Engaging an IT provider or professional services provider is about more than pricing, capabilities, and shiny marketing assets. The experience and stability of a professional services firm are not often top priority when considering a new provider, yet they have a profound impact on the quality of the service delivered. An understanding of Employee Retention, and the not-so-obvious costs of turnover, are key to understanding how important the turnover rate is to the well-being of any service organization, especially its financial standing. This is the first post in a series on Employee Retention is a reminder of the costs associated with a high rate of turnover.

First, let’s examine some of the tangible onboarding and separation costs for the typical employee:

  • Recruiting costs: how you find qualified candidates and how they find you; may include the cost of ads and numerous job search tools and subscription fees
  • Hiring costs: includes time spent interviewing and training, as well as determining how good a fit the employee may be for the client; additional hiring expenses for resources
  • Acculturation of the employee to the organization’s culture and expectations
  • Conducting the exit interview
  • Unemployment compensation
  • COBRA benefit continuation costs

Tangible costs are easier to quantify, but intangible costs can also take their toll on an organization:

  • Relations with the client may suffer as a result of service errors
  • Loss of the company knowledge that employees take with them when they go; there is a higher cost when the departing employee is at a more senior level
  • Resentment on the part of co-workers who must share the departing employee’s responsibilities until a replacement is found
  • Disdain from other management who, rightly or wrongly, attribute the employee’s departure to management
  • Cost to the organization’s brand
  • Low morale among remaining staff

For the reasons cited, an organization’s Employee Retention Rate should be considered a Key Performance Indicator (KPI) when considering engaging an industry partner.

Is your prospective partner’s Employee Retention Rate significantly lower than the industry average? Knowing that indicator will provide valuable insight to your decision-making process.

About the Author


With an in-depth background in technology, Suneetha Menon started her career at IBM as a Programmer and later moved into project management and consulting roles at other Fortune 500 companies. In her current role as Vice President of Professional Services, Suneetha is in charge of delivering custom IT Managed Services and Managed Staffing to large US-based enterprises.
Suneetha is very active in her community, often participating in STEM and sports programs and a current member of WITI (Women in Technology International). She holds a Master of Engineering degree from Syracuse University, New York.