Recent Gallup research shows 51% of U.S. employees are watching opportunities or actively seeking new jobs, making self-reported employee turnover risk the highest it’s been since 2015. This causes negative impacts to organizational culture, employee morale, and a company’s bottom line. The cost to replace employees, according to Gallup, is:
- 200% of a leader or manager’s salary
- 80% of salary for technical roles
- 40% of salary for frontline workers
Don’t let the turnover trend impact your business. Learn how to improve employee retention with the strategies outlined below.
What is Employee Retention?
Employee retention refers to an organization’s ability to keep its employees over time and the various strategies and practices implemented to encourage workers to remain with the company. It encompasses not just preventing turnover, but also maintaining employee engagement, job satisfaction, and long-term commitment to the organization. A strong retention rate indicates that employees find value in their work, feel adequately compensated, and see opportunities for growth within the company.
For businesses of any size, employee retention and people management is crucial to long-term success and sustainable growth. High turnover rates can be extremely costly, involving direct expenses like recruitment and employee onboarding, as well as indirect costs such as lost productivity, decreased morale, and reduced institutional knowledge. Companies that prioritize retention create a stable workforce that drives innovation, maintains strong customer relationships, and contributes to consistent business performance.
Why Employees Leave Their Jobs
Primary reasons why employees leave their jobs, according to Gallup polling, include:
- Pay/benefits
- Advancement, development, or career opportunities
- Direct supervisor/manager or senior leadership
- Relocation
- Personal reasons
- Unrealistic job expectations and responsibilities
- Job fit/work is no longer interesting
- Not treated with respect
- Work-life balance
Benefits of Having a Retention Strategy
Implementing a robust employee retention strategy offers numerous benefits for both the workforce and the organization. Among the benefits are:
- Enhanced employee engagement
- Increased productivity
- Improved company culture
- Reduced hiring and training costs
- Preserved institutional knowledge and expertise
15 Strategies for Improving Employee Retention
Employee retention yields numerous benefits, but requires a comprehensive strategy and consistency. Learn how to improve employee retention with the strategies outlined below.
1. Surveys
You can’t fix what you don’t know is broken. The survey is a strong tool for soliciting employee feedback and measuring employee sentiment. An employee engagement survey offers insight you can use to resolve issues and that lead to low morale and turnover. Get started with our free employee engagement survey template.
2. Onboarding
Set the stage for success with an informative and engaging onboarding process that equips new hires with the resources they need to excel in their roles. Providing structured training, clear expectations, and networking opportunities helps employees feel welcome and integrated into the team quickly. A strong onboarding experience improves retention, boosts productivity, and fosters long-term commitment to the organization.
3. Internal Mobility
Employees need to feel valued for their work and understand what opportunities exist for them with an organization. Employers should develop a career ladder that shows the natural progression for each role from entry-level to leadership positions. Share this information in team one-on-ones, so employees are motivated to work hard.
A recent LinkedIn Workforce Learning Report shows internal mobility boosts retention. According to the report, employees who have made an internal move in the organization have a 75% likeliness of staying, compared to 56% for employees who haven’t made an internal move.
4. Professional Development
Much like advancing their career within the organization, employees seek opportunities to learn more and sharpen their skills. LinkedIn’s report shows three of the top five reasons employees leave jobs are their desire to grow their career, pursue challenging work, and learn and develop new skills. Consider investing in a learning management system that offers employees career development opportunities they can pursue at their own pace.
5. DEI Programs
Diversity, equity, and inclusion (DEI) programs create a more inclusive workplace where employees feel valued and respected. A strong DEI strategy fosters a sense of belonging, which is essential for employee retention. Employers can implement DEI programs by offering mentorship opportunities, training on unconscious bias, and employee resource groups. Leadership should actively promote diversity initiatives and ensure equitable growth opportunities.
6. Acknowledgement
Recognizing employees for their contributions boosts morale and increases retention. Employees who feel appreciated are more engaged and motivated to perform at their best. Employers can foster recognition through formal reward programs, peer-to-peer shoutouts, or personalized incentives. Simple acknowledgments—like a handwritten thank-you note or a public recognition in meetings—can significantly impact employee satisfaction. Investing in an employee recognition platform can streamline this process and make appreciation a consistent part of company culture.
7. Talent Management Software
Talent management software empowers managers to lead their teams effectively and boost retention with tools that streamline performance reviews, encourage career and skill growth, and support employee development. In addition, a talent management system can surface data-driven insights that allow companies to proactively address workforce needs, improve engagement, and reduce turnover.
