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HR: A Closer Look at How Employee Turnover Affects Organisations


Recent Gauteng Business News

Study results by indicate that management should monitor voluntary turnover among key employees in order to make sure that the company understands why key employees leave. This is vital as it assists in refining and developing more effective retention strategies. It is estimated that the cost of employee turnover often ranges from 50 to 200 percent of the employee’s annual salary based on the type and level of job he/she holds. These costs are substantial even for medium sized organisations that have moderate rates of turnover.

Most of the time, employers face difficulties when confronted with the task of filling highly-skilled positions such as engineers, technical roles, managers or executives, and sales representatives. Losing key employees costs considerably more since their impact and contribution is greater than that of typical lower level employees as they are more difficult to replace.Employee opinion norms indicate that 20 percent of employees plan to look for a new job in the next two years and another 20 percent plan to leave their employers within the next five years. These trends alone suggest discontent in the workforce; which is not surprising since employees are working harder as a result of downsizing, limited base salary increases and incentive payouts, and increased pressure to perform.

It is clear that one of the foremost challenges for management today is how to retain key talent. Turnover is costly and directly impacts on business performance, particularly during an economic recovery. As a result, rewards professionals will be under increased pressure to make counter-offers, increase new hire offers and offer more frequent exceptions to reward policies and programmes. Professionals fear that key employees are becoming increasingly frustrated in their organisations due to layoffs, the expansion of job accountabilities, and constraints on reward programmes — primarily limited base salary increases, lower incentives and fewer advancement opportunities.

How then, do reward programmes make special efforts to retain key employees?

In order to make a special effort to retain key employees, the organisation must first identify these individuals. Specific criteria to distinguish top talent from other employees must be carefully developed and then applied consistently throughout the organisation to ensure that the correct individuals have been identified. Constant evaluation is also important.

A rewards system designed to differentiate key talent from other employees is important in enhancing a fair culture of rewards and recognition.

Contact us today, for assistance in developing a well balanced rewards programme that recognises all employee levels and is custom designed to cater according to each employee’s category.

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