Good employees really matter to any organisation and it’s the duty of the employer to retain them at any cost. If the employee chooses to leave, the organisation would face the ramifications, especially if he joins a competitors organisation. However, the cost of retaining the skillful employee may differ from one organisation to another.

According to a study conducted in the US, the turnover costs for a manager averaged 150 percent of the salary. It includes certain tangible costs like hiring a new worker, relocating him and other intangible costs such as his inability to perform upto the optimum level in the initial stages and the lost productivity while the job is vacant. The cost of a temporary replacement is around 39 percent, which is very high.

Employee turnover is not an easily identifiable expense. It doesn’t show up as an item in your financial statements, and calculating its impact requires exploration of hidden costs. It’s difficult to estimate the corporate impact of employee turnover because traditional cost methods used in management accounting don’t

· Recruitment activities should include both job requirements and organisation’s culture.

· Review the organisations recruitment strategies and specify the appropriate recruitment strategies.

It is also important to identify the characteristics of your organsation and the job that contribute to employee turnover. You can get this information through employee surveys and interviews. Examining the differences between successful and unsuccessful employees also provides information about potential factors affecting employee turnover. Listed below are a few effective methods by which employee turnover can be reduced.

Strategies for improving employee retention:

· Examine your employee selection methods. l Define the content of the job, while organisational culture often drives how the job is done.

· Assess the current impact of turnover on your organisation.

Employee turnover significantly affects the financial performance of any organisation. Employee turnover is very costly to an organisation and ultimately takes its toll on organisational performance, productivity, and profit. These costs include both direct and indirect costs associated with employee turnover.

· Carefully screen candidates for the right job fit.

· Use pre-employment testing, such as new fifth-generation profile assessments which tell us what we’d like to know about the ‘total person’. The test tells how they think, how they feel about work tasks and the level of their core competencies. You can now screen for learning ability, personality and the interests of the candidate by comparing the profile of the candidate with a composite profile of your best job performers.

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