In high-tech businesses, turnover averages 30 to 40 percent! Human resources experts estimate that it costs four to five times an employee's salary to replace the employee, including search fees, lost time, retraining and other costs.
When a third of the workforce leaves each year and it costs four times an employee's salary to find a replacement, more money is spent replenishing the workforce than is spent on salaries for the existing workforce.
So what can an employer do to improve employee retention? The following are among the elements a successful retention strategy might include:
- Hire carefully . A job candidate with the technical skills you need is not enough. Consider whether the candidate shares your company's vision and will adapt to your workplace.
- Communicate . Ongoing two-way communication with employees is essential.
- Recognize good work . Don't wait until the next job performance review to tell your employees what a good job they're doing. Provide positive reinforcement on an ongoing basis. Try to be positive four times as often as you make negative comments.
- Reward good work . It is much more cost effective to reward employees for good work than it is to recruit new talent. Make a significant percentage of your compensation package variable, so that both you and your employee benefit from high-caliber performance.
These are just a few of the elements that should be included in a retention strategy. It takes a great deal of effort to develop staying power, but if you have the right employees, it's worth the effort.