Retention of Key Talent and the Role of Rewards


Retention of key talent — those employees who are the strongest performers, have high potential or are in critical jobs — is even more important during economic recoveries when organizations compete aggressively for market share and talent. Key talent disproportionally contributes to current organization performance and to future performance since key employees often become organization leaders. Losing key talent costs considerably more since these employees’ impact and contribution are greater than that of typical employees.

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Estimates suggest that the cost of employee turnover often ranges from 50% to 200% of the employee’s annual salary based on the type and level of job he/she holds. These costs are substantial for even medium-sized organizations that have moderate rates of turnover (e.g., Allen 2008, Cascio 2010, O’Connell & Kung 2007).

Even though unemployment is still relatively high in many parts of the world, the United States and other industrial countries are already experiencing talent shortages in a number of labor markets. The U.S. Bureau of Labor Statistics (BLS) reports an increasing trend in voluntary terminations, and the rate of unemployment for people with college degrees is about half of the national unemployment rate and is decreasing (BLS, 2011). Finally, even when there are high unemployment rates, key talent is always in demand, and an improving economy will exacerbate the challenge of holding the most capable employees who have unique or critical skills.

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