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Employee Retention and Its Benefits

When employees leave a company, the employer has to incur a considerable amount of direct and indirect expenses. These costs normally includes such as advertising cost, time taken to recruit a replacement, headhunting expenses and also opportunity costs such as loss of productivity. According to (Global Business Articles Website, 2010) the cost of a turnover is estimated to cost you 150% of the annual salary for a middle level employee and up to 400% for a specialized high level employee.
As discussed previously, there are indirect and direct cost incurred whenever an employee decide to leave the company. Let us take deeper look at some of the different sources where costs are derived from (Timothy R. Hinkin, & J. Bruce Tracey, 2000).
Recruitment of replacements of the employee. This cost are including the administrative expenses, advertising to job vacancies, screening and interviewing processes, and services associated with selection, such as medical examinations checks.
Lost of productivity associated with the interim period before a replacement can be placed on the job.
Lost productivity due to the time required for a new employee to get up to speed on the job that includes knowing the process, knowing the environment and attaining sufficient trainings.
Lost productivity associated with the time that co-workers must spend away from their work to help a new employee. This is a known issue where co-workers will spend some time helping and guiding the newly hired employee in their assignments and tasks.
The costs of training where a certain skill must be attain for the job that also includes the supervisory and co-worker time spent in training for the new employees, as well as the time that the new employee must spend off the job.
The costs associated with the period prior to voluntary turnover when employee tends to be less productive as they are leaving the job soon.
In some cases costs associated with the communication of proprietary trade secrets, procedures, and skills to competitive organizations. This is likely to be seen when an employee hoops to a competitor.

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