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Recruitment | 9 Min Read

12 Effective Employee Retention Strategies Every Company Must Follow

Building a highly productive and engaged team starts with devising innovative employee retention strategies. Organizational success hinges upon retaining competent and ambitious employees. You must nurture and develop your team’s talent for lower employee attrition rates. 

Did you know that the quit-rate of The U.S.A employees is at an all-time high?

What makes these employees leave their jobs? And what makes them stick around?

The solution to these problems lies in the realm of employee retention.

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 and bring them at par with the existing employees. When prompted by factors such as lucrative remuneration, comfortable timings, or growth prospects, these employees tend to seek new opportunities. Irrespective of your efforts to influence them, employees decide on the 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 management and human resources teams step in to ascertain the precise reasons for such a decision by the employees, leading to improved employee retention.

Companies will struggle to build a successful business if potential employees don’t intend to stay with the company. 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 individual goes well beyond monetary considerations. When an employee decides to seek employment elsewhere, the organization loses its talents and ideas, the accumulated organizational knowledge, and bears the financial burden of recruitment and training.

Moreover, employers could fall into the rut of adopting a half-baked approach to train new employees, which can expend the company’s resources. Therefore, it’s vital to have an effective employee retention strategy.

Employee Retention Starts From 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 enables to attract the right talent while channelizing hiring managers’ focus toward 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. Recruiters, CHROs, business leaders, and even most professionals understand the correlation between recruitment and retention. Both must be discussed in equal measure. For teams to emerge as winners, organizations need to hire the right people and retain them.

What Are Employee Retention Strategies?

Employee retention strategies are plans and policies that organizations adhere, to reduce attrition and employee turnover and maximize employees’ engagement and efficiency. Growing businesses face the challenge of creating an employee retention program that aligns with business objectives to ensure the best returns. Companies can increase employee engagement by reinventing their internal corporate social responsibility to profoundly impress the employees about organizational commitment toward societal and environmental responsibilities. 

Simultaneously, CSR is crucial in improving the organization’s bottom line because customers would prefer businesses that prioritize social and environmental causes. Employee retention strategies are devised to encourage employees to continue with the company for the maximum-possible duration.

Employees in the digital age are notably different from their predecessors. There is no shortage of good opportunities for consummate professionals. When they start feeling a sense of dissatisfaction in their current jobs, they begin considering new opportunities. The onus of retaining the best employees lies with the employer. Otherwise, they would be left with indolent, unambitious employees. A sensible employer should know how to deploy the right employee retention strategies to attract and retain the best talent.

In some cases, employees may feel that their remuneration is not commensurate to their abilities and contributions. When the difference is starkly evident, turnover is highly likely in the backdrop of a new opportunity. In an organization where employees feel difficulty realizing their full potential, they are likely to look elsewhere.

12 Effective Retention Strategies In HRM

Listed below are twelve strategies that could boost employee retention:

1. Hiring:

A Methodical Job Description:

A well-thought-out job description provides a comprehensive overview of employer expectations from employees and how employees perceive their job roles. A methodically written job description provides the candidate with a thorough understanding of the job responsibilities. It is also an essential tool for evaluating performance and serves as a reference in cases of disciplinary acts or disputes.

Emphasize Skill Development and Training:

Candidates must be familiar with the opportunities to learn new things and upgrade their skill sets. This enables employers to understand employees’ abilities and the required skill sets to excel at their jobs. 

Assess Job Fit:

Using psychometric assessment tools during hiring will 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. Its report states that bad hiring decisions can cost a company between 50-60% of its annual salary. Candidates hired, based on their alignment of values and beliefs with the organization, are definite performers and are likely to contribute to its progress for a comparatively longer duration. If you are attempting to boost your business’s growth, you must keep your employees contented and engaged.

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 an organization’s values, culture and systems. It is the first step toward keeping 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 very challenging to learn. It is a process that commences even before hiring. Are you confused? Let’s understand it in more detail.


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.


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

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 such as email ID, t-shirts, a bottle of wine, followed by breakfast with the CEO and a tour of the office before they commence the training.


A well-defined mentorship program must follow, where employees understand how things work and acquaint with the company’s vision. Considering these, 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 as they had invested significantly in employee training and development programs.

