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18 Effective Employee Retention Strategies


High turnover rates can affect your business’s long-term success and indicate underlying organizational issues. Developing an effective strategy for employee retention can help you highlight internal opportunities, improve employee satisfaction and decrease costly turnover.

Keep reading to learn more about employee retention strategies and their benefits.

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What is an employee retention strategy?

Employee retention is an organization’s ability to prevent voluntary and involuntary employee turnover. An employee retention strategy is a plan businesses develop and implement to reduce turnover rates. An employee retention program generally includes company policies and programs that help organizations attract and retain qualified employees.

Some turnover is inevitable, and acceptable rates vary among businesses and industries. However, astrategy for employee retention can help optimize retention and reduce expenses related to hiring and training.

Related: Why Employee Attrition Matters

The importance of an employee retention strategy

You can expect to lose some of your employees every year. People naturally move on for various reasons, such as new opportunities, moving or life changes. According to the BLS, the average employee tenure is 4.1 years. Most people under 50 will change careers at least three times throughout their life.

Still, high turnover rates can be expensive, inconvenient and harmful to a company’s overall success. High employee turnover forces a company to spend resources to recruit, hire and train new employees. These costs can amount to up to 33% of an employee’s yearly salary through both direct and indirect costs. This is why every business should know how to retain employees.

An effective retention strategy can provide numerous benefits by targeting internal pain points such as workload issues, interpersonal challenges or low morale. A solid retention strategy can:

  • Increase employee loyalty
  • Reduce hiring, training and staffing costs
  • Improve morale and workplace positivity
  • Increase productivity
  • Add more skilled workforce
  • Better brand reputation
  • Enhance customer experiences
  • Improve employee experience

The top reasons why employees leave

Wondering how to retain staff? According toa study by the Work Institute, 78% of the reasons employees quit could have been prevented by the employer. This means over three-quarters of employee turnovers are preventable. The most cited reasons mentioned during exit interviews included:

  • Lack of career development
  • Poor work-life balance
  • Upsetting manager behavior
  • Perilous job characteristics
  • Unsatisfactory compensation and benefits

Understanding why employees leave is important to avoid a high turnover rate. By recognizing patterns of employee dissatisfaction, you can proactively make changes that will positively impact retention.

Strategy for Employee Retention: 18 Ways to Get Started

Wondering how to retain an employee? Here are 18 effective strategies to try:

1. Focus on the hiring process

Choosing the right candidate for the position is critical to employee retention. If an employee isn’t a good fit for their role, they’re more likely to leave your organization regardless of other retention strategies you use. Focus on the hiring process by creating a job description that clearly describes the expected qualifications, skills and experience for the position as well as your workplace environment and culture. By creating a clear impression of what working at your organization looks like, you’re more likely to attract candidates who are a great fit and deter those who aren’t.

Related: 10 Recruiting Strategies for Hiring Great Employees

2. Offer a competitive salary and benefits

Employees often leave when they don’t feel they’re appropriately compensated. Use Indeed Salaries to understand the average salaries and consider ensuring you’re within that range.

Benefits and perks can make a compensation package more competitive. Employee benefits often relate to enhanced work-life balance and personal wellness, which can help employees feel more motivated to work and loyal to your organization. Employees value benefits such as flexible work arrangements, paid meals, insurance, retirement accounts, cell phone stipends and gym or health club memberships. They’ll often consider these benefits when comparing compensation packages between prospective employers.

3. Invest in your employees’ careers

Employees who feel their employers are invested in their career and professional development are often more likely to be loyal to their organization. In addition to helping team members feel supported and valued, professional development incentives and opportunities allow them to continually hone their skills, progress in their careers and retain a competitive edge. These investments likewise benefit your organization, as you’ll gradually nurture and develop a highly skilled workforce that feels committed and motivated for a future with your business.

Read more: Learning or Leaving: Why Employee Development is Key to Retention

4. Train effective leaders

Employees spend much of their time at work interacting with management. In fact, a manager has a more significant impact on a person’s mental health than their therapist or doctor and sometimes as much as their partner. If employees have a bad experience with management or don’t feel they’re receiving supportive or effective guidance, they may be more likely to leave the company. Consider focusing on training management with an emphasis on skills in leadership, communication and teamwork.

5. Be respectful and inclusive

A respectful, inclusive work environment helps set the tone for a professional work environment and encourages them to speak up more and share their ideas. Team leaders should encourage employees to recognize and value each other’s skills and be respectful of the differences.

