Employee Retention – Get it Right from the Start

January 24, 2025

Rethinking Employee Retention: Strategies for the Modern Workforce

Employee turnover and retention: in the world of HR, we know how important this is, but sometimes it’s hard to communicate it to our business partners. But let’s do some quick math that might help us make the point.

First let’s pick a job title. I chose “IT Infrastructure Specialist” and I searched for how many job listings are posted for that job where I live. The answer is 714. Let’s assume that 75% of those job postings are to fill a vacancy when someone left the company (as opposed to newly created roles. A quick check with the local government stats office tells me that the median salary of that role is $6500 per month before tax.

Anyone in HR knows that even by the most conservative measure, the cost to replace someone is about 6 months of that person’s salary. (I think it’s far higher, but let’s stick to the conservative numbers). The math:

75% of 714 = 535.50 x $39,000 (6 months of $6500) = $20,884,500

So those 714 vacancies represent nearly $21 million cost to those companies.

At every opportunity doing this calculation I have taken a conservative approach. I’m only looking at posted jobs, obviously not accounting for the many jobs that never made it to a jobs board. The ‘6 months salary’ as the accepted cost of a vacancy is extraordinarily conservative, as it does not factor in lost productivity (fully productive employees rarely just quit), the drop in productivity of the people who take over the job in the interim, the HR team that springs into action to start the search, the line manager of the departing employee who now has to add replacing them to their to-do list, and so on. By some estimates the cost would be more like 12 to 40+ months of salary depending on how hard it is to replace the person.

No matter how we calculate it, the cost is staggering. Retention has always been a challenge, but these days, it’s more pressing than ever. People are spending less time in a job before moving on (and not just millennials – every generation spends 20% less time in a job on average than they did 10 years ago). This shift puts tremendous pressure on companies, and the smart ones are finding ways to increase tenure, bolster retention and increase productivity. In addition to the direct costs that go along with replacing employees, there are indirect costs such as productivity loss (as stated above, it’s not just the one who left but everyone else who had to pick up the slack in the meantime). Add on top of this, the cost (though hard to measure) of the loss of institutional knowledge, client relationships (many of the people who leave can and will take our clients with them), and a myriad other ways we pay for it. It is the death of a thousand cuts.

Building a Strategy to Retain Talent

So how do we deal with this? There are three things that any company can do. They’re straightforward, but not easy (well anything that takes hard work usually isn’t!)

Companies need to get better at: Hiring, Onboarding and Managing.

1. Precision in Hiring 

Retention starts with attracting and selecting the right talent. Too often, job descriptions are overly ambitious or misaligned with the actual role – sometimes to the point of delusion (it is not ‘entry-level’ if you are asking for 5 years’ experience). Start with a clear, accurate (and reasonable) job description. This will set the foundation for a productive conversation and a good job experience after they start.

Then make sure that the people doing the interviewing have the necessary skills and tools to do it well. While HR professionals may know what they’re doing, most line managers have never been given a moment’s training on how to conduct a good interview. What to ask, what to listen for, and how to push past our own biases are critical skills to make sure we get the right person for the job.

2. A Thoughtful Onboarding Process

A new hire’s experience in their first weeks often has an impact on how long they’ll stay. Effective onboarding is about more than filling out forms or a one-day orientation. Do they feel welcomed and supported, with access to the tools, resources, and knowledge they need to succeed?  Do they know how things really work at your company; do they understand the values and mission?

This might mean pairing new hires with mentors, clearly outlining expectations, and integrating them into the company’s culture. Many years ago, I was hired for a job, but my bosses didn’t tell anyone. The day I started they were both on a business trip. My welcome was confused and frosty (I was gone in just over a year).

Your actions as a leader set the tone for your team. If you value integrity, demonstrate it in every decision. If you prize innovation, show a willingness to take calculated risks – and reward those on your team who do too.

3. Empowering Managers to Lead

The saying “employees quit managers, not jobs” may be cliché but it is true. Bad managers are responsible for more turnover than any other factor; and it may not even be their fault. Managers often find themselves managing without adequate preparation or training. Just because you can do something, it does not follow that you can lead the people who do that thing. This leaves them ill-equipped to address team dynamics, create a positive and supportive space for good work, provide effective feedback, mentor, and actually lead.

Investing in leadership development is a critical way to close this gap. Managers should be trained to recognize and respond to employee concerns, provide constructive feedback, foster a supportive work environment, operationalize strategy and goals, keep people on track, and help them grow. We can keep people in our companies when they can see a future for themselves here – and that’s their boss’s job. 

The Case for Retention

Turnover is an unavoidable reality, but its impact can be minimized. By improving hiring practices, enhancing onboarding processes, and investing in leadership training, companies can significantly reduce attrition costs. Lowering a 15% annual turnover rate to 10% in a 500-employee company could save over half a million annually. 

And the benefit is not just about money. A stable workforce fosters better collaboration, stronger institutional knowledge, and higher overall productivity. In a competitive labour market, retention isn’t just a matter of cutting costs—it’s a strategic advantage that sets companies apart. 

The Bottom Line

Employee retention requires intentionality and investment. While turnover can never be eliminated entirely, even incremental improvements yield measurable results. By focusing on the fundamentals—hiring the right people, supporting them through onboarding, and training their managers to lead effectively—companies can create a workplace where employees thrive and choose to stay. In the long run, investing in retention is not just a business strategy but a commitment to building a stronger, more resilient organization.

Author
Mark Cosgrove

Managing Director APAC, PROAKTIV Asia

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