Employee retention and turnover are major organizational management concerns. Finding the balance between the two is critical and there are consequences and rewards to both. People have to feel they are valued and contributing or they will go elsewhere. If their strengths aren’t aligned with their position, adjustments have to be made. Overall job satisfaction plays a key role while employees assess work/life values, the culture of the business, its practices, procedures, and policies, and the overall integrity of the company. Management and Human Resources have to understand the needs of the workforce so that the organization functions, develops, and runs smoothly, effectively, and continuously. The purpose of this paper is to investigate the significant business costs associated with turnover and retention.
Keywords: turnover, retention, job satisfaction, motivation, development, training
In today’s competitive business market, it is a very critical task to manage employee turnover and retention in any organization. Human Resources and managers must have a sound foundation of making good ethical decisions that is in the best interest of both the company and its employees as they face these critical issues that impacts all aspects of the business operations from its cohesiveness, actions, functions, and performance. Employee turnover deals with the amount of personnel who enter and leave companies whether the mains reasons are voluntarily or involuntarily. The main effects of turnover are employee morale, reductions in productivity, decreases in product quality, and declines in company profits. On the other hand, retention is the efforts of an organization to maintain a positive environment which supports current employees remaining with the company. These efforts are focused on enhancing employee job satisfaction, rewarding employees for their performance, ensuring harmonious working relationships and partnerships, reducing hiring costs, maintaining a healthy and safe work environment, training, and development. Keeping or losing staff can be critical for any business as they are competing for employees’ knowledge, skills, abilities, and other characteristics while ensuring the company runs efficiently. When hiring, retaining, and growing employees is handled right, turnover decreases and the company is able to succeed and flourish.
Turnover is a key factor central to a firm’s planning, organization, and strategy. There are many reasons employees leave their jobs and seek employment elsewhere. There are high costs involved with turnover – some hidden and some that one can never put a number on or even budget. It takes time and labor to post positions, interview, hire, work with headhunters or temporary agencies, train, and even develop employees all for them to quit or be terminated if they end up not working out in some way or another. Companies lose money when it comes to turnover. Along with money, they also lose in areas such as lowered productivity, loss of skills, expertise, company and product knowledge, loss of clients, overworking current employees, training costs, and all associated Human Resource costs from separation, rehiring replacements, interviewing, recruiting, possibly adding temporary employees, overtime, supplies, advertising, orientation, printed manuals, handbooks, and training materials, administrative costs, severance packages, traveling, testing, and unemployment benefits.
Some examples of voluntary resignation include finding better positions or advancement with other organizations, personal or health reasons, retirement, unharmonious relationships with management or co-workers, not feeling as if one is a good match in the company and its environment, no room or opportunity for growth and professional development, not enough pay or raises, lack of challenging work or boredom, high stress or unfair treatment, lack…