Employee Retention Plan And Appreciate Human Capital Essay

808 Words May 1st, 2016 4 Pages
Unlike common perception, 88% of employees leave their jobs for reasons other than the pay, however, 70% of managers think otherwise. According to Right Management, a career management consulting company, the cost to replace an employee is three times higher than the person’s salary 1. The costs includes, but not limited to, lost productivity, recruitment, training, and lost opportunities. Right Management’s theory also postulates that 50% of newly hired employees leave within the first 2 years, and one in four leaves within 6 months. 70% of organizations claim that they have difficulties for staff replacement and it produces financial impact for the company. Such alarming statistics demonstrate that it is important to develop an employee retention plan and appreciate human capital even more.
Content Overview:
The skills, experience, and knowledge of employees provide economic value to the organization and is considered as human capital. The same as other business capitals, the productivity level of human capital can vary depending on their skills, knowledge, experience, or simply resources such as training that have been invested on them (page 53). Employee retention, similar to business capital, must be strategically governed in organizations to ensure they meet their Return on Investment (ROI). The theory of human capital relates to the employee’s length of service in the organization and according to Ulrich’s (1998) “intellectual capital equals the knowledge, skills,…

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