The retention strategy that turns turnover into a growing asset

Losing a top performer cost more than most business owners realize, often more than double an employee’s salary. Turnover is something most employers will eventually face, but having a framework to keep great people on your team should be part of your overall strategy for long-term growth.

Joining us on today’s episode of Business Trends Today is retention expert David Alemian. He is the creator of the Alemian Retention System™ and the author of Talent Retention: How to Attract and Retain Highly Skilled Professionals. Alemian says the driver behind who stays and who leaves isn’t simply pay; it’s whether they see a stronger future inside the company or outside of it. 

People stay where their future is strongest

People start weighing their future in childhood. What do they want to be when they grow up? Where do they want to go to school? Who will they marry? Alemian said staying with a company or leaving one works the same way.

"The stronger future always wins. That's why I say people stay where their future is strongest."

Top performers rarely job hunt openly. That doesn’t mean no one is approaching them. Almost anyone with in-demand skills already has a job, Alemian said. Companies looking to fill open seats have to recruit from somewhere. Even content employees will weigh a competing offer against what they already have.

The decision comes down to a simple comparison. If an employee stays, what does their future look like? If they leave, what does it look like instead? Alemian said the stronger future wins every time. That holds true even when the strength is more perceived than real.

The real cost of losing a top performer

Turnover costs employers more than double an employee’s salary, Alemian said. Much of that cost is not deductible. A superstar salesperson who walks out the door takes lost sales with them. And in many cases, losing a key team member can also impact overall employee morale. None of it shows up on a balance sheet, but all of it drains the company.

"Turnover is the biggest hidden cost that an employer has. It can cost more than double the salary to replace someone." 

New hires add another layer of risk. An employer might bring someone in, pay them for months, then realize the fit is wrong. That salary is gone before the position is even filled correctly.

The problem will only get worse, Alemian said. Baby boomers made up the largest generation in the workforce. Millennials, Gen X and Gen Z are smaller generations, and a smaller share of each one has in-demand skills. Employers can’t manufacture more skilled workers on demand, so they have to protect the ones they already have.

Thinking outside the raise

The smaller the business, the bigger the impact turnover can have. A company with three employees loses a third of its workforce if just one person walks out. That math makes retention an even bigger priority for smaller teams. 

Raising pay to keep someone can backfire, Alemian said. The new salary becomes the employee’s baseline, not a reason to stay. A competitor with deeper pockets can still lure them away with an even higher offer.

Alemian recommends offering incentives beyond salary increases. He suggests building benefits that strengthen an employee’s future and tie them directly to staying with the company. If the employee leaves, they lose that benefit.

Growth opportunities offer another path. An employee who knows they’re in line to take over when an owner retires has a strong reason to stay. 

Creating incentives to stay 

A 401(k) does little for retention. It’s fully portable, so employees can take it anywhere. While it’s a nice benefit, it offers no reason to stay, Alemian said. 

To increase employee retention, Alemian suggests retirement plans that work differently. The employer funds the plan at no cost to the employee. In exchange, the employee agrees to stay for a set period, sometimes 10 years, sometimes until retirement, under a written agreement.

Structured well, it can add up to more lifetime income than the employee earned while working. Alemian said that’s a hard offer to walk away from, and an employee’s own family often becomes an advocate for staying once it’s in place.

“If they leave, they forfeit the benefit, and the investment that the employer made in that employee stays with the company. It is literally an investment and a growing and compounding asset on the company’s books,” Alemian said.

Play the long game

Short-term bonuses don’t solve retention the same way, Alemian said. A year-end bonus can keep someone through December, but it can also trigger an exodus once the payout clears in January. 

Alemian’s approach targets long-term retention instead. He recommends reserving the benefit for top performers rather than the entire staff.

Reserving a strong benefit for top performers helps a company win the competition for talent, even when pay and other benefits are similar across competitors. Alemian said a company that commits to this approach for four or five years can end up staffed almost entirely with top performers.

Retention is an ongoing strategy

Retention isn’t a one-time fix, Alemian said. It’s an ongoing strategy that has to compete with every offer a top performer might get elsewhere.

Companies that build a stronger future into the job itself, rather than reacting after an employee already has one foot out the door, put themselves in a better position to keep the people driving their growth.