Research suggests it usually takes eight months for a recruit to be fully productive in their 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 crucial component that drives a worker to perform well, even exceeding expectations. To comprehend a candidate’s’ motivation level, Mercer | Mettl provides you a comprehensive library, which measures inspiration on eight essential helpers under three requirements:

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, rewards, medical coverage, and retirement benefits, etc. come under this category. As per a survey, 89% of the companies using financial incentives were rated positively.

Relatability Needs:

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

Growth Needs:

The growth potential is a substantial motivational differentiator for employees. Opportunities to improve their skills, broaden their knowledge, empower them to make decisions, and derive a sense of achievement positively impact their 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, FRS FRSA FRSE

New employees join an organization with the mindset to improve their skills and grow 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:

Consider Business Goals:

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

Employer-Employee Conversation:

Speak to each employee to understand their career goals, aspirations and challenges. You must understand their short and long-term plans, and the corresponding opportunities to learn new skills, besides honing the existing ones.

Capability vs. Readiness:

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

Training and Development:

Now comes the fundamental question: how will the employee acquire new skills? Well, the answer to this question is simple. Specific assignments and projects are inexpensive and proficient and 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 significant reason to stay longer with the company. Interestingly, Wasp Small Business Report offers clear insight into the employee engagement dynamics, stating that nearly 56% of businesses plan to bring new hires in the coming twelve months, while 82% of them plan to further train their employees. Then comes the tricky part of evaluating employee performance versus expectations.

5. The Evaluation:

The evaluation follows after creating an employee development plan. A formal assessment with a performance review and a quarterly meeting with the employee should be the next step to ensure retention. Gather and review all documents and records related to the employee’s performance, productivity and behavior, following which, write a performance review that must include:

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

An employer-employee meeting should be set up after preparing the performance data. 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 in HRM are not appropriately tackled, you might find yourself wading into tricky waters.

7. Cultivate a Healthy Work Environment:

Workplace culture: Usually, employers oversee 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 their 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 is undoubtedly beneficial for employee retention.

10. Give Constructive Feedback:

There’s a saying: “to err is human; to let go, divine.” It holds relevance 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. Influential 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 collaboration 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:

Excellent 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.

Employee Retention Strategies During COVID-19

Employee retention in times of inflated demand and the global pandemic has become critical for organizations the world over. While companies must deliberate on retaining employees under favorable circumstances, implementing employee retention strategies is the most pressing priority during the COVID-19 pandemic. As the world carries on with social distancing measures, conducting an employee retention program will provide organizations stability amid the unprecedented disruption.

Employers must implement employee retention strategies to ensure they feel valued and appreciated, despite the current work-from-home scenario. It’s critical to have a proper plan that helps lower turnover rates, improve organizational performance and enhance productivity. Here’s how you can keep motivation and engagement high, both during uncertain and ordinary times:

Promote recognition programs (formal and informal)

Recognition programs go a long way in ensuring that employees are respected for the values they bring to the table. These programs can boost creativity and engagement and ensure enhanced workplace productivity. During the COVID 19, companies can manage virtual recognition programs for remote workers. Here are some informal recognition ideas that can be beneficial while working remotely:

  • Expressing gratitude for a job well done either over email or having a one-on-one conversation. 
  • Using team meetings to acknowledge employees and project team members. 
  • Praising good performance and posting thank you notes in a group chat. 
  • Hosting online employee appreciation events to shed light on fantastic team performances and significant accomplishments. 
  • Formal incentive-based recognition programs are also worth-considering. The global pandemic has forced most organizations to rethink their revenue and profitability models, so measures and objectives should be realigned with revised expectations. 

Offer Career Development Opportunities Remotely

Professionals find those opportunities lucrative where they learn and enhance their skills. It’s manageable for employees to repurpose their time to improve their professional development skills, considering the current market conditions. There are several opportunities for learning and development.

