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The widening mismatch between the job environment an employee desires and the one the organization offers is the reason behind the dropping retention rate. With 75% of the employers suggesting that they are having a hard time filling positions, shared a study by ManpowerGroup on talent shortage, what every organization needs right now is to incorporate strengthening employee retention strategies into their process. 

Employees who can adapt and keep up with the changing pace of the work environment – in terms of technology, people management, or any other factor – are in steep demand and are extremely valuable for the organization’s growth.

While hiring such employees is only one part of the challenge, retaining them is another story. Hiring the right people is critical to making your company as strong and effective as possible.

But if those employees leave after a year or two, you’re right back where you started - having to hire again and wasting more money and time on recruitment. A Gallup study found that the cost of replacing an individual employee ranges from one-half to two times the annual salary of that respective employee,

Increasing employee retention helps you hold onto those great employees, reducing turnover and recruitment costs. Even the top companies in the world struggle to keep employees - so what are some damn good, data-backed strategies to reduce turnover of employees?

Employee retention is a huge challenge for every organization – large or small. Not only is it time-consuming to find a suitable replacement for any role, but it can also cost a lot to the organization.

Before we jump into more details on what strategies organizations can adopt to retain employees, let’s explore turnover and why it is important to manage it.

What exactly is employee turnover?

Employee turnover is an inevitable part of every organization. While turnover is voluntary in most cases (where employees initiate the process), there are times when it can be involuntary (where the organization initiates the process).

To define the term, employee turnover is nothing but a total number of employees leaving the organization over a stipulated period. For example, if an organization has 600 employees and 30 employees move out over a span of a year, the employee attrition rate is around 5%.

There can be many reasons for an employee to leave the organization – like finding a better job opportunity, continuing education, displeasure with the manager/organization, starting their entrepreneurial ventures, relocating with their spouse who has been transferred, retirement, and so on.

The top reasons why millennials leave their companies are because they received a better job offer from another company (30%), their career goals aren't aligned with the company (27%), or they saw a lack of career opportunities within the company (13%). - G2 Crowd

Does employee turnover matter?

So, if you think turnover matters, the answer is simple and profound – YES! Employee turnover can prove to be quite expensive for an organization.

While some costs like recruitment, hiring, and onboarding can be estimated accurately, some costs are quite impossible to measure – like the added stress on the rest of the team, overall morale, disruptions in customer interaction, service, etc.

Sometimes, an employee leaving can leave the others in the team wondering if they should start looking for other opportunities.

For example, the organization may owe an employee who is leaving a severance pay, while on the other hand, may also need to pay a new hire bonus.

Until the new hire is onboarded and is up to speed, the remaining team might have to do overtime. The training of new hires is another cost that can account for the organization’s expenses, and so on.

Losing an employee can cost anywhere from 16% of an hourly, untrained employee to 213% for a highly-trained position. Say an executive makes $120,000 a year - if he or she leaves, the true loss to the company could be up to $255,600. - Center for American Progress.

Like the best talent in the team, leaving the organization is not a nightmare enough. A turnover brings a whole new set of challenges to tackle.

That is why creating an effective retention strategy that reduces turnover and improves the overall team engagement and morale is extremely crucial for the success of any organization.

Why is reducing employee turnover important?

It’s completely normal to have the same level of employee turnover at any organization. Employees retire, change industries, move away, or are let go for poor performance.

No industry has zero turnover - it’s just not possible. But plenty of people leaves their employers for avoidable reasons.

More than 1 in 4 workers in the US will leave their jobs this year to go work for another company - that’s 42 million people. And 77% of those who quit their jobs could have been retained by their employers.

Avoidable turnover like that means companies are having to spend lots of money on finding and recruiting new candidates instead of putting in just a little work to keep the employees they already have.

Your most talented workers have plenty of job options elsewhere - what are you doing to convince them to stay with you for the long haul?

Employees leave companies for many reasons, but they all come down to one simple explanation - their company is not meeting their needs. How can you find the problem and fix it so your employees stay loyal to you for a long time?

What is employee retention?

The essence of employee retention is to try and retain the best talent in the organization for as long as possible.

Employees who stay in the organization for longer tenures profoundly impact several factors – like productivity, uninterrupted business flow, reduced cost of hiring & training, and so on.

That is why employee retention happens to be on top of the priority list for most HR heads and leaders.

