Employee retention and turnover is an important subject for human resource managers to address. The money, time and effort put into the recruiting and training process can easily be wasted if the organization is dealing with excessive turnover.
Through extensive research, this paper will focus on:
• Developing a retention program. What factors must be taken into consideration to develop an effective program?
• Utilizing effective exit interview strategies. Determining the reasons why the employee left may help to identify problems within the organization that need correcting/tweaking.
• Common reasons for turnover. What are the most common reasons for employee turnover and how can this knowledge be used to an organization's advantage?
• Costs and benefits of turnover. What factors go into determining the turnover cost to the organization? (Voluntary vs. non-voluntary turnover will be discussed as well).
Reducing the rate of turnover is an important factor for almost every organization. By identifying the reasons behind employee turnover and developing a successful retention program are the most effective ways to reduce turnover, and also has other residual benefits that contribute to making the company more successful.
See attached for figures
The workforce is the biggest asset for any organization. However as opportunities continue to open up in the external environment; employee turnover is becoming a major concern for organizations across the world. But what exactly is turnover?
Turnover can be defined as the percentage of a company's workforce voluntarily quitting the organization during one year (May, n.d).
Going by the definition, a high employee turnover means a greater percentage of employees are leaving the company due to which the company has to recruit and train new employees. However this is a problem for the organization. To recruit and train a new employee organization has to spend dollars. This does not directly reflect on organization's profit & loss statement nor is it in budget. It's so because these costs are hidden, for example cost of posting a position requirement on job portal, cost of engaging a headhunter, etc.
Costs associated with high employee turnover
The organization has to pay for cost
Reduced Productivity: When an employee leaves the company the position which was occupied by him or her becomes vacant. While critical tasks would be farmed to other employee/s, most would fall back. It results in productivity lost.
Additional burden on remaining staff: The remaining staff gets paid the same but they would be required to compensate the work of employee/s that has left the company. As they stretch the quality of work goes down bringing down the satisfaction. They start searching for a new job and quit.
Knowledge lost: When a particular employee leaves he or she takes away the knowledge. Sometimes the knowledge is way beyond general knowledge and can include client specific details, industry knowledge and best practices.
Training costs: The new employee who takes over the role of employee who quit the job, the company would need to put trainer to teach him or her the processes of the company. It goes on until the employee understands everyone and can drive things without any support.
Recruitment cost: The hiring manager would have to find a replacement for the position that has fallen vacant.
As per review of 30 case studies published in research papers published between 1992 and 2007 the turnover cost is about one-fifth of an employee's annual salary. In other words, it takes one-fifth salary to replace the employee.
* Center for American Progress
Based on the above graph, it is evident that jobs which require higher level of education and specialized training have higher turnover costs than jobs with lower education and training requirements. Senior management and executive jobs are included in this category.
Types of Employee Turnover
It is important to distinguish between types of job separations as it reveals why employee left the company and may shed light on issues in the organization which need to be addressed. The two general types of turnover are voluntary and involuntary.
Voluntary Turnover- When employee chooses to terminate the employment it is called ...
The document details components of retention management plan, and steps of creating retention program.