6 best employee retention strategies in 2024
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Published 8:10 a.m. UTC Dec. 21, 2023
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Sustaining an invested and dedicated workforce is a crucial yet challenging task that every employer faces. Between a competitive job market, family obligations and work-life balance priorities, the risk of employees seeking new opportunities feels higher than ever.
In the next few sections, we’ll explore what employee retention is, why organizations should seek to increase retention rates and strategies you can leverage to encourage workers to stay.
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What is employee retention?
Employee retention is the process of trying to keep employees with the company, as well as making sure your employees want to work for your business. As Priyanka Swamy, CEO of Perfect Locks LLC, explained, “One of the biggest challenges in employee retention is finding the right balance between employee needs and the company’s goals.”
There are myriad reasons that workers may decide to leave an organization and seek employment elsewhere. A few of these motivations include:
- Poor compensation based on the employee’s worth (or the perception that compensation is inadequate).
- Lack of work-life balance.
- Not feeling recognized and appreciated for their achievements and contributions.
- Feelings of a toxic or unhealthy work environment, especially if negative interactions or conflicts with other members of the organization exist.
- Lack of opportunities for growth or promotions.
- Not feeling invested in the company and its success.
- Boredom.
Overcoming these hurdles is no small feat. Founder of Yanre Fitness and OxygenArk, George Yang, shared, “I’ve learned that employee retention is the cornerstone of a company’s success. Effective employee retention strategies foster a stable, skilled and motivated workforce, which is vital for long-term business sustainability.”
Benefits of employee retention
There are several reasons to strive for high employee retention rates for your organization. Olivia Lin, QC Manager at Tabrick, explained that employee retention “directly influences customer satisfaction, organizational knowledge and overall business health.” With higher rates of employee retention, organizations can save money. For one, they don’t have the added costs of hiring or training new workers.
Furthermore, finding qualified employees can be time-consuming, increasing the workloads of the other members of the team while recruiting and training new hires. This situation can further perpetuate the cycle, as existing team members will feel the strains of being understaffed and overworked.
Companies that excel in employee retention have a workforce that is more committed and loyal. When these staff members feel like a valued and integral part of the organization, they are more likely to work to advance the company’s goals. Building a reputation of having happy and committed employees can help improve customers’, clients’ and potential new hires’ perceptions of your company.
One of the biggest benefits of employee retention is increased revenue. Each team member’s industrial knowledge increases the longer they stay with the company. With a dedicated and consistent staff, the overall knowledge and understanding of key processes and goals will lead to increased efficiency, innovation and performance, directly impacting your company’s bottom line.
6 best employee retention strategies
Consider implementing some or all of the employee retention strategies shared below to help your organization grow and succeed.
Start strong with onboarding and training
First impressions are so important. The way your employees feel about your organization from their first day — or even during the hiring process — will impact how long they plan to stay. To increase retention, put your best foot forward from the beginning with a focused and supportive onboarding process.
Make sure each employee feels welcomed and that they receive the training and support they need to be successful. Their first interactions with you and the other team members will impact their overall feelings about their new position and their future with the company.
Offer competitive compensation and perks
If you really want your employees to feel like an invaluable part of your company, then their salaries must reflect that. If the rate of pay you’re offering doesn’t match that of other companies in the industry, or if it is not sufficient to support the cost of living for the region where your company or virtual employees are based, it is unreasonable to expect that your workers are going to want to stay.
Be fair with starting salaries and give raises that match the growing experience of your employees and that also keep up with inflation. While paying your workers more may cut into your company’s profits, keep in mind that you’ll end up spending more money if you must hire and train someone to replace a dissatisfied employee.
Beyond base salaries, look for other ways to compensate your staff for their hard work. These additional benefits could look like bonuses for high performers, excellent medical and dental benefits, company matching for 401(k) contributions, cell phone service or stipends and company-provided meals.
Recognize a job well done and provide regular feedback
Workers who feel valued are more likely to stay than those who feel like their hard work goes unnoticed. A simple “thank you for the time and effort on X project” can convey your gratitude. You could also consider developing a system where managers can nominate workers for a reward.
