Turnover in business refers to the rate at which an employer both gains and retains employees. The cost of employee turnover to employers is a high one, and involves many factors that are often not considered by the employers. Research shows that the expenses that are involved include recruitment and hiring costs such as administrative time and screening and interviewing time, lost productivity in the forms of time during replacement, training time of new hires, and time away from their own jobs by other employees in helping a new hire get up to speed, unemployment expenses, and other sometimes unseen costs.
Causes for turnover can include employees searching for higher paying jobs, lower performance or poor culture by the company, job characteristics or expectations, and individual issues with an employee that are outside of the employer's control. The cost of the turnover of an employee has been estimated to be between 150% and 250% of the employee's annual pay. With such high costs involved, it is a necessary and desirable goal of companies to reduce the turnover in their organization by as much as possible through talent retention and development, as well as a more stringent hiring process.
The five areas that must be addressed with employees in order to minimize the turnover rate at an organization are environmental (workplace safety and culture), relationship (between employee and employer, usually by way of direct manager), support (through training), growth (the possibility of advancement and gaining new skills), and compensation (through pay and benefits). By combining an effective and well planned retention strategy with a risk mitigation program for loss of talent, many of the ill-effects from turnover can be reduced. Human Resources department should work in conjunction with the executive management team to ensure that turnover ratios and retention strategies are closely examined.