Listed below are some ideas that will encourage employee engagement and motivation:

  •  Organizing virtual conferences
  • Conducting virtual training courses
  • Providing corporate online training programs
  • Helping employees familiarize with online MOOC courses (e.g., LinkedIn learning, Masterclass) and identifying learning outcomes

Occupational health, safety and wellness  

Physical and mental wellbeing has become a matter of pressing concern during the pandemic. Healthy employees always rank higher on happiness and productivity quotient. Listed below are a few suggestions that ensure support for employees while working remotely:

  • Employers can sponsor the Employee Assistance Program (EAP), a work-based facilitation program that helps employees sort out their problems that may impede their performance. 
  • Employees can use a virtual ‘’health and Wellness board” to share tips and recommendations to encourage their peers to choose a healthy lifestyle. 
  • Health and wellness initiatives should be at the forefront of the employer’s mind because they could have an influential impact on employees. Whether it’s about sponsoring virtual health and wellness programs or aiding those experiencing challenges in the organization, focusing on employees’ health and wellbeing is critical. 

Create a communication cadence

Setting up a proper communication process is even more critical in the time of COVID-19. Leaders need to keep abreast of what’s going with the team. Unlike earlier, people no longer run into each other to indulge in those water-cooler conversations, so employers must create a communication cadence through multiple activities, such as:

  • Setting up weekly meetings between managers and their direct reports. 
  • Scheduling monthly ‘’town halls’’ to provide business updates and share quarterly marketing plans. 
  • Much like an open-door policy, having an ‘’open-screen policy’’ will prove beneficial in encouraging team members to share their queries and concerns with their managers. 
  • Managers can play a pivotal role in ensuring that communication is managed well, keeping all team members in the loop, and seeking their inputs to maintain transparency in communication at different levels. 

Create an effective backup strategy

Delegation of tasks is also essential to ensure employees have a backup if they’re unavailable during critical office hours. The main objective of remote working is to ensure business continuity and increase organizational stability while safeguarding employees’ emotional and mental wellbeing.

Help employees maintain a balance between their professional and personal lives

Employees need to strike a better balance between their work and family lives while working remotely during the pandemic. There could be many personal commitments that employees have to juggle along with their office work. So, managers must consider their teams’ needs and develop creative ways to encourage work-life balance while working remotely.

How Mercer | Mettl Can Help

The most significant resource of any organization is its “exceptionally competent team.” Building a profoundly capable team includes aligning your employees’ goals with the organizational objectives. Our employee engagement assessment helps you utilize your company’s single most sustainable advantage in today’s economy: your workforce.  Not only does this assessment enable you to assess employee engagement, but it also helps you understand how to keep your top talent motivated and engaged.

Mettl employee engagement assessment uncovers those aspects where your organization is prospering and where it is struggling, what keeps your employees motivated and focused, and how to address employee turnover issues with adequate data and analytics. Our flagship tests from Mettl’s psychometric inventory includes the following advantages: 

Objective data for organizational insight: Mettl employee engagement assessment helps fathom how employee engagement influences vital business outcomes through undertaking meta-analyses and analyzing data. 

Saves time:  Our online assessment platform is accessible anywhere, anytime, and provides real-time data. The exit data is actionable with detailed recommendations for maximizing organizational effectiveness.

Quick and secure access: The 24/7 online platform displays numerical findings for all data gathered and external benchmarks (if desired). Charting comparisons, filtered data and download capability are also provided periodically.

Comprehensive in scope: The assessment and the report is uniquely designed with extensive quantitative data and can be made available in multiple languages on request.

Robust analytics and periodic reports: Further analysis of trends, themes, demographic causes and organizational causes for turnover is included in regular reports.

Benchmarking: Responses from external norms and internal benchmarks can be provided, which allow you to compare your turnover findings against your internal results periodically.

Customization: Questions and findings can be compiled to meet your specific demographic and organizational reporting needs.

Red Flag Alerts: Our assessments and technology enable monitoring of unethical or illegal activity.

Easy to use: No expensive software purchases, licensing, training, or long-term contracts to sign.

The Bottom Line

How organizations and workers forged ahead despite the pandemic will go down as a turning point in history. Most companies bore the brunt of the economic fallout from the pandemic as social distancing measures took precedence. Others adopted adaptable models to deal with the crisis and respond to disruption much quicker than others. In such times, organizations need to adopt innovative employee retention strategies to ensure that the right talent stays engaged and motivated. A company is only as good as its people.

Treating employees justly in the workplace is the crux of the employee retention program. So managers should reassess their talent retention strategy at regular intervals. They 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 employees and augment the team’s productivity.


Get the answers to the most commonly asked questions about employee retention strategy.

We have listed the answers to the most typical concerns in the FAQ section:

What are the retention strategies in HRM?

