The Relationship Between Employee Retention, Employee Skill & Service Quality

by Catherine Capozzi

Attracting and retaining high-skilled employees is a primary goal for businesses. Losing high-skilled workers is a two-fold loss: In addition to the company losing expertise, the result is often a competitor gaining this valuable skill set. As such, employers should strive to understand the intricate relationship between employee skill, service quality and retention.


Skill is the combination of knowledge and experience. Workers gain experience from prior employment and by spending time on the job. Knowledge, on the other hand, is acquired formally and informally. Formal accumulation results from studying in school and reading literature pertaining to the job at hand. Workers gain knowledge informally by studying the culture of the workplace and conversing with other employees. Improving skills requires the company to gain a firm understanding of the current skills possessed by workers and devising methods to elevate these skills in a tangible way. For example, a business may decide to reduce call-handling time by one minute while boosting customer satisfaction by 10 percent by requiring all employees to undergo a customer service training course.

Service Quality

Businesses value high service quality. Without it, companies fail to retain customers and miss out on gaining a competitive advantage. Organizations must train workers on how to deliver high service quality. While some employees naturally handle customers with finesse and charisma, a company's responsibility is ensuring these workers know how to remedy disputes within its unique set of rules and regulations. For instance, workers must be trained on specific refund policies, delivery options and discount options for disgruntled customers. Peter Hernon explains in his book "Assessing Service Quality" that one of the best ways to ensure consistently high standards is through the use of benchmarkers. Hernon states ideal benchmarkers balance customer expectations and market expectations, and are realistically set based on a company's given resources.


Retention measures how well a company keeps its workforce by tracking the number of workers who leave voluntarily. Leigh Branham explains in the book "Keeping the People Who Keep You in Business" that turnover rate depends on the industry, company, position and employee characteristics. For example, a fast food company experiences higher turnover within its labor pool of customer service workers than a hospital's workforce of doctors. Therefore, Branham advises comparing turnover by industry, department and specific company standards.


Businesses must identify and reward employees with strong skills and the ability to deliver high service quality. Retaining workers requires creating a hospitable, enjoyable work environment. This is achieved by developing a strong relationship between managers and subordinates, maintaining open communication and empowering workers to make appropriate decisions.

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