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Recruitment | 9 Min Read

12 Effective Employee Retention Strategies Every Company Must Follow

What Is Employee Retention?

Employee retention refers to the organizational objectives of retaining its talented workforce and lowering the attrition rate by adopting and implementing employee-centric practices. 

Why Is Employee Retention Important?

Every organization invests time and resources to make their recruits corporate-ready material and bring them at par with the existing employees. These employees, when prompted by factors such as lucrative remuneration, comfortable timings, or growth prospects, tend to look for newer opportunities. Irrespective of your efforts to try and influence them, it is ultimately the employees who take the final call on their prospect of continuing with the organization.

Research indicates that nearly one-third of the new hires quit their jobs after about six months of joining. This is when the management and human resources team step in and ascertain the exact reasons for such a decision by the employees, leading to improved employee retention.

If potential employees don’t intend to stay with the company, it will be a tall order to build a successful business. On average, companies shell out an amount roughly equivalent to 20% of an employee’s salary as the cost for employee replacement. However, the real value of losing a talented workforce goes way beyond monetary considerations. After all, when an employee decides to seek employment elsewhere, along with the financial burden of recruitment and training, the organization also loses an individual’s talents and ideas, his thus far accumulated organizational knowledge, credibility, and customers.

Moreover, employers could fall into the rut of adopting a half-baked approach to train new employees, which could be an enormous drain on the company’s resources. Hence it’s vital to have an effective employee retention strategy in place.

Employee Retention Starts with Hiring

Right from the application to screening resumes, to selecting the one for interviewing, you aren’t just recruiting; you are sowing the seeds of your success and reputation. An effective recruiting process makes it possible to attract the right kind of talent while channelizing the focus of hiring managers towards engaging the eligible candidates in the least possible time. Hiring the right person will likely result in improved quality service, leading to job satisfaction, and creating a capable and motivated workforce.

Top 12 Effective Employee Retention Strategies



1. Hiring

1.1 A Methodical Job Description:

A well-thought-out job description paints a clear picture of what employers expect from employees and, consequently, how employees perceive their job role. If methodically written, it provides the candidate with a sense of direction about the probable job responsibilities. Similarly, not only is it an essential tool for evaluating performance, but it also serves as a reference in cases of disciplinary acts or disputes.

1.2 Emphasize Skill Development and Training:

Candidates must be familiar with the opportunities to learn new things and upgrade their skill sets. This way, employers can understand not just employees’ capability but the skills needed by them to excel at their jobs.

1.3 Assess Job Fit:

Using psychometric assessment tools during hiring will immensely help recruiters to ensure that the candidate’s behavior and competency are well-aligned with the organizational objectives.

The Society for Human Resource Management has already underscored the importance of hiring for culture fit in its report stating that bad hiring decisions can cost a company between 50-60% of the employee’s annual salary. Candidates hired based on their alignment of values and beliefs with the organization are definite performers and are likely to contribute to the organizational progress for a comparatively longer duration. If you are attempting to boost the growth of your business, start by keeping your employees happy and engaged at work.


2. Employee Onboarding:

“We focus first on the people and how we incorporate them into our company, and then we focus on how to drive the business,” says John Chambers, former CEO of Cisco Systems.

Onboarding is much more than “here’s your laptop, and here’s your desk,” but a crucial transition period of imbibing the values, culture, and systems of an organization. It is the first step to keep talented people excited, happy, and engaged for long.

Did You Know?

In a study conducted in 2007 by the Wynhurst Group, it was observed that employees who went through a systematic onboarding program (58%) were more likely to stay with their company for more than three years in comparison to those who didn’t.

Interestingly, the onboarding process is not too challenging to learn. It is actually a process that commences even before hiring. Are you confused? Let’s go through it.

2.1 Presenting:

A brief and convincing presentation about the job role, growth patterns, pay scale, and the organizational culture before beginning the hiring process could be the initial step.

2.2 Planning:

Planning for the first day would come next. IBM sets a good example here as they prepare workstations and assign mentors to welcome recruits on their first day at work. Also, they introduce the employee to the workplace culture.

Come to think of it, Twitter’s onboarding ritual is one of a kind, which includes a descriptive 75-step process for the new hire. They provide the new joiner with essentials like email ID, t-shirts, a bottle of wine, followed by breakfast with the CEO along with a tour of the office before they get down to training.

