Answer to Question #138492 in Management for Chrischris

Question

. In some companies, managers are rewarded for minimizing the turnover within their department or branch. A part of their bonus is directly tied to keeping the level of turnover below a minimum. What do you think about the potential effectiveness of these programs? Do you see any downsides to such programs?

Answer 1

Replacing employees every now and then is costly to companies. Consequently, involving department managers in minimizing turnover by rewarding them is effective because it ensures the managers are careful during the hiring process and do their best to retain their best employees. However, the downsize of the approach is that the managers may focus so much on obtaining the bonuses and compromise the quality of employees.