8. Benefits
Competitive benefits packages play a crucial role in employee retention. Offering comprehensive healthcare, retirement plans, paid time off, and wellness programs helps employees feel secure and valued. According to industry research, companies with strong benefits packages experience lower turnover rates. Employers can also consider flexible benefits, such as student loan assistance or childcare support, to address diverse workforce needs. By investing in benefits, organizations not only retain top talent but also boost employee satisfaction and productivity.
9. Mentorship Opportunities
Establishing formal mentorship opportunities, such as pairing new hires with seasoned professionals or offering leadership coaching, can help employees grow and see a future within the organization. A structured mentorship initiative fosters engagement, strengthens workplace relationships, and builds a pipeline for internal promotions.
10. Compensation
Fair and competitive compensation is a key factor in retaining employees. Companies that regularly assess and adjust salaries based on market trends and performance benchmarks are more likely to keep top talent. Pay transparency and clear paths for salary growth build trust with employees and increase job satisfaction. Employers should consider offering performance-based bonuses, equity compensation, or other financial incentives to reward contributions and drive loyalty.
11. Communication
A Gallup Workplace survey shows nearly half (45%) of voluntary leavers report that no managers or leaders proactively discussed their job satisfaction, performance, or future with the organization with them in the three months before leaving. This failure to communicate leads to missed opportunities to intervene before an employee leaves a job.
11. Flexible Work Arrangements
Flexible work arrangements, such as remote work, hybrid schedules, and flexible hours, have become essential for retention. Employees value the ability to balance work and personal life, and businesses that offer flexibility see increased productivity and engagement. Implementing flexible policies tailored to your workforce’s needs contributes to a more motivated and committed team.
12. Company Culture
A strong company culture fosters engagement and long-term commitment. Employees who feel aligned with a company’s values, mission, and work environment are more likely to stay. Leadership plays a crucial role in shaping culture by promoting transparency, recognition, and collaboration. Businesses that prioritize inclusivity, team-building activities, and open communication create a workplace where employees feel valued and motivated to contribute.
13. Wellness Initiatives
Wellness in the workplace isn’t just a trend. It’s a valuable tool to decreasing burnout and retaining employees. Companies that offer mental health support, fitness programs, and work-life balance initiatives create a healthier, more engaged workforce. Research indicates that organizations with strong wellness programs see lower absenteeism and higher employee satisfaction.
14. Encourage Teamwork
Build camaraderie within your organization by encouraging teamwork whenever possible. Employees who form strong bonds with their colleagues report higher job satisfaction and are more likely to stay with the company. Employers can promote teamwork through cross-functional projects, team-building activities, and collaborative tools that make communication seamless. Recognizing and rewarding team achievements also strengthens workplace relationships and encourages collective success.
15. Develop Employee Resource Groups
Employee resource groups (ERGs) create supportive communities within organizations, helping employees feel heard and valued. These groups, often centered around shared interests, identities, or experiences, promote inclusivity and engagement. Research shows that ERGs contribute to higher retention rates by fostering belonging and professional growth. Employers can support ERGs by providing funding, executive sponsorship, and opportunities for members to influence company initiatives.
Employee Retention FAQs
Read on for answers to a few frequently asked questions regarding retention.
What Are the 5 C’s of Retention and Employee Engagement?
The 5 C’s of retention are care, connect, coach, contribute, and congratulate. These elements are key factors in keeping employees engaged and satisfied.
What is the Biggest Key to Retention?
The biggest key to retention is a strong company culture that fosters engagement, recognition, and career growth. Employees are more likely to stay when they feel valued, supported, and have opportunities to advance.
How Often Should Organizations Review their Retention Strategies?
Organizations should review their retention strategies at least annually, with ongoing assessments through employee engagement surveys and feedback tools. Regular reviews ensure strategies stay aligned with workforce needs and business goals.
Measuring the Success of Your Employee Retention Strategy
Measuring the success of your employee retention strategy requires tracking key performance indicators (KPIs) such as turnover rates, employee satisfaction scores, and average tenure. HR software can help monitor trends in retention by analyzing exit interview data, performance metrics, and engagement levels.
Regularly conducting employee engagement surveys provides direct insights into workplace satisfaction, identifying areas that need improvement. By leveraging these tools and reviewing data consistently, businesses can make informed adjustments to their retention strategies, ensuring they align with employee needs and company goals.
How Paycor Helps
Paycor provides an all-in-one human capital management platform that connects every aspect of people management, from compensation and benefits to recognition and career development, to help companies track the employee journey and reduce turnover. Attract, develop, and retain talent with Paycor’s robust solutions, which support more than 2.3 million people across all 50 states. Learn more with a guided tour.