Retention: What’ll It Cost You?

“We train them. Then they leave. Train new people. They leave.”

This happened to one client until they finally decided it was time to stop being the free training center for their competition.

You may not have a revolving door, but the cost of losing even one employee is so high that every level of management must be concerned with retention.

The direct cost to replace salaried employees is estimated to be at least 6-9 months of pay and can be as high as two times the annual salary for a high-earner. For low-paid high turnover employees, the cost is at least 16% of their annual pay.

In addition to the direct costs, frequent turnover has a negative impact on employee morale, productivity, and revenue growth. Lost knowledge is a big problem as well, to say nothing of the stress and increased workload on other employees. While new people are found, hired, and brought up to speed, others suffer.

The process of finding, hiring, indoctrinating, training, and coaching new employees is not only expensive, it is demanding, frustrating, stressful, and often unsuccessful.

Thus, it makes sense to avoid for managers to avoid these big costs. However, while I know you are concerned about retaining talent, many of you in management are hindered by some common beliefs:

• We can’t control who leaves or stays.
• People leave. It’s a normal part of business. It just happens.
• There is a problem with their direct manager. (Maybe a “personality clash”.)
• We need to hire better next time.
• It’s about money. People are motivated by a higher salary or bonuses.
• The economy is strong – they have many choices – being offered more money, better benefits, etc… “We can’t compete. Just have to deal with it.”
• Victims of generational gaps: “Millennials are different. They want to move up quickly and change jobs often. This is just the way it is.”

None of those beliefs are true.

What is true?

People stay where they “feel” that management respects, values, and cares about them. Is that simple.

In fact, when they feel that way people don’t want to leave under any circumstances. They are very loyal to the extent they will even try to stick it out during bad times.

To understand this, think of how you feel about a restaurant you love and frequent. Think about how you are treated — the level of service, the ambiance, how the owner and managers greet you, how the wait staff attends to you, etc.

You might love the place so much as to even be emotionally attached. You’d hate if it shut down. You tell everyone about it, so they will patronize the restaurant.

Now, think of a restaurant you don’t like. More than likely the staff and management don’t seem to care much about you or the quality of the food, service, cleanliness of the facilities, etc. You might give it another chance or two, but if there are other places to spend your money, why bother putting up with the poor experience.

Management is responsible for both scenarios. The greatest waitress or waiter cannot keep you coming back. The place can serve the greatest food, but if the manager treats you poorly, most of you will choose to go elsewhere.

The same is true for retaining employees. They might love the pay, the work and their colleagues, but they will ultimately look to leave if they feel management does not respect, value, and care about them.

As a note to senior management – and those striving for a higher impact leadership position: You have far more influence over retention than your subordinate managers. When you cause those lower in the chain to “feel” respected, valued, and cared about, the effect of that is extremely powerful. They will treat employees the same way. And if you see high turnover in a group, get over there and fix the situation, because it is an issue with management. Leaving it unanswered shows that you do not care. That negative message is heard loud and clear.

Losing people is costly. But showing you respect, value, and care about the people who work for you is FREE.

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This is part 5 of a six-part series to dispel some common misconceptions that trip up managers – causing you to lead in the wrong direction, producing unintended consequences.

Go to Don’t Get Tripped Up to access the entire series.

If you have any questions, just ask Ben, or leave a comment below.

And hey, if this helped you, then maybe it will help a colleague, a member of your team, a friend or family member. Share this with them.