Employee Turnover and Retention

Category: Employee Turnover
Last Updated: 11 Feb 2021
Essay type: Process
Pages: 3 Views: 148
Table of contents

Employee turnover is a ratio comparison of the number of employees a company must replace in a given time period to the average number of total employees. A huge concern to most companies, employee turnover is a costly expense especially in lower paying job roles, for which the employee turnover rate is highest (Beam, 2010). Most associates’ average employment time with them is 7 years. Some of the common reasons why employees leave their company includes employee decided to do contract work instead of fulltime, moving out of province or employee feel that their company or position is just not a good fit (Devernichuk, 2010).

Employee Turnover Costs

Employee turnover is a very expensive and time consuming. There are several direct cost associated with employee turnover in the company. This includes:

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  • Separation Costs. Cost incurred for exit interview, separation/severance pay, administrative expenses, or any increase in unemployment compensation.
  • Replacement Costs. Cost in advertising the position vacant, entrance interviews, testing, travel/moving expenses, pre-employment administrative expenses, medical exams and acquisition and dissemination of information.
  • Vacancy Costs. Cost due to increased overtime or temporary employee who fill-in the vacant position.
  • Training Cost. Time and resources spent in training the new employee and loss of productivity while new employee is on training.

“Studies have estimated direct turnover costs per employee to be 25-30% of an individual employee’s salary/benefits package, with hidden costs inflating that figure substantially” (Insight Communications, n. d. ). Reducing employee turnover rates have many advantages to the company like profitability, productivity and competitive advantages.

Employee Retention

Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the employee. Many employees today leave the company or organization once they feel dissatisfied with their job or their employer. Once they feel the dissatisfaction or unhappiness with what they’re doing they will easily leave the company and switch to a different company which is not good to the employer.

Employers should know how to retain its employees (Compare Infobase Limited, 2007).

Employee Retention Strategies

  • Trust in Management. The primary factor for employee to stay in the company is the level of trust for the management. This means that the leaders should do the right thing and be truthful, treat people with respect and acknowledge their accomplishments.
  • Hire Wisely. Hiring is a very critical stage to avoid high employee turnover. A person who is doing the hiring process should screen the applicant wisely and if in doubt with the person, don’t hire.
  • Career Path Opportunities. Most people are seeking for improvements; they don’t want to be stuck in one position for many years. Giving them an opportunity for advancement will likely make them stay in the company.
  • Treating Employees with Respect. Every individual needs to be treated fairly and with respect.
  •  Employee Recognition. Recognizing employees is a good strategy in retention. Employees that are recognized with the hard work they did will more likely to stay with the ompany because of their job satisfaction and recognition.
  • Compensation. Offering above average compensation is the greatest way to retain employees. Satisfied employees with how much they make will make them stay longer in the company.


Company must be honest at the hiring process of what the benefits are and also thoroughly describe what the salary and the position is. They must explain what they expect from an employee and what the employee expects from them to avoid employee leaving.

This will eliminate the feeling that their company or the position is not a good fit.


Based on the information we gathered, we have concluded that company have avoided issues on employee turnover and retained their employees as long as possible by developing effective strategies that satisfy the needs of their employees. Hiring the right people will increase retention and conducting a regular employee satisfaction survey in an organization will help reduce employee turnover rates.

Cite this Page

Employee Turnover and Retention. (2017, Mar 14). Retrieved from https://phdessay.com/employee-turnover-and-retention/

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