Reducing Turnover: Why is retention so important?

1. The Cost of Turnover

As most HR managers know, the cost of turnover adds hundreds of thousands of dollars to a company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training costs, productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate. For example, if the average salary is $20,000/yr the cost of one employee turnover is $5,000. If you have 30 employees terminating per month, the cost to the organization equals $150,000/month. Mulitiply that by 12 months and you have $1,800,000 in added annual expense.

Use the savings calculator to determine how much money you can save by reducing your turnover:


2. Loss of Company Knowledge

When an employee leaves, they take with them valuable knowledge about your company, your customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized.



3. Disruption of Customer Service

Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued patronage of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss.



4. Turnover spirals into more turnover

When an employee terminates, the effect is felt throughout the organization. Coworkers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff.

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