Honing a talent for retaining talent: smart chief financial officers understand the real cost of losing talented people in a recession and having to recruit them again. Knowing that more than numbers affect the bottom line is a key ingredient of their business's success.

• Author: Johnson, Mike
• Position: HUMAN RESOURCES

European executives have often looked askance at the United States in the parlous times of economic depression, believing that the phrase "quick to hire and quicker to fire" accurately described the nation's employment practices. Against historic trends, however, some workforce experts say U.S. employers have worked harder to retain their employees in the current economic environment.

Goran Hultin, a former deputy director general of the Geneva-based International Labor Office, said, "Indeed, they [U.S.] have practically matched Europe in their outright zeal to not resort to mass dismissals."

Is this a change of heart on the part of America's employers? According to Hultin, who publishes the quarterly Global Employment Outlook, U.S. industry has held off dropping the axe for highly pragmatic reasons.

"In Europe, employers have been reluctant to fire during this recession for the key reason that employment laws make it cost a lot to dismiss people--you think twice, possibly three times." But in the U.S., he continues, employers are reluctant for one reason: They don't want to lose skills and talent they worked so hard to hire and train. Lose them, he says, "and it's a very costly exercise to get them back."

Hultin's right. People cost money and talent costs even more. Most organizations seem to be adept at separating people and money into two piles: Human resources is concerned with employees and the finance department is responsible for counting the results of those efforts. The problem for many organizations is that people make up as much as 99 percent of the corporation's assets. Consider, when these employees leave every evening it is their choice to return the following morning.

More than that, employment costs--especially for today's people-centric businesses--make up a staggering amount of the overall operating charges of most corporations. Recruitment, retention, redundancy, reward, training and development--not to mention the astronomic costs of dealing with increasingly litigious former employees--all add up to being the most significant line in many corporate budgets.

Anthony McAlister, a partner of Thorburn McAlister, a London-based executive search and employment analysis firm that specializes in helping organizations deal with "the difficulties of transition" for senior executives, says, "The problem is that with hiring and firing, risks are practically impossible to quantify, and therefore most CFOs ignore them."

There's good reason for that, he adds. "Historically, CFOs operated on the principle 'we only measure what can be measured.' That view doesn't work in today's complex and increasingly ambiguous world."

McAlister explains that poor hiring and...