Top Companies Neglect Retention Issue

September 13, 2006 ( - Why employees leave for other jobs is apparently one issue that is not at the top of the agenda for many of America's fastest growing private companies.

According to a PricewaterhouseCoopers survey, fewer than one-third of respondents have formal programs to retain key employees and fewer than one-third regularly discuss retention issues during management meetings or understand why key employees are leaving the company, according to a WorldatWork news report.

Nearly half the CEOs surveyed (49%) said they are concerned that a shortage of qualified workers could hinder their 2007 growth while 38% see scarcity of skilled, trained workers as potentially creating its own issues with upward wage pressure.

However, that does not mean companies are neglecting hiring generally, as the CEOs surveyed said they dedicate almost half their budget to their workforce. Not only are they spending a good bit on HR issues now, 63% of the corporate chiefs expect to spend even more over the next 12 to 18 months. Only 5% foresee a decrease in HR spending, and the remaining 30% anticipate these costs will stay at about the same level.

Overall, workforce expenses are expected to rise by an average of 6.9%, with worker-intensive service companies expecting a higher average increase than product sector businesses – 7.8% versus 5.8%, respectively, according to the survey.

Over the next 12-18 months, 32% of respondents likewise said they expect their company’s costs associated with workforce retention and turnover will increase. Only 5% foresee a decrease in these costs, while 60% said they will stay about the same, and 3% did not report. Overall, an increase of 2.5% is expected.

The retention issue may not be at the top of their corporate agenda, but the majority (52%) of CEOs surveyed in fast-growth companies still said their company’s efforts to manage and improve employee retention are better than their competitors, and another 34% said they are equal.

While virtually all CEOs agree that their company manages workforce expenses effectively (only 6% disagree), only about half (49%) strongly agree and another 42% agree only somewhat. A similar pattern exists concerning effective management of workforce retention – 84% agree, but only 45% strongly, with 11% disagreeing.

Eight in 10 CEOs surveyed said they plan staff additions in the next year with an overall workforce increase projected at greater than 9% – fueled by a projected 22% revenue growth in the same time frame.

PricewaterhouseCoopers’ Trendsetter Barometer is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc. More information is here .