The cost of turnover vs. The cost of retention

Fifty-five percent of all employees plan on or think of quitting their jobs at any time.
Maybe that’s not alarming to you at first glance, but let’s look at some of the possible costs to an employer when a worker leaves:

  • Severance pay
  • Exit interview
  • Decrease in morale of other employees
  • Increase in unemployment compensation
  • Slower production
  • Administrative tasks

And there’s more. The cost to replace those sheep that have left the fold can be equally as steep for an employer:

  • Health examinations
  • Relocation costs
  • Ads to attract potential candidates
  • Interviewing
  • Tests
  • Administrative tasks
  • Disseminating information
  • Background checks
  • Training

And yet another problem looms when vacant positions are not immediately filled; remaining staff usually have to pick up the slack to provide the consistent, quality customer service and products customers have come to expect. This may burn-out good employees and could contribute even more to turnover numbers and the cost incurred in such situations.

So how do you keep your employees contented, challenged, and engaged in their work?
Try showing your employees more respect and recognition for a job well done. Communicate company goals often and clearly. Ask workers for feedback and listen to their views. Create company e-newsletters or bulletin boards to post new information about the corporation. Give annual reviews. Tie raises to performance. Celebrate years of service and promote from within.

Provide more benefits.
In a study conducted by Robert Half Finance and Accounting with 2,700 human resource and finance executives in nine countries, the results showed that companies have provided more benefits over the last two years to try to keep employees. Some of those benefits were providing company vehicles, allowing employees to take part in corporate decision making, offering group insurance plans and customized salary packages, and providing lunch coupons.

But training tops the list.
Fifty-eight percent of those same companies polled, believe the most important benefit to enhance retention is to provide more training and development opportunities. Employee training is an investment—an investment in human capital.

“Surely there comes a time when counting the cost and paying the price aren’t things to think about anymore. All that matters is value—the ultimate value of what one does.”
James Hilton (1900-1954)

by Kathleen Weber, Training Coordinator, Business Institute of Highland Community College


  2. Turnover Will Fatten Payrolls, “From ‘The Herman Trend Alert,’ by Roger Herman and Joyce Gioia, Strategic Business Futurists, June 14, 2006
  3. The Buzz: Training News From Around the World, Retention-Raised Agenda, Employee Benefits, June 14, 2006, page 12, ASTD@NEWS.INFOINC.COM
  4. Learning by Design Newsletter from Nathan Greeno-The Bridge Builder, Drawing Board Consulting Group, “Building the Bridge of Human Capital Strategy”, Volume 4, Edition 6, Number 36, June 2006, The Art of the Value Proposition in Learning

BI Solutions is a monthly e-newsletter designed to inform you of emerging business trends and help you be more successful in the workplace. Please let us know what you think by sending a note to

Please consider being highlighted in our e-newsletter by offering a tip of suggestion that has worked for you at your workplace.

Please send us an email or call us at 815 232-1362.


Before You Start Seminar

This two-hour seminar helps individuals prepare to start their own business. The seminar includes information about business plans, how to begin writing a business plan, and how Highland Community College’s Small Business Development Center can help.

August 2, 6 p.m.
Student/Conference Center, room H-210


For other upcoming Business Institute classes and programs check us out on the web


JULY 2006