Employee turnover is a fact of life for all companies, and more than a simple inconvenience; turnover means an employer must adjust its operations to go on without the lost employee or search for, hire and train a new one. The costs to the company associated with these fluctuations can be staggering; the challenge for employers is to try to head off these costs with proactive solutions that keep talented employees for the long haul.
One nationwide study of 333 hospitals found that turnover of registered nurses accounted for 68 percent of the variability in per-bed operating costs. A number of human resource studies have shown that hiring and training new employees can cost companies between 50 percent and 400 percent of an employee’s annual salary, depending on their level of specialization. For small businesses, the loss of an employee is even more damaging.
Lower turnover rates have been shown to improve sales growth and workforce morale. In addition, high-performance human resources practices increase a company’s profitability and market value. This makes proactive retention strategies even more essential for an employer’s bottom line.
The Society for Human Resource Management produced a report entitled Retaining Talent: A Guide to Analyzing and Minimizing Employee Turnover, which found that “Employees who have many connections are more embedded, and thus have numerous reasons to stay in an organization.” Some of the ways the Society encourages employers to connect with their employees include building ties between your company and the community and encouraging home ownership (for instance, by providing home-buying assistance).