Managerial Economics 2nd Edition by William Boyes

Exercise 3

Retention
Recently graduated from a top engineering program, Robert had a career on the rise with a large, international specialty-contracting firm. He had successfully completed the company's three-year project manager training program and had become one of their most reliable and promising employees. So when he suddenly resigned his position, his decision shocked his co-workers. Retaining good employees is critical to a firm's long-term success. The effect on co-workers also can be crucial. When people leave a firm, other employees may become fearful and uncertain about their status within the company. High turnover also can give a firm an unhealthy reputation in the marketplace, making recruiting future candidates especially difficult. When reduced efficiency, lower effectiveness, workforce instability, and lost productivity are added to the cost to find and train a new employee, the stakes become high. Yet, it is argued, many well-meaning companies fail to invest in retention.
How does a firm attract and retain valuable employees?