By Lisa Skapinker,

In tough economic times, when many industries are facing layoffs and hiring freezes, it’s easy to forget the staggering costs of turnover.

The American Management Association estimates turnover costs ranging between 25%-250% of annual salary per exiting employee, while the average monthly turnover rate in the US is three percent. For a company with 100 employees, that means turnover costs can easily surpass $1.5 million per year.

In industries with high demand for skilled “knowledge workers” like financial services (13.3% turnover) and technology (10.6% turnover), costs can be much higher.

Even when companies don’t see those lost dollars popping up on their balance sheets, it shows up elsewhere like in lost productivity and other less conspicuous places. When people leave, the remaining employees are forced to pick up the slack; take time out of their schedules to interview and train new people; and adjust to new working styles and team dynamics. Companies also spend huge amounts of money training employees, so when turnover is high, they lose immense amounts of money in knowledge capital, too.

So when two weeks’ notices start increasing, how do you retain your best people?

1. Offer A Better Work Culture

In places like Silicon Valley where competition for great employees is fierce, a cool snack bar and a basketball court just won’t cut it: the next company may be upping your offer with personalized chef services and lessons from NBA pros. While that stuff is a great bonus for employees, what retains people long term is not cool perks but a corporate culture that empowers each individual employee and lets employees obtain meaning from their work. This means placing more emphasis on individual employees, keeping them engaged and challenged, and recognizing them for their hard work. Since 43% of exiting employees report not feeling recognized at work, it’s clear that recognition goes a long way in creating a great work culture. When people are recognizing each other, work becomes more about camaraderie and teamwork and less about competition and individual accomplishment.

2. Take Time To Assess Fit

Just because an employee has an impressive resume does not necessarily mean they’ll be the right fit for your job. Even if you’re facing a mass exodus of employees, don’t rush to hire. If you hire the wrong people, you may face another cycle of quick exits from your new employees. Take the time while interviewing candidates to make sure they’re a good fit and will thrive within your team. Have them meet your people and interact with them, and make sure you can see them working together in the future.

3. Accommodate People’s Scheduling Needs

Companies like Apple, Cisco, Xerox, and American Airlines know that in order to retain great talent, you have to accommodate employees’ personal schedules as well as their work schedules. This is especially relevant for working parents or employees experiencing family crises. Letting employees telecommute allows people to work while still attending to their personal needs. And thanks to the Internet and social media, telecommuting is easier than ever. It’s especially relevant in high-turnover industries where savvy competitors are likely to offer employees flexible hours and telecommuting options.

4. Offer A Growth Environment

Make it clear to employees that your company is an environment where they can grow long term. Help them develop networks within the company to further their career as well as their immediate job. Help your employees identify a mentor within the organization, whether it’s you or someone else, who will help them get to the next level in their career. That way, employees know the company is committed to their success and will be more loyal when other opportunities come knocking.

5. Give Employees Direct Feedback

Direct, timely feedback goes a long way in helping to retain employees. When employees know where they stand, they’ll feel more confident in their jobs and will be more likely to innovate and push the envelope. And when they’re in an environment where they feel comfortable being creative and trying new things, they’ll be less likely to leave.