though they were very dismissive of all ideas and opinions of all the junior enlisted members, while at the same time holding us responsible for decisions that were being made.
There was one person in my chain of command that saw a change in my demeanor and cared enough to sit me down, off the record, to find out what was going on. As a result of that conversation, I saw a shift in my immediate supervisor’s behavior towards me and other junior enlisted members (this was his boss as well). This was not a “cure all”, but it did trigger a much needed change of behavior by senior leadership (managers) in my unit towards junior enlisted members (workers).
The Air Force has spent thousands of dollars training and educating me, and I consider myself a valuable asset to the military for that reason. Had I separated, the money and time spent training me would have been a loss. This would have been a controllable cost, due to the fact that the reason was because of something completely within the control of the organization.
Again, managers must fully understand controllable vs. uncontrollable cost for many reasons; however, the most obvious reason is the negative financial consequences a lack of understanding in this area will have.