Building a successful employee retention strategy, however, is not always easy. A successful employee retention strategy relies on a number of factors, including employee recognition, organizational culture, growth opportunities, learning and development, and more.

Best employee retention strategies that work

To help you build a great retention program, we have put together the 12 best employee retention strategies that are tried, tested, and are sure to work.

  1. Analyze why employees leave
  2. Look into your hiring strategy
  3. Optimize employee onboarding
  4. Invest in employee development
  5. Select the right managers & coach these managers
  6. Encourage workplace socialization
  7. Establish trust through transparent communication
  8. Show gratitude and recognition
  9. Seek employee feedback & act on it
  10. Value employee health and wellbeing
  11. Keep up with compensation
  12. Let go when needed

Let's take a closer look at implementing these strategies in detail.

1. Analyze why employees leave

If you don’t know why employees are leaving your company, you won’t develop an effective strategy to get them to stay.

First, review the average turnover rate for your industry - is your employee turnover rate higher than average?

Implementing an exit interview process for departing employees can give you insight into the real reasons employees are leaving.

After all, they’re more apt to be honest when they’re leaving, and if you don’t ask them yourself, they might tell the world in a negative review on Glassdoor or another site.

Look at the patterns you see once you’ve started to gather your data. Are you getting feedback from multiple employees on work/life balance issues, manager problems, workplace culture issues, stalled career development, or something else?

What is getting in the way of your employee retention strategy? You can’t fix a problem until you can identify it.

2. Look into your hiring strategy

It all starts with hiring. The people who leave you are the people you once hired. So take a deeper look at your hiring process, including the job requirement, job description, interview processes, compensation and benefits, the roles and responsibilities.

And are you seeing a large number of employees quit a few months after they’re hired because the job wasn’t what they thought it would be?

Your job descriptions should be an honest look at your corporate culture and a detailed and accurate view of the job responsibilities.

Employees shouldn’t be surprised by the basic aspects of the job after they start - that means you need to adjust something in the hiring process, so you’re hiring the right people from the start and setting up the right expectations.

3. Optimize employee onboarding

The first day at a new workplace is often very similar to the experience we used to have on the first day at school – the jitters, the excitement of meeting new people, learning new things, and so on.

While it's challenging for the new employees to familiarize themselves with the new environment, people, process, job responsibilities, etc., it’s just as challenging for the managers.

It becomes the responsibility of the manager to set the new hire up for success by making them feel comfortable with the organization and the team from the beginning (well before their first day on the job!).

An intelligent, well-thought-through, individual plan for each employee onboarded can go a long way. Ensure the employees are not just spoken about the roles & responsibilities but are also educated about the company culture and how they can thrive each day.

Layout plans and goals for the first week, first month, first quarter, and so on, so they are clear about what is expected.

Gestures like making an announcement on the intranet portal, introducing the new employees, pairing them up with a buddy or a mentor to help them sail through the first few days can greatly impact.

In short, the employee onboarding experience should be just as planned and thought after as a customer onboarding experience.

4. Invest in employee development

An investment in knowledge always pays the best interest.” - Benjamin Franklin

One of the simplest ways to reduce employee turnover is by providing good career advancement opportunities. The top reason employees leave a company is because they don’t see a fulfilling long-term career ahead of them.

If you’re not providing regular career development opportunities and a fair promotion system, employees will get frustrated and start looking elsewhere for jobs.

This doesn’t mean you need to promote every employee every year- that’s not reasonable, and your workers know that.

But they do want to know what their career path could look like, have regular discussions about career progression with their managers, and know that the opportunities for promotions are clearly stated and fairly distributed.

Losing people because of insufficient learning opportunities is probably one of the worst ways of losing your talent. These are the curious people – curious to learn new technologies, techniques, processes, etc. - and curious people often make great employees.

These employees jump into any new challenges and think of creative solutions.

Encouraging employees to constantly learn and equip themselves with the latest trends and technologies in the market will keep them from leaving.

According to LinkedIn’s annual Workplace Learning Report, 94% of employees said they would stay in a company longer if it invested in their professional development.

Prioritize investing in employees’ professional learning and development by allocating special funds for online courses, providing tuition reimbursement wherever necessary, attending industry events, webinars, conferences, etc.

5. Select the right managers & coach these managers

We’ve all heard the familiar phrase “Employees leave managers, not companies”. Managers make a huge impact on employees and teams.

