What Is an Employee Retention Strategy and Why Is It Important?

By Indeed Editorial Team

Updated 15 November 2022 | Published 30 November 2021

Updated 15 November 2022

Published 30 November 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A company with loyal employees is more likely to have a high retention rate. Employee retention is something many organisations prioritise due to the high cost of turnover. Different strategies can be employed to retain employees in an organisation. In this article, we discuss what an employee retention strategy is and why it's important.

What's an employee retention strategy?

An employee retention strategy refers to methods that organisations use to ensure that employees stay with that organisation for as long as possible. An organisation with a good culture is likely to have higher retention rates. It's in an organisation's best interest to continually seek new strategies that they can implement to keep employees loyal to them so that they can continue to enjoy the benefits of it.

Why retention strategies are important

When an organisation is able to retain its employees, there are many benefits it stands to gain in the long run. Some of these benefits of employee retention are:

It can reduce cost

One of the benefits of effective retention strategies is that they can reduce hiring costs for organisations. When hiring new staff, organisations often incur some expenses, which include the cost of training. Therefore, such an organisation can save more money if they don't frequently hire new staff because of turnovers.

It can boost morale

Since organisations direct their retention strategies towards their employees, the strategy is likely to boost morale. The reason that employees are likely to have more confidence in themselves and their contributions can be because they feel more appreciated. For example, a retention strategy that includes frequently rewarding employees for hitting milestones can encourage employees to always put in more effort.

It can increase productivity

When employees feel appreciated for their initial effort, they're more likely to strive to put in more effort next time. This is another benefit of effective retention strategies because increased productivity levels can lead to the organisation's growth. Once again, an organisation can achieve this with retention strategies that include rewarding employees.

It can lead to improved customer experience

High turnovers can affect customer satisfaction in an organisation. The longer an employee stays with a company, the better they can get at satisfying customers. If you've been in the company for a longer time, you may naturally have more knowledge and expertise in solving complaints.

It can improve the reputation of an organisation

An organisation with a high retention rate is most likely one that has a good company culture and can help improve the reputation of a company. A company with a good reputation can benefit from referrals from existing customers, which can attract new customers. Another benefit of a good reputation is that it can also attract high-value talent.

It can increase revenue

When an organisation is able to reduce turnover levels, it means that it's spending less on hiring costs. This allows the company to invest in developing and promoting employees who've worked there longer. An organisation can also benefit from increased revenue if it gains more customers, which it can do if satisfied customers continue to give referrals.

Strategies to retain employees

Here are some effective strategies that a company can use to increase employee retention:

1. Flexibility

Employees value a good work-life balance more than ever. This is why it has become increasingly important for organisations to prioritise flexibility with employees. An organisation can do this by allowing employees to work from home some days of the week.

Flexibility has become important for people because it allows them to spend more time with their families and children and deal with personal life issues, such as going to the post office or a doctor's appointment during working hours. To encourage employee retention, it's in an organisation's best interest to be less rigid about working from the office five days a week.

Read more: Top Work From Home Benefits For Employees

2. Remote working

Employees have become more attracted to opportunities that allow them to work remotely. Besides reducing time on the commute, working from home can also have a good impact on the environment and gives professionals more flexibility. Additionally, an organisation that embraces remote work can benefit from international talent. Allowing employees the chance to work from anywhere in the world can significantly boost morale.

Read more: Q&A: What Is Remote Work?

3. Rewards

Organisations that rewards employees for hitting milestones are likely to benefit from more employees putting effort into reaching goals. Rewarding employees can help increase self-esteem and loyalty to the company. The positive environment that it's likely to create can also help reduce staff turnover. When an employee is loyal to a company, they're less likely to leave it to work for a competitor.

4. Competitive salaries

One of the popular reasons staff turnover occurs is when employees feel like they're not getting paid their worth. After constantly hitting milestones, it's natural for an employee to expect to be paid more for the work they do and the value they add to the team. If a company has a strict policy for promotions and raises, it can cause its employees to feel dissatisfied and unmotivated. It's in an organisation's best interest to continually review employee salaries and increase them based on achievements.

Additionally, offering people their desired salary or higher is an excellent strategy to discover and hire new talent.

5. Equality

Employee morale in an organisation can increase if there is no bias or prejudices. This is possible when organisations treat all of their employees, at all levels, with equal measures of respect and dignity. Some favouritism traits that organisations can look out for are management being more lenient with some employees or a gender pay gap, in which male employees earn more than their female counterparts.

One of the most effective ways an organisation can check to ensure that its employees feel treated equally is by encouraging regular feedback. Such feedback can be more effective if they're anonymous and if they ask specific questions related to employee treatment at work.

6. Fringe benefits

Fringe benefits are those extra perks that employees receive from an organisation. These benefits are different from salaries and can include healthcare or a company car. Because of these benefits, employees can get more from their salaries. For example, an employee that has health care benefits is less likely to spend most of their salaries on health, and they can then repurpose the money they save.

A good way to know the fringe benefits that an employee needs or expects is by talking about them. Usually, this conversation can take place in the interview process. With a high-value employee that an organisation is seeking, knowing what these benefits are earlier on can influence their decisions to accept your offer.

7. Mentorship programmes

Partnering employees with experienced people in an organisation means that they can have someone to support and guide them. This is the obvious benefit of creating and encouraging mentorship programmes in an organisation. Having this support can help employees feel more encouraged to ask for help.

Mentors can also perform regular check-ins with their designated employees to determine how they're doing. This can be a form of low-pressure check-ins that can also encourage employees to discuss challenges they may be facing or ideas they have.

Related: Benefits of Mentoring for Mentors, Mentees and Organisations

8. Training and development

The chances of burnout and demotivation are likely to reduce when organisations challenge their employees with new tasks. An organisation can trust its employees to handle more advanced tasks if they have the right skills. An organisation can also ensure that its employees have these skills by developing them through constant training. Investing in the training and development of employees is also another way that organisations can show how much they value them.

9. Accessible management

An organisation where management is readily accessible to other employees can create a positive and friendly environment. Moreover, it provides an opportunity to improve the notion that team members are equals despite their high-ranking positions. Management can foster this sort of relationship by participating in social events outside of work

10. Constant feedback

Providing constant feedback gives employees a chance to improve on their work. When they're told about the areas they need to improve on, it can give them more clarity. Providing constant feedback is also another way to ensure development in employees.

Related:

  • How to improve employee retention (with definition)

  • Employee retention: definition, strategies and benefits

  • Retention ratio: definition, calculation and implications

  • A complete guide to the stages of the employee life cycle

  • 10 benefits of engaged employees within an organisation






Explore more articles