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Do you suffer from a revolving door of talent? You swing open the door to a batch of new recruits only to find others heading for the exit?
Employee retention is your organization’s ability to retain your best workers for the long term. By tracking your employee retention rate, you can measure the effectiveness of your efforts to retain talent. The higher the retention rate, the better it is for your company’s bottom line.
But how do you ensure your employees stick around for years to come? This guide digs into the reasons for high turnover and suggests effective employee retention strategies to keep your workers.
People come and go in business—it’s normal for companies to experience some level of turnover. Yet, organizations that keep their retention rates under control can enjoy the following advantages:
Constantly departing team members cause chaos and disruption for anyone who remains. Time-to-fill rates are long in recruitment, with LinkedIn highlighting that 42 days is the median time to recruit a replacement, extending to 49 days for industries like engineering.
During this time, existing employees prep for people leaving, conduct interviews, or train new team members to take on additional responsibilities. There’s little wonder that overall productivity can be impacted, not least by rising cases of employee burnout—a condition experienced by 65% of people, with 72% of these believing it has affected their performance.
A wave of departures in your organization can impact employee morale and cause those remaining to wonder if the grass could be greener for them, too. Exiting team members are highly likely to air their grievances publicly—from tales of toxic management to internal conflict with their peers.
Retaining engaged and happy people in your organization keeps these negative and triggering conversations at bay, focusing instead on internal success and opportunities.
Low turnover is good for your bottom line. Along with keeping productivity levels high, you’ll also avoid the costs of turnover and hiring new staff. SHRM data reveals that the average cost per hire is $4,700, but some companies spend 3-4x a person’s annual salary on recruitment. A focus on high retention means you won’t shell out for:
Employees with long tenure have a wealth of knowledge about your workflows, processes, products, and services. This vital information dilutes or disappears entirely when people depart the organization. Retaining your highly skilled professionals enables them to pass on institutional know-how to others through mentoring arrangements or succession planning programs.
Understanding the reasons for high turnover is a good starting point for turning the situation around. Commonly, we can expect the following issues to send your employees toward the exit:
If you suspect any of the above as a reason for your high turnover, consider the following strategies to offer a more attractive outlook for your workforce:
Employee retention statistics suggest that 41% of people actively seek a new job in 2024, and 24% may be open to a change. Increased compensation is the top reason people are job hunting as employees struggle with the cost of living. According to the Achievers 2024 Engagement and Retention Report, employees who can’t afford to pay their bills are 39% more likely to look for a new role, which is twice as many as those who can live comfortably on their salary.
Companies that want to retain employees must stay focused on offering their employees a competitive salary in the market. Consider using industry benchmarking data to understand if you’re offering current and prospective employees an attractive salary. Remember to regularly review and adjust salaries as needed based on market trends.
Career progression is the second most popular reason for employees to leave their roles, according to Achievers, with 24% of people choosing this as their priority. When employees can’t see a clear future at their company, naturally, they’ll be tempted by juicier opportunities elsewhere. Speaking on the HR Leaders podcast, Erica Keswin, author of “Retention Revolution,” explains how the corporate culture has moved away from ladders toward lily pads.
“Gone are the days everybody is going to just go up one rung in the ladder and then 50 years later, you’re going to retire with a plaque and a pension. Within an organization, if you don’t create an ecosystem for growth and help people grow up, down, and sideways, they will hop on over to another company.”
Employees need to believe and visualize that career opportunities are real and attainable to them. Some ways to communicate different progression options include:
Employee benefits are essential to your total rewards model, complementing your workers’ salaries with additional monetary and non-monetary perks and employee retention benefits.
Some benefits, like health insurance, are mandatory, while other perks are optional, allowing you to get truly creative with your benefits package design. One of the most attractive ways to improve your benefits package is to give your employees the power to choose what they want. For example, using a lifestyle spending account, employers fund the account each month, and employees spend the money on the lifestyle categories that best suit their circumstances, including:
Tip: Review our 2026 Benepass Benefits Benchmarking Guide to understand how your current benefits offering compares to your competitors. This provides detailed breakdowns of benefits trends according to company size and industry.
