Does training increase employee retention?

IN MORE WAYS THAN ONE, employee turnover is an important consideration for managers and employers alike. For starters, the monetary cost of hiring a new worker is significantly high. In an 1989 MLO article, I estimated that the cost of replacing an employee could average as much as 1 year's salary for that position.[1] My estimate may have been low. A pharmaceutical company recently put the cost of a single employee turnover at 1.5 times the person's annual salary.

In addition to financial considerations, turnover takes its toll in other ways as well. It lowers staff morale, safety, Productivity, interdepartmental cooperation, and--most significantly--customer service.

* Where training fits in. Many employers believe that training boosts morale, enhances motivation, and improves personnel retention. Marriott hotels found, for example, that effective training of its entry-level workers had a profound effect on keeping these employees.

The Florida Power Corp. reduced its annual turnover rate from 48% to 9% using a unique combination of training and employment screening. After receiving instruction in 12 essential skills, job applicants were expected to successfully demonstrate these skills. A 1992 Southport Institute study of workplace education concluded that the longer an organization had an educational program in place for its personnel, the more likely it was to experience lower turnover, improved morale, and reduced hostility among its people.[2]

* What else affects turnover? While there have been other reports of dramatic decreases in employee turnover due to effective training, most of these studies lack validity since during the periods studied there were concomitant changes that could have influenced turnover rates. For instance, Roma Lee Taunton attempted to measure the impact of management training on turnover among nurses. Although her findings suggested a positive cause-effect, results may have been skewed: At the time of her study, considerable downsizing of hospitals was taking place in her area.[2] It seems to follow that anything that increases unemployment may also increase worker retention.

Employee selection procedures can also distort turnover studies (better selection often results in diminished turnover). Richard Wellins is quoted as saying, "If you have a turnover problem ... 8 of 10 times it may very well be due to selection of personnel rather than (lack of) training."(2)