Impact of Employee Retention

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IMPACTS OF EMPLOYEE RETENTION:
Griffeth & Hom (2001) have argued that employee turnover is assuming crisis proportions for many employers who struggle to retain people in the tightest labour market. Griffeth & Hom (2001, Pg 1) 52% of companies report that their turnover is increasing and quit rates are running high of 1.1% a month.” Turnover can be a real problem in many organisations. Companies spend a great deal of time and money recruiting and training employees and the cost of replacing staff members lost through turnover are great. The monetary cost of replacing one employee is generally estimated to range from 50 percent to 200 percent of the annual salary for the position, and may even be higher in very specialized fields. Furthermore, poor employee retention can have a negative impact on workplace productivity, job satisfaction, and also on the overall morale of the organisation. It is proven that a high turnover percentage can cost employers a great deal of financial distress. Depending on the size of the company, to many employers it can make the difference in staying or going out of business. Phillips (2003,Pg 4) noted that, “of late employee retention has captured the attention of the business, financial, and executive community as a critically important strategic issue that can have a dramatic effect on productivity and profits.” Cascio, 2000 and Johnson,1995 cited in Griffeth & Hom, Retaining Valued Employees (2001), are of the opinion that, human resources professionals and researchers project that the cost of one turnover incidence ranges from between 93% to 200% of a leavers salary, depending on his or her skill and level of job responsibility. Labour turnover has a negative impact on the organizations. Although every manager and team member is aware of problems associated with high turnover, a review of its foremost consequences puts employee retention in the appropriate perspective. Patricia (2002, pg 4, 5) noted that “employee turnover has a...
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