Ensuring employees treat each other with empathy and understanding promotes a positive setting that not only makes them feel more satisfied with their employment, but may also improve business outcomes.

Related: How to Manage Employees

6. Encourage a culture of open communication

While problems in an organization can’t always be avoided, how the company responds to them matters the most. Satisfaction rates increase when employees openly communicate with management and discuss their problems or concerns. A culture of open communication can also encourage trust among middle and upper-level management. Create a culture of open communication by welcoming employees’ requests and feedback.

7. Create clear work expectations

Employees also want to know how they’re doing professionally. When they don’t fully understand their duties or how their performance is measured, employee morale tends to decrease.

Take time to explain your expectations to new hires and how you plan to evaluate their performance. Share metrics or rubrics you’ll use to assess their work. It’s also important employees know how their work impacts business objectives so they understand the importance of their contributions. When team members have insight into how their efforts help the organization meet its goals, they’re more likely to feel fulfilled by their work and motivated to do well.

Additionally, be sure to offer the same level of guidance to employees who have recently changed roles or earned a promotion to ensure they feel comfortable and confident about their new duties.

Setting clear goals and objectives and regularly discussing progress toward those goals motivates employees, gives them clear expectations and helps them better understand their role. Annual reviews provide the environment to discuss role objectives and perform evaluations.

Related: How to Conduct an Employee Evaluation

8. Understand what makes employees leave or stay

It’s necessary to understand why your employees choose to leave. Exit interviews can help you have transparent conversations with individuals about why they’re leaving. Keep track of the reasons for leaving and address reasons that indicate internal issues, such as unsatisfactory compensation or a toxic work environment.

Showing kindness to departing employees and letting them know they’re welcome to touch base later could mean an easy hire in the future if they decide to return.

It can also be helpful to consider why your current employees are staying. Continually get employee feedback about what they enjoy most andwhat they feel could be improved about the company. Gather this information through employee surveys and one-on-one meetings. This can help you understand the company’s culture as a whole.

Related: 8 Exit Interview Questions that You Should Ask

9. Encourage professional work relationships

Employees who feel more connected with their teams are often more motivated regarding shared goals or objectives. Foster work relationships among employees through professional outings, events and team-building activities. For example, company-sponsored sports teams or volunteer events can be a great way to encourage community and collaboration within your company.

10. Build a strong company culture

A positive, healthy working environment proves critical to employee retention, and the best way to build it is by leveraging dedicated, supportive leaders. These managers should promote relationship-building collaboration by organizing effective team-building activities such as group lunches and outings.

By helping workers get to know each other better outside the work environment, these opportunities often strengthen bonds and improve cooperation between coworkers. Bonds formed and nurtured in this way may make employees feel more supported by their coworkers and teams, making them more likely to stay with your organization over the long-term.

11. Emphasize the importance of work-life balance

Work-life balance can be vital for your employees. Staff who feel their jobs’ demands affect their personal lives are more likely to find alternative employment. Allowing for greater work arrangement flexibility through remote or hybrid work, for example, can improve employee satisfaction rates. Some surveys suggest 64% of employees would forgo a $30,000 raise if they didn’t have to work in person.

To support work-life balance, consider the following benefits and strategies for employees:

  • Childcare assistance
  • Remote or hybrid work options
  • Regularly reviewing workloads
  • Flextime
  • Emphasis on productivity rather than hours
  • Subsidized commuting costs
  • Gym memberships, mental health services and other extended health benefits

12. Provide advancement opportunities

Although some employees might be content in an entry-level position forever, most are eager for career advancement and access to more rewarding challenges, opportunities and compensation.

Focus on hiring from within when you have a new position. Work with your employees on a career path that lets them pursue new opportunities with your company. Knowing these opportunities are available can motivate them to work harder and stick around longer.

13. Bring your values to life

Research shows your organization’s culture and values account for about 21.6% of employee satisfaction compared to other factors, and this number only goes up for higher incomes. Employees are increasingly prioritizing employers who share their values. To attract and retain well-aligned team members, demonstrate your company’s values through your behavior.

Depending on your organization, that could translate to several initiatives. For example, you may make efforts to reduce your carbon footprint, provide education opportunities to marginalized groups or sponsor local charity events.

