Turnover rates are rising. In industries such as software and entertainment, some companies experience turnover rates as high as 35 percent. Recent data suggest that turnover among professional, technical and managerial ranks is increasing in more traditional industries, as well.
Why? One possible reason is that the “psychological contract” between an individual and organization is weaker than ever. Good performance is no longer a guarantee of long-term employment, and individual workers today are more aware of outside opportunities. With decreased loyalty, people perceive increased permeability in the boundaries between company and environment, making them better able, both practically and psychologically, to move from one organization to another. Frequent movement by professional workers creates a turbulent environment that strains companies and their human resources departments.
Recruiting and retaining skilled employees has become a central focus for many organizations. Many high-tech companies find their HR budgets consumed by recruiting costs, often more than 50 percent of the total budget. Training costs also mount as a result of turnover. But the costs go beyond the monetary. Time lost to find and train replacements translates to a loss of business momentum. And with the fast pace of competition today, that can be a mortal blow to a company’s strategic plan.