Businesses have long understood that it’s easier (and more cost-effective) to keep your current customers or clients happy than it is to acquire new customers. That’s why there are so many customer loyalty programs, designed to keep customers happy and coming back again and again.
The same holds true for employees. It’s not enough for a company to recruit the best employees – it also has to find a way to retain those employees for as long as possible in order to get the most value out of its recruitment efforts.
This isn’t news to most organizations (and especially not to HR professionals). And yet, holding on to top talent is something virtually every employer, regardless of industry, region or size, struggles to do.
Employee turnover is defined as the number or percentage of employees who leave a company and are replaced by new employees.
There are two types of employee turnover: voluntary and involuntary. Voluntary turnover occurs when an employee chooses to leave (i.e. quits or resigns), and involuntary turnover occurs when the employer makes the decision for the employee to leave (i.e. is fired).
Whether an employee resigns or is fired, their absence takes a toll on profit margins. Having to pay for continuing benefits or severance pay, coupled with the cost of hiring someone to take their place, results in lost productivity and, ultimately, lost revenue.
According to the National Association of Professional Employer Organizations (NAPEO), compared to other businesses, businesses that hire a professional employer organization like G&A Partners have 23 to 32 percent lower employee turnover.