Retaining key employee retention is critical to the long term health and success of your business. It ensures customer satisfaction, product sales, satisfied coworkers, effective succession planning and deeply imbedded organizational knowledge and learning. Employee turnover means training time and investment; lost knowledge; insecure coworkers,  costly candidate search among other things. Various estimates suggest that losing a middle manager costs an organization up to 100 percent of his salary. The loss of a senior executive is even more costly.

Employee retention is one of the primary measures of the health of your organization. If you are losing critical staff members, you can safely bet that other people in their departments are looking as well. Exit interviews with departing employees provide valuable information you can use to retain remaining staff. Heed their results. You'll never have a more significant source of data about the health of your organization.

 Here's what you can do to help reduce employee turnover:

·         Ensure your employees know what is expected of them everyday at work. Changing expectations keep people on edge and create unhealthy stress. They rob the employee of internal security and make the employee feel unsuccessful.

·         Ensure quality  supervision. People leave managers and supervisors more often than they leave companies or jobs. It is not enough that the supervisor is well-liked or a nice person, anything the supervisor does to make an employee feel unvalued will contribute to turnover. Frequent employee complaints center on these areas.

--lack of clarity about expectations,
--lack of clarity about earning potential,
--lack of feedback about performance,
--failure to hold scheduled meetings, and
--failure to provide a framework within which the employee perceives he can succeed.

·         Create an atmosphere where employees can speak freely. Does your organization solicit ideas and provide an environment in which people are comfortable providing feedback? If so, employees offer ideas, feel free to criticize and commit to continuous improvement. If not, they bite their tongues or find themselves constantly "in trouble" - until they leave.

·         Create opportunities for talent and skill utilization. A motivated employee wants to contribute to work areas outside of his specific job description. How many people could contribute far more than they currently do? You just need to know their skills, talent and experience, and take the time to tap into it. As an example, in a small company, a manager pursued a new marketing plan and logo with the help of external consultants. An internal sales rep, with seven years of ad agency and logo development experience, repeatedly offered to help. His offer was ignored and he cited this as one reason why he quit his job. In fact, the recognition that the company didn't want to take advantage of his knowledge and capabilities helped precipitate his job search.

·         The perception of fairness and equitable treatment is important in employee retention. In one company, a new sales rep was given the most potentially successful, commission-producing accounts. Current staff viewed these decisions as taking food off their tables.

·         When an employee is failing at work, ask the W. Edwards Deming question, "What about the work system is causing the person to fail?" Most frequently, if the employee knows what they are supposed to do,  the answer is time, tools, training, temperament or talent. The employee must have the tools, time and training necessary to do their job well - or they will move to an employer who provides them.

·         Your staff members must feel rewarded, recognized and appreciated. Frequently saying thank you goes a long way. Monetary rewards, bonuses and gifts make the thank you even more appreciated. Understandable raises, tied to accomplishments and achievement, help retain staff. Commissions and bonuses that are easily calculated on a daily basis, and easily understood, raise motivation and help retain staff.

Taken from http://humanresources.about.com