Replacing employees can be costly, especially for middle-level and high-level employees. It can cost 150% of an employee's annual salary to replace a middle-level employee and up to 400% for specialized high-level employees. These costs include hiring and training new employees to replace those who leave. Retaining top employees is important for productivity, morale and profitability. Companies need to develop effective retention programs that go beyond just pay and benefits to offering work-life benefits, recognition programs, training and opportunities for growth to encourage employees to stay. Listening to employee feedback is also important for retaining top talent.

1. Keeping qualified employees –
particularly your top performers – is a
challenge in any economy. The best
people are always in demand. How-
ever, retaining employees is critical for
your productivity, morale and, perhaps
most significantly, your profitability.
In fact, recent studies say that replacing
employees can cost:
• 30-50% of the annual salary of
entry-level employees
• 150% of the annual salary of
middle-level employees
• Up to 400% of the annual salary of
specialized, high-level employees
These estimates include the anticipated
costs of hiring new workers, as well as
the projected costs of lost productivity
while the position is unoccupied and
the new worker is getting up to speed.
DO THE MATH.
If a middle-level employee earning
$50,000 a year leaves your company,
just multiply $50,000 by 1.5 (150%). It will
cost your company $75,000 to replace
this one middle-level worker. That’s the
bottom line cost.
MAKE RETENTION A PRIORITY.
Retaining your top people is easier said
than done. In the old days, you could
persuade your best employees to stay
with more money, bigger offices and
fancy titles. Now, savvy companies are
rethinking many of their basic
employment practices to compete
for talented employees. They’re finding
solutions that are more about how you
treat employees. But these solutions
require a change in management’s
attitudes and behaviors toward employ-
ees. And change is not always easy.
GET WITH THE PROGRAM.
Developing an effective employee
retention program takes time and
resources, but every successful
program incorporates a few basic
principles:
• Start by hiring smarter.
Don’t simply match skills and
experience. You also need to look for
candidates who fit your company’s
culture. Working with a recruiter is a
good way to let someone else screen
each potential new hire to find the
right fit.
• Go beyond pay and “expected”
benefits.
In the hiring phase, these things are
attractive. After that, employees
feel entitled to fair pay and health
coverage. So, if you can, take it a step
further by paying for benefits like gym
memberships, educational seminars
and onsite day care. If you can’t
afford these things, try offering
simple work/life benefits like flexible
work schedules, telecommuting or a
relaxed dress code.
• Establish a recognition program.
Performance bonuses and incentive
trips are great, but they’re not always
feasible in tough economic times.
More affordable ways to recognize
employees who go above and
beyond include giving appropriate
credit for a job well done, sending
thank you emails to the team and
notes to individuals, and letting
workers come in late or leave early
if they’ve been putting in a lot of extra
hours.
ENCOURAGE GROWTH AND
DEVELOPMENT.
Make your best employees feel like
they’re getting something out of work
and have something to work toward.
Provide your key performers with
valuable training and opportunities
for promotion, and encourage them
to take external courses by offering
tuition reimbursement. Also, make
sure your annual performance evalua-
tions are constructive – use them as an
opportunity to set goals and follow up
frequently.
Most importantly, take the time to listen
to your employees. Get their feedback
on what you and your company could
be doing better. After all, who knows
what your employees want better than
your employees?
For more information on cutting
down on the costs of turnover and
developing an effective employee
retention strategy, visit
trakservices.com.
A LOOK AT THE REAL COSTS OF LOSING YOUR BEST
PEOPLE AND WHAT YOU CAN DO TO KEEP THEM.
YOUR TOP EMPLOYEES MAY BE
MORE VALUABLE THAN YOU THINK.
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