Retaining Good Employees

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Companies with high employee turnover rates are losing not only valuable resources but also substantial money. Different studies come up with different costs, but these range from $7,000 - $9,000 to replace an hourly low-wage employee and up to $45,000 to replace a mid-level salaried employee. Some estimates on the cost of replacing the average employee are over $125,000. The Saratoga Institute and Hewitt Associates estimate the productivity cost of replacing employees can cost 1 to 2.5 times the salary of the job opening.

Aside from the actual cost of hiring and training new employees, turnover can also contribute to customer-service disruption, declines in morale among remaining employees, and loss of corporate knowledge. Turnover has the highest cost in jobs requiring specialized skills, such as nursing and information technology, and jobs in middle or high level management. Many companies and organizations are embracing HR talent management programs that evaluate the issues of employee retention, and far too many are not.

Is employee retention going to become a major issue for your company? Well, according to the Gallop organization, 71% of your employees already would consider leaving for a better or more appealing opportunity. Combine that statistic with the current positive state of the economy, low unemployment rate and flexible work arrangements available, and it becomes clear that employees now have more choices than ever before. Now, let's add in the fact that over the next few years while 76 million Baby Boomers begin to retire, the upcoming Generation X (ages 25-34) has a population of only 44 million people, and it becomes clear that each year there will be fewer people available for work.

If your business is highly employee critical, then employee retention is one of the primary measures of the health of your organization. If you are currently losing critical staff members, you can safely bet that other employees are looking as well. And while few of us would turn down more money, according to most studies, money is not the primary tool for retaining employees. A few simple steps that companies can take to help retain the employees they have and can go a long way in keeping employees happy and productive.

Employees are people and want what most people want: flexible work schedules, appreciation, training for performance improvement, performance incentives, and clear direction on exactly what is expected of them. If the company is sincerely interested in the employee doing well, usually the employee will do well.

Flexible Schedules

Up until recently, "flexible work arrangements" meant that if you worked late on Wednesday, then you could come in late or leave early Thursday. Now, according to the Bureau of Labor Statistics about thirty percent of full-time employees in the United States have true flexible schedules that allow them to balance work and private lives. A growing number of employees are from dual-career couples, have child and/or elder care responsibilities, or are baby boomers, and these factors create a growing demand for flexible work schedules. Because flexible work arrangements challenge many traditional assumptions about how, where and when work gets done in many industries, developing and rolling out such a program takes careful planning.


Because employees involved in ongoing training feel that their employer is interested in them doing a better job and cares enough about them to make an investment in their development, a direct link exists between training and employee retention. While training has always been considered a means for positive change and increased employee performance in any business, only recently have HR experts realized that training is a key tool in employee retention. An employee must have the tools, time and training necessary to do their job well – or they will move to an employer who provides them.

Performance Incentives

Employees have a human need to feel rewarded, recognized and appreciated. Sometimes just a thank you or a plaque will do, but realistically, work is about the money, and almost every individual wants more. I suggest offering performance based bonuses. Surveys show that employees view bonuses more favorably than they do raises. Employees have extra incentive to work for something tangible, and bonuses keep other employees from feeling unfairly treated when someone else gets a raise and they do not. People understand others getting a reward for a one time achievement, and know that they had the same opportunity. Commissions and bonuses that are easily calculated on a daily, weekly, or other basis, and easily understood, raise motivation for doing a job well and help retain staff.

Clear Directions

Changing expectations keep employees nervous and make employees feel insecure and unsuccessful. While job growth is important, the need for a specific framework within which people clearly know what is expected from them while they expand their horizons is most important. A motivated employee wants to contribute to work areas outside of his specific job description. Your best employees, those employees you want to retain, seek frequent opportunities to learn and advance, but they need clear directions that fit within the company’s vision for that development.

Finally, remember that employees are people, so let them bring their human selves to work, and performance and production will increase.

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Vickie Adair has 1 articles online

Vickie Adair is the senior technical writer at Media A-Team ( and also publishes as a freelance writer. She writes for, a website for Houston manufacturers, providers, and suppliers, and, a directory of online business that sell or manufacture organic and/or natural products.

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Retaining Good Employees

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This article was published on 2010/05/23