Retention strategies refer to a detailed action plan organizations follow to keep employee engagement to the maximum and turnover and attrition rate to the minimum. The main idea behind employee retention strategies is to fulfill employees’ expectations without compromising on company’s goals to maximize return on investment.

What are the five main drivers of retention?

Listed below are the key drivers of retention that employers can utilize to keep the best performers engaged:

  • Employee Benefits
  • Workplace flexibility
  • Meaningful manager-employee relationship
  • Career development
  • Personalized employee experience

How can employee turnover be reduced?

The primary methods of reducing turnover are listed below:

  • Hire the most suitable person for a given role
  • Provide employees with authority to achieve desired results
  • Help employees understand that they are indispensable to the organization
  • Place trust and confidence in them
  • Give them access to valuable knowledge and information
  • Give useful employee feedback on their performance
  • Recognize individual and group success
  • Acknowledge and appreciate their achievements
  • Boost employee morale in the workplace
  • Create an environment where employees fall in love with their  work

What factors affect employee retention?

Listed below are some crucial factors that affect employee retention:

  • Morale

Employees can reach the zenith of productivity when their confidence is high. Similarly, employees with low morale are low-spirited and less productive. Low morale is one of the critical factors why an employee quits the organization. Employees leave organizations if they don’t feel valued at work and are not happy with the work culture.

  • Lack of Professional Growth

Lack of career development programs makes employees discontented in their current job.  They feel that possessing limited skills will not help them in the long run, and eventually, they lose interest. The onus is on organizations to introduce proper training and development programs to guide them in their career development process. Employees must know where their career is heading and what skills they need to give their career the right direction. Organizations shouldn’t miss out on this perspective on workforce development. 

  • The Management and Employee Relationship

The management and employee relationship in the workplace is a critical part of an employee retention program. Employees cherish good, professional relationships at work. Business leaders must form an interpersonal connection with their team members to ensure they are happy and engaged. When managers lack good leadership skills, they fail to resonate with their employees, leading to high employee turnover.

  • Lack of Recognition

Employees appreciate if the upper management recognizes them for the efforts they put in their tasks. Monetary and non-financial rewards can work wonders in this aspect. After all, effective leadership includes reinforcing the belief and boosting employee morale to keep them motivated.

  • Onboarding and Training

Onboarding and training initiatives are crucial parts of employee retention strategies.  New hires must be properly inducted and onboarded in the new organizational ecosystem to feel comfortable and relaxed in a new environment. Such activities include providing social support, organizing interactive activities ( formal and informal) and giving them a unique learning experience.

  • Compensation

Compensation plays a pivotal role in employee retention because there is a direct relationship between pay and employee engagement. However, it depends on priorities that vary from person to person. For some employees, paycheque makes a difference, whereas it doesn’t matter at all for some. Well, it’s undeniable that improved compensation can improve retention for a short period. For a company to bolster its talent retention strategy for a more extended period, a lucrative compensation package and proper work-life balance would be crucial.

  • Wellbeing at the Workplace

Research has found that employees would be pleased to associate themselves with organizations that are serious about workers’ careers and financial wellbeing. Moreover, physical, social and community wellbeing is equally vital for any employee. Employee health and wellbeing should be a pressing priority for organizations. There should be more initiatives such as free gym membership, community building exercises, onsite health clinics, and other similar initiatives. If the wellbeing of employees is at stake, they may lose interest in work.

What is a good employee retention rate?

In general terms, a retention rate of 90% or above is usually a good sign. These are the industries with the highest employee retention rates – government, insurance, finance and education. Meanwhile, these are the industries with the lowest rates – retail, hotel and food industries.

What is the retention rate formula?

Employee retention rate can be calculated as the number of employees who stayed for the entire period divided by the number of employees at the beginning. The result is then multiplied by 100 to get the rate of retention.

A homestay has 80 average employees. During March, 3 staff members were let go and replaced.

Based on the formula, (77/80)x 100 = 96.3% retention rate

Mettl Employee Engagement Assessment

Identify, Understand & Resolve Employee Engagement Issues Scientifically

Originally published March 12 2018, Updated June 22 2021

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.

About This Topic

The primary objectives of recruitment and selection are to ensure high-quality candidates who are culturally fit and work toward shared organizational goals and vision.

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