Page 54 - The Green Building Bottom Line The Real Cost of Sustainable Building

NARRATING VALUES, SHAPING VALUES, CREATING VALUE 33

Airlines, is absolutely spot-on when he notes that “the intangibles are more important
than the tangibles because you can always imitate the tangibles.” 43 But these intangi-
bles have simply not been measured with any analytical discipline.
With these three conservative assumptions in mind, let’s consider the value that
Green, Inc. can concretely realize as a result of its values-shaping orientation. Two
categories are concrete and measurable: value creation through employee retention
and value creation through business development.
The average large company today turns over its workforce every four years. 44
While statistics aren’t available on the rate of turnover of much smaller companies, I
would assume it to be much lower—let’s say every ten years, to err on the side of cau-
tion. Melaver, Inc. has virtually no turnover, averaging over the course of the past fif-
teen years around 3 percent annually or complete turnover in thirty-three years. That
low turnover rate has everything to do with our values orientation, as we have delib-
erately built and continue to build our company around the values each person
espouses. But again, for the sake of being conservative, let’s say Green, Inc. sees com-
plete turnover in its workforce every fifteen years. With twenty people on staff, that
means 1.3 persons leave the company each year, as opposed to a more conventional
small business, which we are estimating sees two people leave annually.
Bob Willard, who was written about hiring and retention in The Sustainability
Advantage, estimates that it takes $7,000 to recruit a new employee. It costs, accord-
ing to the accounting firm KPMG, about $25,000 to replace any worker but according
to Willard, there’s a premium for replacing a good worker. 45 While I think there is,
indeed, a premium to be extracted for retaining a good worker, we will consider this
savings in the context of the following chapter, when we analyze more closely the
value a green bottom line business can add by creating a culture of shared leadership.
With these data points in mind, Green, Inc., because of its values orientation, will save
conservatively about $21,000 annually as compared to a similar-sized conventional
company. The calculations can be seen in Table 1.3.

TABLE 1.3 COMPARATIVE COST SAVINGS ON RETENTION

STANDARD SMALL ANNUAL SAVINGS
ITEM COMPANY GREEN, INC. (DIFFERENCE)
Complete company 10 15
turnover (# years)
Annual loss of personnel 2 1.333
(# people)
Cost of replacing a worker $50,000 $33,333 $16,667
($25,000)
Cost of recruitment $14,000 $9,333 $4,667
($7,000)
TOTALS $64,000 $42,667 $21,333