14. Create a mentor program

Building a mentor program or buddy system into your onboarding process helps employees learn more about the organization, understand how they fit in and provides a go-to person for support and guidance.

Mentor programs don’t have to be exclusively for new employees. Your existing team members might want a mentor if they’re trying to advance, switch to a new department or grow within their role. Having a mentor in a higher position helps the employee understand how to get there.

15. Recognize achievements and milestones

Compensation is necessary, but employees who never receive recognition for their work and accomplishments may feel unfulfilled and frustrated. Knowing that management sees their efforts can motivate employees to work harder and stay with the company.

Speak up when you see an employee doing something worthy of recognition, and share appreciation with the team at meetings or via email. Having a plan to celebrate birthdays, work anniversaries and other milestones can also improve morale and encourage employees to stay.

16. Tell your brand’s story

Tell your employees your brand’s story, including your company’s history and core values. Knowing the brand’s purpose will help strengthen employee engagement, unify team members around a common mission and foster a sense of community. Additionally, when employees fully understand the brand values, they can use them to guide their decision-making process.

It’s important to explain your brand story as part of your onboarding efforts and continue reinforcing the message by publicly displaying values and discussing them frequently.

17. Encourage collaboration

Foster a collaborative environment that thrives on employees supporting one another. While a highly competitive environment might work in some situations like fast-paced sales floors, it causes too much conflict within most other business operations. Instead, incorporate collaboration by creating common goals they can strive for together, build cross-functional teams where employees with different specialities work together and leverage technology to make teamwork easier.

Open office layouts often work well for employees collaborating on projects, but be sure to provide them with solo workspaces when they need to break from the crowd to recharge. Encouraging mutual respect helps in these situations, as does rewarding and recognizing teamwork to show you how much your business appreciates the great work they did together. Collaborative efforts should also focus on open communication with regular meetings where everyone gets a say and an open-door policy so employees can air out issues in a healthy setting.

18. Research the competition

Just like you perform market research for your products and services, you should also research your business competition. Knowing what the competition is doing helps you understand the advantages they have in snagging your employees. Evaluate the pay for similar positions and the benefits other employers offer so you see where your organization stands in comparison.

Company culture and reputation of competitors also factor into their overall desirability to potential employees. Companies that are known to be great places to work always get lots of applications, some of which could be your current employees. To avoid losing workers to competitors, figure out what sets the competition apart and why they have a positive reputation. Use this knowledge to identify ways you can improve your own employee retention rate.

FAQs about employee retention strategies

What are the warning signs for poor employee retention?

Certain behaviors may suggest that employees are more likely to leave your organization. Watch for these red flags:

  • Unmotivated work attitude
  • Frequent absences or lateness
  • Decreased work quality
  • Overwhelmed or burnt-out employees
  • Below-median compensation

Who is responsible for employee retention strategies?

HR is generally responsible for developing and creating an implementation plan for policies that drive employee retention. Other parties, such as coworkers or clients, can also affect retention but aren’t responsible for it.

What is a retention bonus?

A retention bonus is a payment or reward outside of the regular salary offered as an incentive to keep a key employee on the job. Bonuses usually occur during stressful business cycles, such as holiday sales seasons or periods of intense production demand. They let an employee know their dedication and work ethic are recognized.

Why should managers measure employee retention?

By looking at employee retention data, such as turnover rates and reasons why employees leave, employers can understand how their managers are handling employees and what operational challenges are faced in daily activity. Employee retention can be directly correlated to managerial success.

What is a retention survey?

Employee retention surveys consist of questions that discover what makes workers happy or unhappy. They provide valuable insight into morale and encourage employees to share their feedback in a confidential way. It’s important to regularly offer retention surveys to stay informed about employee views.

How do you create an employee retention strategy?

The best ways to retain employees for your company might be different than for a competitor’s. Start by understanding your current retention rate to know if you have an issue. Assess your current situation and review recent exit interviews to identify the most crucial concerns, and talk to current employees to uncover additional issues. If the work environment is toxic, make cultural changes.

If your salaries fall well below competitors, find ways to increase pay. Once you address the most important factors that are costing you employees, you can incorporate additional strategies.

What is an employee retention rate?

Employee retention rate is the total number of retained employees at your company measured over a given period of time. Your employee retention rate can give you insight into the overall health of your business. It also helps determine the total number of employees you’re able to keep for budgeting purposes. Read more about how to calculate retention rate.

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