They directly affect how engaged and motivated employees are – and therefore, how long they are likely to continue working in an organization. But, what is it that employees do not like seeing in their managers?

From playing favorites to making inappropriate advances, not communicating sufficiently, micromanagement, not appreciating enough, not listening to the team enough, not being decisive, not providing enough learning opportunities, etc., can be extremely demotivating and push employees towards quitting the organization.

One of the best ways to avoid this, and encourage a good manager-reportee relationship is to equip the managers with the right kind of enablement training, learning material, etc.

Providing managers sufficient free-handed funds to reward team members and bond with the team over lunches/dinners will also help break the ice. Using tech platforms for effective one-on-one feedback and using social intranet platforms to connect and collaborate with the team can also go a long way in building great performing teams.

Selecting your managers carefully, and training them on management skills thoroughly, helps your supervisors succeed and your employees stay satisfied.

6. Encourage workplace socialization

When I speak with people who love their jobs and have vital friendships at work, they always talk about how their workgroup is like a family. - Tom Rath

We tend to spend a larger chunk of our time at the workplace/working than with our families. So, don’t you think encouraging employees to build strong workplace friendships helps the purpose of building strong, connected, and happy organizations?

Workplace friendships make coming to work less obligatory and more fun and something to look forward to.

According to a Gallup report, people with a “best friend at work” are seven times more likely to be engaged in their work.

Workplace socialization goes far beyond a drink with a colleague on Friday evening or an odd team-building day.

Building ‘compassionate’ and ‘meaningful’ bonds with co-workers can go a long way in creating a happy, satisfied workforce.

Provide your employees with multiple avenues to break the ice and connect – be it through regular company events and celebrations or powerful communication platforms.

Workplace socialization goes a long way in retaining employees.

7. Establish trust through transparent communication

The single biggest problem in communication is the illusion that it has taken place. - George Bernard Shaw

Great communication is just like a good game of tennis – it consists of great volleys.

Communication is not like what it used to be decades ago, where the management would send out memos or stick announcements on notice boards without any means for employees to share their views and opinions.

In today’s fast-paced world, employees expect to stay up to date with every company's development and want to voice their thoughts and opinions about it.

The most innovative and successful organizations aren’t waiting to see disengaged employees with low productivity. Still, they invest in a technology platform that can connect employees – no matter where they are working from, which part of the world, or what device they are connected from.

A digital communication and collaboration platform like an intranet lets you explore creative ways of establishing communication, quick messages from senior leadership, brief conversations between managers and team members, HR announcements, or opinion polls.

These platforms help leaders stay connected to all employees and give employees ample opportunities to share their views, ideas, questions, and concerns. This sends out a strong message that the employee's voice is vital for the organization’s success - thus increasing engagement and retention.

8. Show gratitude and recognition

Recognize and affirm people when they contribute to the mission you share. Do this and you will ignite their purpose and potential. - Mike Byam

One simple thing that has a big impact on reducing employee turnover is recognizing and thanking employees for their hard work.

Strategies to reduce employee turnover don’t always have to be costly and extensive - they can be as simple as noticing when someone has done an excellent job and telling them why you appreciate their dedication and hard work.

You can do this by implementing a formal recognition program. But it’s critical not to ignore the small gestures as well. Employees who don’t feel adequately recognized are twice as likely to quit in the next year - that’s a huge impact on your turnover rates.

And 65% of employees say they haven’t received any form of recognition for good work in the last year, so there’s a lot of room for improvement at almost every organization.

No one dislikes being told how good a job they have done. Appreciation is something everyone appreciates!

That is why rewards and recognitions have a massive impact on how motivated and engaged employees are, affecting how long they will work with the company. They create a perception amongst employees that their work is valued and respected by the organization.

Not just that, it helps employees find focus and purpose in their day-to-day activities. So much is the effect of rewards and recognition that research by Bersin & Associates showed that companies with recognition programs that are highly effective at improving employee engagement have 31% lower voluntary turnover.

Make it a habit to thank your teammates when they go the extra mile, be it a simple “thank you”, or “kudos” at the weekly meeting, be it an award at the annual gala or a gift voucher to show your appreciation.

Recognition is the most powerful when it is made “social.” Be it a recognition like an employee of the month, or any team recognition, birthdays, or work anniversaries, announcements on social intranet platforms bring the organization together in celebration and lift employees' morale.

