Rewards & Retention

Effectiveness of Reward Programs on Employee Retention Organizations are intent on keeping the right people in the right position. When quality employees are obtained, it is important to retain them long term without loss to another agency, especially a competitor. Even in today’s environment of high unemployment and sluggish economy, attracting and retaining talented employees is a top human resource concern. The cost of employee turnover is significant in the business world. Unless an employee is a low performer, the exit of a worker is a cause of concern. It is expensive to recruit and train new hires while efficiency is also being lost during the orientation period. It takes time and attention away from productivity to train new employees. New employees are also more likely to make mistakes and work more slowly. Workplace focus on retention can help reduce these high turnover costs.
Boushey & Glynn (2012) found in a study from 1992-2007 that businesses spend one-fifth of an employee’s annual salary to replace that worker consistent across different pay levels. The typical cost of turnover was 21 percent of a worker’s annual salary. Jobs with specific skill sets, such as physicians or executives, and jobs that require higher levels of training and education for specialization have even higher turnover costs. Jobs with low wages and minimal benefits, such as the hospitality, hotel/motel and food-service industries have the highest voluntary quit rate. While the very-highest paid employees are the most costly to replace, the costs remains significant due to the high volume of turnover for those jobs with low earnings (Boushey & Glynn, 2012). As human capital declines with the retirement of baby boomers, Holloway (2006) says retaining high performers is even more essential. A Fortune 2000 company can spend up to $6,000 to hire a single employee. Chhabra (as cited by Butler, 2008) says that eighty percent of employees make the decision to stay or leave a job