2.3 Mentoring:

A proper, well-defined mentorship program comes next where they are walked through the soft skills of how things work there and get acquainted with the company’s vision. With these in mind, they seamlessly assimilate into the existing work culture.

According to a study by CareerBuilder, a US-based tech company, a staggering 92% of employees asserted that they felt loyalty toward their supervisors since they invested significantly in employee training and development programs.

Research suggests that it usually takes eight months for a new joiner to be fully productive in his/her new role. On a broader scale, an effective onboarding system includes new hires in a social circle and is a learning process where the feedback is the motivating factor.


3. Find Out Motivators:

The level of your association with your workforce is directly proportional to your company’s potential for progress. Motivation is a key component that drives a worker to perform adequately, even exceeding expectations at work. To comprehend a candidate’s’ motivation, Mettl provides you a comprehensive library, which measures inspiration on eight key helpers under three noteworthy requirements:

3.1 Sustainability Needs:

One of the most common and effective ways to motivate the workforce is by addressing their sustainability needs. Monetary motivators, for instance: wages and pay rates, reward, medical coverage, and retirement benefits, etc. come under this category. As per a survey, 89% of the companies using financial incentives were rated positively.

3.2 Relatability Needs:

It is the most obvious way of motivation if provided at the right time and tracked well. The power inherent in employee recognition and culture of healthy competition keeps an employee motivated and hence, results in increased employee productivity.

3.3 Growth Needs:

The potential for growth is a substantial motivational differentiator. Opportunities to improve their skills and broaden their knowledge, giving them the power to make decisions, and deriving a sense of achievement, affect an employee’s motivation.

Nothing works better than motivation. Empowering employees, appreciating them for their efforts and performances, and making them realize their value to the company induce motivation and reduce employee attrition.


4. Create an Employee Development Program

“An investment in knowledge always pays the best interest.”

                                                                               –Benjamin Franklin

New employees join an organization with the mindset to improve their skills and take impressive strides in their careers. With an extended range of abilities, they can contribute extensively to the progress of your company. Well, it’s mutually beneficial. An employee development program focuses entirely on the employee’s needs for learning, growth, and development.

There are four steps to create an on-point development plan:

4.1 Consider Business Goals:

Align employees’ development needs with the needs of the organization. After that, identify the necessary skills and competencies that support long- and short-term business objectives. Finally, bridge the gaps between the employee’s current skill sets and the ones required for success.

4.2 Employer-Employee Conversation:

Speak to every employee and get a better understanding of their career goals and challenges. You must understand their short and long-term plans, and the corresponding opportunities to learn new skills, besides honing the existing ones.

4.3 Capability Vs. Readiness:

Keep track of such situations where an employee might have the skills and knowledge and has the requisite potential for a job role, but isn’t willing to step up to it (reasons may range from personal to any other).

4.4 Training and Development:

Now comes the fundamental question: how will the employee acquire new skills? Well, the answer to this question is simple. Inexpensively and proficiently, specific assignments and projects can work well. One-on-one mentoring, creating groups, or conducting online courses are how the L&D program can be executed.

After successful training, employees get updated with new skill sets, which is a major reason for them to stay longer with the company. Interestingly, Wasp Small Business Report provides us clear insight into the employee engagement dynamics, which states that nearly 56% of businesses plan on bringing new hires in the coming 12 months, while 82% plan on training their employees further. Then, here is the tricky part of evaluating employee performance versus expectations.


5. The Evaluation

The critical aspect of evaluation follows after creating an employee development plan. A formal evaluation with a performance review and holding a quarterly meeting with the employee should be the next step to ensure retention. Gather and review all the documents and records related to the employee’s performance, productivity, and behavior. Once done with the clustering of information about the employee’s work, write a performance review that must include:

  • Goals set for the job and the employee by the employer
  • Employee’s stand on the expected goals
  • Valid reasons for your conclusion

After preparing the performance data, an employer-employee meeting should be set up. The meeting should be long enough to discuss the issues thoroughly. It needs to be specific, realistic, and honest and must help the employee understand his strengths and weaknesses. It should be interactive and not a ‘just come-listen-and-go meeting.’

A successful employee development plan makes your workforce knowledgeable and hence, satisfied. And when your employees are happy, they are less likely to look for opportunities elsewhere.


