Employee Retention 697
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Employee retention refers to policies and practices companies use to prevent valuable employees from leaving their jobs. How to retain valuable employees is one of the biggest problems that plague companies in the competitive marketplace. Not too long ago, companies accepted the "revolving door policy" as part of doing business and were quick to fill a vacant job with another eager candidate. Nowadays, businesses often find that they spend considerable time, effort, and money to train an employee only to have them develop into a valuable commodity and leave the company for greener pastures. In order to create a successful company, employers should consider as many options as possible when it comes to retaining employees, while at the same time securing their trust and loyalty so they have less of a desire to leave in the future.


Many people love their work, and there are a multitude of reasons as to why this is the case. They may like the company atmosphere, their boss, and their co-workers. An exciting position, with plenty of opportunity for growth, learning, and advancement, is always desirable, as is a meaningful job that has the potential to make a difference in the lives of others. Dissatisfaction with one or more of these things could force the employee to consider leaving.

A rather obvious way for a company to better retain their employees is by offering competitive salaries and bonuses. Everyone likes to be recognized for a job well done, and nothing makes someone feel more appreciated than cold hard cash. It also shows the employee that the company has some degree of loyalty towards them, which could in turn influence them to repay their employers with some loyalty of their own. Increased benefits, stock options, more vacation time, company cars, child care, and other perks don't hurt either. Financial support for employees who wish to continue their education would also most likely be appreciated and rewarded with employee loyalty.

In many instances, employee retention starts just as soon as an employee is hired. If a company sees an unusual amount of potential in a new hire, management could make them feel appreciated right off the bat. Interest free loans to help pay off their college bills or other debts is one way for an employer to do this. In order to keep the employee from jumping ship before the loan is paid off, the employer can do several things, including staggering payments or making the loan contingent on certain performance goals. In a way, this practice can be considered a combination of recruitment and retention tools. Similar programs could also be implemented for employees that already have tenure built up with the company.

There are times when an employee wants to leave a company not for a better job opportunity, but for the chance to relocate. Usually if this is a case, the employee's needs are strictly personal ones. If possible, a business can offer a relocation allowance to the employee and still try to keep them in the company in the same or a different capacity. Again, the details would have to be worked out on an individual basis so that the employee does not abuse this privilege.

The implementation of company policies like flextime, job-sharing, and part-time work may also prove useful in retaining an employee who wishes to leave their job for personal reasons. By doing so, a company could gain a reputation as a family-friendly environment and therefore make itself more attractive to future potential employees.

Another thing that employees seem to enjoy are casual days (or even a company-wide casual dress policy). This allows employees the chance to better express themselves and creates a more comfortable work environment. In most cases, the dress code should be clearly defined so that the employees do not abuse the privilege and promote an unprofessional image about the company.

A company may also want to spend some time to get to know their employees better. A thorough understanding of an employee's goals, concerns, skill level, values, health, and job satisfaction are just a few of the areas that can be addressed. By doing so, the employee could be made to feel more like a prized individual and less like a cog in a corporate machine. At the same time the company will educate itself as to which employees are the most valuable in both a business and personal sense.

When a valued employee leaves, the company can use information gathered in an exit-interview to find out the reasons for the employee's decision and the changes that can be made within the company to keep others from following suit. This data can be gathered into a formal report and distributed to management, members of the human resource team, and other pertinent employees to be used for this purpose.

Finally, upper-level employees can be trained as retention managers to help in the seemingly never-ending battle to keep talent. A successful retention manager must be aware of their strengths and weaknesses and have a talent for listening, respecting, and understanding their employees' concerns. Retention managers should be individuals who have already proven their loyalty to the company. Honesty, creativity, and patience are other virtues that can help in this type of position.


Every company should understand that people are their best commodity. Without qualified people who are good at what they do, any company would be in serious trouble. In the long run, the retention of existing employees saves companies money. As Beverly Kaye and Sharon Jordan-Evans stated in Training and Development: "Studies have found that the cost of replacing lost talent is 70 to 200 percent of that employee's annual salary. There are advertising and recruiting expenses, orientation and training of the new employee, decreased productivity until the new employee is up to speed, and loss of customers who were loyal to the departing employee. Finding, recruiting, and training the best employees represents a major investment. Once a company has captured talented people, the return-on-investment requires closing the back door to prevent them from walking out."

When an employee leaves a company for a direct competitor, there is always a chance that they will take important business strategies and secrets with them to be exploited by the competition. This is yet another reason why the retention of employees is so crucial to some businesses. While this practice seems a bit unscrupulous, it stills happens quite frequently. As Bill Leonard stated in HR Magazine: "Because employers know that the best-qualified applicants will come directly from competitors, recruiting and hiring employees away from the competition becomes a necessity in an ultra-tight labor market. And necessity is the mother of inventive and sometimes controversial business practices. Recruiting and hiring from your competitors is probably as old as business itself. But what is new—and a hot topic among employers—is how to attract and retain qualified candidates in a highly competitive labor market while also preventing their own intellectual capital from winding up in the hands of competitors."

One way for a company to prevent employees from giving valuable information to competitors is to make it a policy to enforce strict noncompete and confidentiality agreements amongst its employees. The existence of such agreements could in fact deter a competitor from hiring a valuable employ because they might not want to risk possible legal entanglements with the other company. Of course, all this could possibly lead to animosity with the employee who could feel that his or her options are being limited. Many employees don't always remember signing such a document, so a copy of it should always be kept on file for the employee to refer to. This area could prove to be a highly sensitive one between employer and employee, so extreme caution is suggested in all instances.


Employee retention is an issue in just about every business sector. The technology field seems to see the most movement amongst employees, but other markets like education and sales also see more than their fair share of turnover.

The effects of this trend are somewhat different for small businesses. Since the employee base at a small business is fairly low, a stronger sense of loyalty may be a bit more prevalent. One possible reason for this trend would be the generally low number of layoffs that occur in the small business sector. Many small businesses even have no-layoff policies that can be used as a valuable recruiting and retention tool to secure employees. These types of policies are not for all small businesses, especially those with erratic sales trends or those that employ a large number of nonskilled workers who are often easy to replace.

In any event, just about every business will have to live with the fact that valued employees will leave at some point. While certain strategies can be practiced to slow this trend, it most likely can never be stopped completely. Successful businesses that are built on a strong foundation should have less trouble dealing with this situation than their weaker counterparts. At the same time, the company's strengths will enable them to promote an image to help recruit and ultimately retain the best employees out there.


Kaye, Beverly, and Barbara Jordan-Evans. "Retention: Tag, You're It!" Training and Development. April 2000.

Leonard, Bill. "Recruiting from the Competition." HR Magazine. February 2001.

Also read article about Employee Retention from Wikipedia

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