If a tech company wants to be successful then it needs to invest in their employees as for tech-savvy companies it is far more beneficial for them to retain their top tech talent rather than hiring new employees as if the company keeps on hiring and re-hiring employees once the old ones leave, it will never get out of the perpetual hiring cycle.
Secondly, consider all those hours it takes just to train a new employee while if employee retention had taken place, the company could have used that extra time to develop new IT products and services.
On average, it can cost up to $8,000 to just hire and train a new tech savvy employee and for companies this is a huge expense as training is not cheap and employees need to be trained on an on-and-off basis so that they end up retaining 90% of whatever they have been taught and the dollars spend on them can be accounted for. The costs associated with replacing an old employee with a new one are as follows:
Separate costs are the immediate costs that a tech company incurs as soon as an employee leaves the company. These costs include severance pay, unemployment insurance claims by the employee, benefits earned in years of service as well as costs of processing an employee’s termination and the time spent conducting exit interviews.
This cost includes the cost of training a new employee and the time spent on finding one to fit the role.
This cost pertains to the productive hours lost when a new employee is hired, the time lost picking up the mess left behind by the old employee as well as the cost of training the new hire to effectively take over for the old one.
If the tech company in question ends up retaining its current employees and stops them from leaving and ends up bringing the turnover rate down by even 3.2 % means that that company could end up having a big improvement in their bottom line.