6. Employee-Employer Bonding

Positive interpersonal relationships, amidst layers of hierarchy, are hardly imaginable in a formal working environment. With defined boundaries and official communication protocols in place, people accomplish the delegated tasks every day and go home. That’s about it! However, you need to bridge that communication gap and know your employees better. You can try to establish an easy-going, meaningful, friendly rapport based on concern and respect for one another. But if you intend to take it up a notch by socializing with the subordinates, meeting their families, discussing something off-topic, etc., you must not overdo it. Remember, if employee retention strategies are not appropriately tackled, you might find yourself wading into tricky waters.


7. Cultivate a Healthy Work Environment

Workplace culture: Often, it is overlooked yet an essential aspect of a worker’s experience. Usually, employers oversee the fact that unsafe or uncomfortable working conditions can take a toll on the employee’s motivation. Imagine them toiling long hours without being able to comfort themselves in a not-so-conducive work environment. Will they be able to perform to the best of their abilities? A safe and relaxed work culture positively impacts employee performance. That’s why relying solely on work-life balance strategies just can’t cut it if the workplace reeks of negativity. Simply put, you must get down to such basic facts as keeping the office well lit and ventilated, and at optimum room temperature, while also ensuring an aesthetically appealing office environment.


8. Strike the Right Work-Life Balance

As far as a company’s culture is concerned, the message received by the employee can make or break his belief in the workplace. If the staff is working for prolonged hours, feeling floundered, you’ll likely have to strive for employment retention because eventually, people will leave.  As they lack empathy, most employers fail to underline the importance of work-life balance. Unless the staff is encouraged to take time off from work, they will not align their objectives with the company’s expectations. Increased job satisfaction at work, be it in the form of an extra day off, late arrivals, flexible timings, or telecommuting, will translate into a significantly happier and motivated workforce.


9. Having an Open-Door Policy in Place

Sometimes, employees harbor resentment or bitter feelings against the management, and they don’t know how to address these pent up emotions. Often, employees don’t even reveal these repressed experiences in the exit interviews. Now, what would you do if you faced a similar situation? You should prepare beforehand and have an effective open-door policy in place, which gives employees the option of walking up to the concerned manager or HR with any issue concerning them. You should also make it a point to address those issues and take the appropriate action. The idea of connecting with each employee regularly is undoubtedly beneficial for employee retention.


10. Give Constructive Feedback

There’s a saying: “to err is human; to let go, divine’’. It holds true in the corporate context, implying that employers should refrain from making a mountain out of a molehill if it’s not a significant error. Employers nitpicking at every activity of their staff is not an ideal situation. A lack of mutual acceptance can be detrimental to the company’s progress. Choosing to refrain from nitpicking and fault-finding will fortify the employer-employee relationship in the longer run. Effective leaders acknowledge the strengths and weaknesses of others and encourage their subordinates to address their weak points. You should take this into consideration and factor it into your employee retention strategy.


11. Celebrate Team Success

As the saying goes, “a team that works together, grows together,” and teamwork is all about celebrating each member’s hard work and effort. Managers must promote a culture of celebration where every milestone achieved through teamwork is taken into account. Whether the team successfully wraps up a project within the stipulated time frame or completes a major quarterly task within the specified budget, seize the moment and share the happiness by celebrating it together.


12. Promote Effective Teamwork

Amazing results are inevitable when people work together as a team. Fostering teamwork in the workplace can help you achieve more than what your employees would have achieved individually. This collaborative work culture assimilates individuals’ work styles and offers ample room for talented individuals to flourish in their respective roles. If you want to make your employee retention strategy more impactful than before, strengthen your team relationships first. This can be done through defining clear team objectives, clarifying business roles and goals, and inviting everyone to put forth their ideas.

Before Closing


You can’t let the approach to employee retention work passively. Everything you do ought to be a part of a more extensive system. Do you treat your employees fairly in the workplace is the substance of employee retention.  Don’t forget to reassess your strategy at regular intervals. Managers should also stay abreast of the current market remuneration levels and best workplace practices to strengthen employer-employee relations. Doing so will significantly improve the morale of your employees and augment your team’s productivity.

You may also want to read: World of Psychometric Tests in Employee Retention

Originally published March 12 2018, Updated June 16 2020


Written by

Abhilash works with the Content Marketing team of Mercer|Mettl. He has been contributing his bit to the world of online business for some years now. Abhilash is experienced in content marketing, along with SEO. He’s fond of writing useful posts, helping people, traveling, and savoring delicacies.

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