[euphoria83]

This article missed the fact that the cost to the company in trying to keep the employees who will leave every year might be greater than the cost of losing them. For e.g., in the example given in the article, the company loses 1.57 million due to employee turnover. However, who knows how much the company might have to spend to keep those employees from leaving. The cost would be high because the effort spent on employee retention is spread over all employees, even those who won't leave. Hence, even a small expense per employee, might end up costing more than the cost of losing certain percent of them.

[jackaltman]

That's a valid point, that it could potentially be more expensive than it's worth. In other words, it is possible to spend too much on trying to make your employees happier.

I wasn't trying to argue that the optimal amount to spend on employee turnover is infinite, but I do think most companies dedicate less than the rational/optimal amount of effort on it.

[euphoria83]

I totally got your point. I am playing Devil's Advocate to those who are recommending going to the other extreme and spending enormous amount of money for employee retention, including a significant increase in per employee salary.

[nine_k]

Let's estimate.

Assume that the company loses 10 employees and loses $1.57M as a result.

This means that it would be better off if it spent less than $157k on each employee, on the average, to prevent the loss.

$157k is a yearly salary of a senior developer, or maybe the entire yearly cost of a senior employee outside the hotbeds like SV or NYC.

We can cautiously suppose that a company could retain the employees with measures less drastic than paying them twice as much for a year. OTOH paying them +20% for 5 years would be the same. So, if they can keep hiring cheaper developers, even while losing productivity due to onboarding issues, maybe they can actually save money!

[euphoria83]

The money that they can spend per employee is 1.57M / # total employees. Not, 1.57M / # of employees who left. They don't know who will leave. Their cost of good initiatives will be spread over all their employees.

[smileysteve]

This is a non starter if the new employee salary + recruiting costs > existing employee salary + raise.

Recruiting costs are typically worth several years of 10%+ raises.