Appreciating your employees’ contributions to your organization is a simple way to maintain their interest and loyalty. Nectar’s recognition statistics highlight that 71% of employees would be less likely to leave their organization if they were recognized more frequently. This means finding a way to acknowledge your employees’ behaviors, activities, and accomplishments, perhaps choosing one of the following recognition vehicles:
Employees need to feel like they have a voice in your organization to suggest innovative ideas or raise serious concerns. Google’s 2018 walkouts are a great example of employees coming together in protest because they didn’t feel heard. The tech giant’s employees staged walkouts across numerous global offices to speak out against sexual harassment, racism, and gender inequality. To avoid such events and create a psychologically safe space where your employees feel comfortable providing their feedback, consider some of the following options:
Although some companies are mandating return-to-office policies this year, flexible work arrangements aren’t going out of fashion. According to FlexJobs, 63% of employees are willing to take a pay cut to work remotely—17% would lose up to 20% from their salary, while 1 in 10 would slash more than 20% to remain in their home offices.
Plenty of employers in the market offer flexible working arrangements, and some employers like Buffer and Toggl are remote-first. Prevent your employees from hopping over to a more flexible competitor by:
A fantastic example of a leader who understands the value of flexible work arrangements is Lauren Howard, CoFounder and CEO of FMLA MD, who says:
“My staff knows that they don’t have to ask to use their PTO. They tell me when they’re taking it. It’s not my time to dole out. It’s theirs. It always was. My job is to run a team that has the resources to function without one person for a reasonable amount of time. Give me a heads-up. We’ll make it work. I don’t need to know why you need the time. I don’t need to approve of your reasons for using PTO. I don’t need to verify that you’re sick enough to need sick time. Not my business. Go frolic through fields in the Alps or rage at a music festival. Go to your family reunion or your best friend’s wedding. Whatever, friend. It’s your time. Trusting employees to use their time as they see fit means they almost never leave you in a lurch.”
According to LinkedIn’s Workplace Learning Report of 2024, 90% of organizations are concerned about employee retention. Providing learning opportunities is the number one strategy to retain top talent, which could include:
93.5% of employees would stay at a company for five years if the culture is great, according to Nectar. A positive company culture can mean different things to different people but often focuses on the fabric of relationships within an organization and the values they embody. Erica Keswin explains why it’s vital to prioritize culture throughout the entire employee lifecycle:
“People leaders need to be really intentional about how we onboard people and let them know our values and how we live them while they’re with us. We help them learn and develop up, down, and sideways, and when they come and tell us they’re leaving, which they probably will at some point, we need to figure out ways to stay connected.”
Retain your best employees by:
The IRS Employee Retention Credit (ERC) was a tax credit introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The aim was to encourage businesses to retain their payrolled employees during the COVID-19 pandemic. To be eligible for the credit, businesses must have:
The deadline for claiming the ERC is April 15, 2024, for 2020 tax periods and April 15, 2025, for 2021 tax periods. Special education sessions are also available for businesses that may have claimed the credit in error, including information on voluntary disclosure or withdrawal programs. There is also an option for businesses to pay up to 80% of the claim back.
Effective employee retention programs hinge on a positive employee experience, strong relationships, and an engaging company culture. Achieve these goals by adding some critical employee retention software into your tech stack, such as:
CultureAmp is an employee experience platform focused on giving your organization a competitive advantage. Its features include:
Nectar is a rewards and recognition platform that helps employers create a culture their employees won’t want to leave. The software offers the following features:
Benepass is a people-first benefits administration platform that simplifies the management of your company’s benefits and perks. We offer a wide range of options to suit your employees at any stage of their personal or professional lives, including the following:
Setting up your Benepass involves the following simple steps:
Download our in-depth guide to setting up an LSA for best practices, customizable templates, and helpful tips to get you started with creating a flexible stipend.
Ready to retain your best employees with a compelling benefits package they won’t walk away from? See Benepass in action by arranging a free demo of our platform, or contact sales@getbenepass.com with any questions.
