When Michael Jones resigned from his position as a regional manager for a large chain retailer on the East Coast, his supervisors were stunned.

Michael had been a terrific employee during his seven years there. He's been thorough, productive, conscientious, and a great team player. Even more puzzling: he left for what his managers considered a lateral move — a job as a store manager at a smaller chain for nearly the same salary.

But it wasn't the money that prompted Michael to make the jump. It was the fact that the retailer who'd employed him had done little to keep him satisfied and enthusiastic about staying put.

"There was really no effort to promote me any further," Michael said. "My managers relied heavily on me but never seemed to truly care about my work goals. I felt I had reached a dead end in my region." In contrast, the new job seemed to offer more opportunities to move up to the executive level.

The retailer had clearly missed a core issue, ignoring an apparently contented employee instead of thinking about how to retain his talents.

The scenario is not uncommon, particularly in the current economic climate when employers may feel that their current employees have few options for leaving them. After all, when even entry-level job openings these days receive hundreds of applications it's understandable that many hiring managers let their retention efforts slide.

But that's a big mistake, according to Beverly Kaye, Phd., co-author of the book, Love 'Em or Lose 'Em: Getting Good People to Stay.

"If you think you can relax, forget it," Kaye said. "It's still vital to hold on to your good people. If those good employees are unhappy and are sitting and thinking they can't leave now because of the economy … you can bet that when the economy finally does shift, they are going to leave big time."

Meanwhile, the financial downside of losing a great employee can be huge, said Kaye, who is also president of Career Systems International, a company that specializes in career development, retention and mentoring strategies for employers.

"In general, companies are spending three times more money on recruiting than on retaining employees and three times more energy on recruiting strategies," she said. "If they reversed that, they could end up saving a lot of money."

The cost of replacing a valued employee is two-and-a-half times his or her annual salary if you factor in all the hiring costs as well as the potential for lost productivity, customers and contacts, Kaye noted.

Another reason to make every effort to retain great employees during hard economic times is that they are ones who will help your company survive it.

"Someone who is a top performer in a company can write their own ticket, no matter the economy," added Gail Jern, human resources representative for Westaff. "Employers really need to be reminded to pay attention to their outstanding employees."

In fact, in times like these, your best employees might be sought out and stolen away by clients who see an easy way to make a great hire that will improve their own business.

Yet, given these tough times, it can be hard to give valued employees the kind of financial rewards they want and deserve, making retention efforts even more difficult.

Both Jern and Kaye agreed, however, that employees stay put for other rewards besides money.

"More people leave their jobs because of management than because of money," Jern said. "Even if the money is not as much as an employee would like, getting a good manager can make all the difference in the world."

Showing appreciation and acknowledging their work is key, she added.

Money may be the number one reason employees give for leaving, but it's rarely true, Kaye agreed. "All of our research says that money matters, but it's certainly not the only thing." Far more important, is creating a workplace environment that makes employees want to stay. "It's like the Golden Rule: 'Do unto others. Care about people.'"

"There are three things that retention-focused managers do well," she added. "They understand the importance of growing and developing employees; they understand that employees want to talk about their career; and they understand that employees want to feel they are learning and growing and being challenged in their positions," she said.

In her own workplace of 20 employees, Kaye practices what she preaches. Every year, she takes her core staff on an annual retreat, inviting each employee for a walk on the beach. "I ask each one what I can do to keep them for another year. I talk about how much I need them and how critical their work is to the company." So far, so good, Kaye noted with pride: "I haven't lost anyone in a decade."

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