Not just that, having a structured rewards and recognition program helps an organization align with and reinforce its values and beliefs. Who in the organization gets rewarded and recognized and why - represents an unequivocal statement of the organization's true values and culture.

A great number of successful organizations also invest in and appreciate the ideas and innovations of their employees. Investing in a formal platform can also help send out wishes to employees on their special milestones, birthdays, work anniversaries, etc.

9. Seek employee feedback & act on it

“Feedback is the breakfast of champions.” – Ken Blanchard

It becomes challenging to retain employees when you have no clue or are too late in realizing what challenges employees face, how exactly they feel about the work environment, whether they need any specific support, etc.

The outdated yearly or half-yearly feedbacks work no more to help the cause - especially with the generation of today – where not only are they keen on voicing their opinions instantly, they also expect quick actions and turnarounds on the feedback shared.

This is where conducting regular (weekly / monthly) one-on-one feedback sessions and surveys come to the rescue. Employee feedback can prove a potent tool to boost engagement and morale.

Employees feel empowered when they are encouraged to share their ideas, thoughts, and views about the various happenings within the team or organization.

Conducting surveys from time to time to understand the organization's pulse or to collect opinions of specific areas of operation can be highly beneficial.

Lifecycle surveys can also help measure the ‘Moments that Matter’ across different stages like - onboarding, role change, celebrating a work anniversary, etc. Capturing and analyzing employee experiences can help understand the challenges sooner and thus take faster action.

While collecting feedback solves one part of the problem, it doesn’t make a huge difference until you take action on the feedback received.

Taking timely action and communicating back to employees on what action is being brought about the concerns and shared feedback makes a difference.

10. Value employee health and wellbeing

"Physical fitness is not only one of the most important keys to a healthy body, it is the basis of dynamic and creative intellectual activity." - John F. Kennedy

With organizations across the globe increasingly emphasizing on health and wellbeing of employees, very few workers are willing to tolerate long working hours and unhealthy work conditions.

What’s more, research shows that employees who are stressed, overwhelmed, and overworked are likely to fall ill more frequently. Over time, overloading employees with too much work can lead to productivity loss, low morale, and a higher turnover rate.

Recognizing the important role employee health and wellbeing plays - be it physical, emotional, mental, or financial - in engaging employees and cultivating a strong workplace culture can go a long way in reducing turnover.

Be it as simple as encouraging employees to take paid-offs and breaks once in a while to unwind and relax, adding headcount wherever necessary, helping them with expert advice on making sound financial decisions, conducting regular counseling sessions to ensure sound mental health, conducting yoga and meditation classes or sponsoring their gym costs – employees value the organizations that encourage their wellbeing.

Employees often leave companies because they feel burned out - their hours are too long, their vacation time is too short and sparse, and they don’t have time to be complete human beings and productive workers.

If departing employees tell you in exit interviews that this is the reason they’re leaving, look closely at your policies.

11. Keep up with compensation

This seems essential, but too many employers discount the importance of maintaining adequate compensation and benefits for their employees.

Suppose you’re not regularly ensuring that your total compensation and benefits are competitive with other companies in your industry. In that case, you provide an incentive for your employees to look elsewhere for work.

After all, employees are working because they need to support themselves, and that’s what a fair wage and competitive benefits allow them to do. And replacing an employee is expensive - raising salaries or adding a few benefits could actually help your bottom line if it reduces turnover.

12. Let go when needed

One poor performer can drag down a whole team and drive away your top employees.

The effect that one toxic employee - who doesn’t perform to standards, makes others uncomfortable, or causes issues regularly - can have on your wider working environment is huge.

Not every employee you hire will end up being a strong fit for the long-term, and that’s ok. You should definitely check why it ended up in the wrong hire to not repeat the mistake.

But it would help if you took action sooner rather than later to adjust so that you don’t lose the employees who do fit and contribute.


Every business, at some point in time, faces the challenge of turnover and retention. That is why employee retention is quoted as one of the biggest challenges that human resource professionals face.

Today's employees look for aspects in the job that are far beyond monetary benefits alone. Paying more is no more a solution to retaining employees.

That is why it is extremely important to have a strong retention strategy that engages and motivates your employees and aligns with your organizational mission and goals.

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Rashmi Singanamalli

Rashmi Singanamalli LinkedIn

Rashmi is a Content Marketing Specialist at Xoxoday. She is a passionate, result-oriented, seasoned marketing professional with overall experience of 7+ years in IT industry.