Why Retention?

Why Retention? Roy Barker Employee Retention Strategist

Why Retention?

Employee retention is important on so many levels.


There is a true cash cost for employee turnover. It may vary from industry to industry and position to position, but there is a true cost to the organization. Turning over an employee making $10 an hour can range between $4,000 and $7,500 with some estimate putting the cost over $10,000

The cost to replace front-line managers ranges between 25% to 50% of their annual salaries. While for mid-level managers it takes 100% to 125% and C-Suite executives over 200% of their annual salaries to find suitable replacements. Highly technical workers take approximately 400% to replace lost employees.

Risk Management

Companies with high employee turnover rates open themselves up to unnecessary risk when they choose to ignore high employee turnover. Each business type has its own unique risk factors. An example of a healthcare-related business would be care-related. If there was a death or serious injury, a prudent litigator would surely point to a high turnover rate affecting the care its client received.

Another example includes employee fatigue due to working excessive overtime hours. This can lead to motor vehicle accidents, accidents with manufacturing equipment, and poor decision-making.

The larger a company becomes or the more they deal with human beings, the larger of a target they become.

Employee Morale

As employees leave high employee turnover environments, they generally give no notice. It typically leads to a no-show, no-call situation; especially in lower-paid positions. The rest of the workforce is put under even more pressure to work additional hours to make up for the open position(s).

In the beginning, this may be great because they are getting some overtime pay, but eventually, the circumstances fade. The results can lead to resentment from the remaining employees. This could be amplified in high turnover workplaces because generally, more than one position will open at a time.

Customer Perception

Customers are very perceptive to who and how they interact when they make purchases. If they see a new and/or different person each time they make a purchase with your company, alarms will go off for them. This situation is exacerbated depending upon the business and how much interaction there is during the buying process. Customers want to make sure they are dealing with a stable company

Company Culture

Higher turnover employers tend to have less than optimal company cultures, hence the high turnover. Once morale begins to deteriorate even those with borderline to improving company cultures will see it tank.

Future Hiring

As with customers, prospective employees are very suspicious of companies with high employee turnover. As they look through job postings they see that the same position continues to open up or there are a lot of open positions with the company. Most employees want a stable and inviting working environment and those unintimidated by high employee turnover rates may be desperate. This results in the company making bad hires and the turnover situation perpetuates itself.

Available Workers

Depending upon the industry and the market it operates in, there are a limited number of potential workers from whom to draw. This is exacerbated where a specialized workforce is needed, as well as in secondary and tertiary markets. Companies end up exchanging employees and recycling previous employees. This is definitely not the desired situation.


Not only does high employee turnover drive up costs but it lowers production, thereby eventually reducing revenue. Now we have a drop in revenue coupled with a rise in costs. There is no escape from affecting the bottom line.

See the Employee Retention Funnel

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