Retention and Turnover

retention and turnover

Understanding Retention and Turnover in Staffing

In the staffing industry it is important to understand not only our value when we succeed but also the costs when our goals and expectations aren’t met. Retention and turnover in staffing aren’t 100% under our control. However with a better understanding of how these two factors work we can customize and improve the way we recruit. I believe that without this knowledge we don’t truly comprehend the importance of the Your Employment Solutions mission statement, “Deliver the right people, on time, the first time.”

What is the Difference?

When studying the rates of retention and turnover it is important to understand the links between the two.

Retention is the rate and length at which an employee reaches a standard amount of time at a specific job. A company’s ability to retain workers in their specific jobs can be a direct reflection of the success of the company or specific department.

Turnover rate is the ratio of the number of workers that had to be replaced in a given time period to the average number of workers. A company that is trying to be efficient uses these rates to track how well they are doing and how they are losing or making money and any particular department.

In the Deloitte Research Report, employment and human resources study the changes in retention and turnover rates. They make it a goal to show with statistics the things that make retention better and turnover lower.

The Director of Deloitte Research Group Greg Stoskopf says, “Employees who believe their employers make effective use of their talents and abilities are overwhelmingly more committed to staying on the job.”

Why do Employees Leave?

One of the main questions of this study was asking employees the reasons that they are looking for different employment within the next 12 months. It was found that an average 1/5th of employees wanted to leave the company for reasons such as:

  • Lack of career progress
  • New opportunities
  • Dissatisfaction with supervisor or manager
  • Lack of challenge
  • No bonus or incentives
  • Compensation increases
  • No job security
  • Excessive workload
  • No trust
  • Reduced or inadequate benefits

These are some of the many reasons that a person would leave their current position. This study doesn’t even include those employees that are discharged from their positions. From these reasons, only two of the listed issues above involved the direct compensation of employees. To me, this is explained best by Mr. Skoskopf, he says, “Pay is important, but executives underestimate the importance of promotion and job advancement.”

What Does Turnover Cost?

The importance of retention is even more apparent when studying the impact of turnover in different industries.

rethinking retentionDick Finnigan, the author of Rethinking Retention in Good Times and Bad and a recovery HR director who has solved disengagement and turnover across 6 continents explains in his book the financial effects of turnover.

“Turnover costs companies 12%- 40% of pre- tax income, costs shareholders 38% in additional value in just four high-turnover industries, and annually costs $25 billion annually.”

Kerry Westenskow, vice president of Utah-based Your Employment Solutions, states that basic turnover in the staffing world costs about 1 and ½ times a persons wage from the time the position is open to when the next employee is done training.

The HR Director of Your Employment Solutions Alison Evans has put together a list of cost caused by turnover for one person that range from vacancy costs, replacement costs, separation costs, and training costs. The model she created shows that with a manager making $12 an hour employing someone who makes $10 an hour can cost upwards of $2000 to simply rehire an employee.

How To Up Retention Rates

Despite all the challenges that companies face in trying to stay away from high turnover, Dick Finnigan believes that supervisors and executives can have a huge impact on these rates. He explains that, “Employees quit jobs because they can, they stay for things they get uniquely from supervisors, and the relationships that supervisors make with employees drive retention or turnover.” He continues by simply and effectively stating, “If you have a turnover problem, look first to your managers.”

Turnover in the staffing world is a constant. It’s like a flowing river that can’t be stopped. If we throw pebbles at it and try to solve our problems with small changes, the flow will continue as before. However, if we analyze this river and place strategic walls in the right places, we can reduce and in some cases stop the constant flow. Putting strategies into practice we can improve our retention rates and save both time and money.


Logan Laws
Account Manager
Your Employment Solutions

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