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High turnover rates hit company budgets hard

Employee reward programs help companies motivate and inspire workers, prevent high turnover and hang on to their best performing staff members.

Employee reward programs help companies motivate and inspire workers, prevent high turnover and hang on to their best performing staff members.

High turnover in businesses is an undesirable occurrence, not only because it requires firms to train new hires but it also is expensive. According to a recent study from the Center for American Progress, for all jobs earning less than $50,000 per year, replacing an employee costs, on average, 20 percent of that worker's annual salary.

These costs include training, recruiting, lost work and a decrease in productivity while the position is in the process of being filled. Turnover expenses continue to go up as the job increases in complexity and the level of education or training needed to fill it.

"The reality is that it will cost the firm to replace [an] employee," the report states. "In the long-term, even if a firm saves money by firing an employee who has stolen or has very low productivity, in the short-term the firm must address the costs of replacing that worker with one who will perform the job better than the one fired."

However, firms can fight these expenses by looking at the internal policies that may be spurring high turnover. Rewards and recognition programs can help staunch the flow of employees by demonstrating appreciation.

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