Notes about employee retention from
"Peopleware" by Tom DeMarco & Timothy Lister and
"The Best Software Writing I" by Joel Spolsky.
In the mid 80's DeMarco and Lister found that the
"average employee longevity [was] from fifteen to thirty-six months", that's about one to three years, and that the
"total cost of replacing each person is the equivalent to four-and-a-half to five months". Joel Spolsky in
The Best Software Writing I, mentions that
"Recruiting and training a new employee is usually estimated to cost 12 months' salary, total." Joel goes on to say that the industry standard for turnover is somewhere around 5%. So accordingly, if you worked at a company with 100 people you'd normally expect to loose 5 employees every year. Anything above 5% and you're probably working in an environment with high turnover.
DeMarco and Lister point out that, companies with low employee retention rates often enter into a cycle with negative financial implications and
"an ugly invisible cost", because
"turnover [produces] turnover".
This
"ugly invisible cost" often manifests itself as:
- Short-term viewpoints, a passing through mentality, degraded moral
- Inexperienced management, early promotion, a top heavy organizational structure
- A feeling of disposability, workers are treated as interchangeable parts, a degraded sense of loyalty
- An undesirable work environment
- A low employee retention rate
- And the cycle continues