While some of these could be monetary rewards, like a gift card or cash, others don’t have to cost you anything. Consider reserving a parking spot for an employee of the month or dedicating a section of the employee newsletter to highlighting high performers or team members who really put a lot of effort into a particular project.
Celebrating achievements is one way you can communicate with your employees about their performance, but it shouldn’t be the only way. Make sure company leaders and managers frequently share constructive feedback with members of their teams.
Use these sessions to discuss company goals, areas of success and growth or improvement areas. Devise a concrete, achievable plan with each employee for steps that they can take to reach these goals and move forward with the company.
Promote work-life balance and flexibility
If your employees are feeling burnt out or like work is all-consuming, it only makes sense that they will seek other opportunities. Taking steps to foster a good work-life balance will help keep your employees from the perception that their job is running their lives.
The way you promote a healthy balance may vary based on your organization and the types of jobs your employees hold, but it could involve allowing for more flexibility. For example, consider allowing your employees to work remotely more frequently or set their own hours based on when they will be the most productive.
Small but meaningful changes can also go a long way toward showing your employees that you value them and their personal time. For example, you could discourage them from checking their emails at home or during set hours or provide them with a few extra days off if they’ve shown dedication to meeting a tight deadline.
Offer wellness initiatives
When you take steps to support the physical and mental well-being of your employees, not only will they feel supported, but they’ll also likely perform better. Consider company-wide classes or programs on mindfulness, stress management and fitness.
You could also consider offering a stipend to allow your employees to decide what would best benefit their physical and/or mental health goals. Some options might include:
- Discounted memberships to a local gym.
- Ergonomic chairs for their home offices.
- Subsidized exercise bikes to help them unwind.
Provide opportunities for development and promotion
Your employees need to feel that you are committed to their success and growth within the company. Strategize ways that you can support their professional development. For example, consider providing training or offering tuition reimbursement so that your workers increase their knowledge and skill sets.
You could also consider setting up a mentorship program to support some of your top employees. These team members could be matched with a company leader who could offer guidance and support to help them advance to a future leadership position themselves.
Promoting from within can help your company grow while also encouraging more employees to stay. Current employees are likely more invested in the company than an outside hire will be. Plus, when other workers see someone get promoted from within, they’ll see promotion as a possibility for themselves and will be more likely to stay with the company and strive to meet new goals.
Featured payroll software offers
OnPay
Monthly fee
$40 per month plus $6 per employee
Direct deposit
Yes
Rippling
Monthly fee
$35 per month + $8 per user
Direct deposit
Yes
Gusto
Monthly fee
Starting at $40 plus $6 per month per employee
Direct deposit
Yes
SurePayroll
Monthly fee
$29.99 per month plus $5 per employee
Direct deposit
Yes
Frequently asked questions (FAQs)
There are several reasons why employee retention is important. For one, when companies face lower employee turnover rates, they don’t need to invest as much time and money into hiring and training new workers. Instead, this time and money can be dedicated to furthering company goals and improving performance.
Companies with high retention rates typically have a more motivated and happier workforce. This gives rise to a positive climate and workers who are committed to helping the company succeed.
The longer employees stay with a company, the more industry knowledge they acquire. They can then use their increased knowledge to:
- Facilitate your company’s growth.
- Improve efficiency.
- Drive increased profits.
To calculate your company’s employee retention rate, begin by determining your period of interest (i.e., six months, one year or more). Then, take the number of employees who have remained with your company over that span and divide it by the total employee headcount at the beginning of the period. Finally, multiply this number by 100.
For example, if your organization had 200 employees at the beginning of the period, but only 170 of those workers were still with the company at the end of the period, your calculation would look like:
- 170 / 200 = 0.85
- 0.85 x 100 = 85
With this example, your company’s employee retention rate would be 85%.
An employee retention rate at or above 90% is generally considered good. At such a rate, a company sees less than 10% turnover and is better able to focus on moving forward and achieving organizational goals.
A higher retention rate can be better, but it is also important to remember that it is good to have some movement in and out of a company. This ensures that you’re able to recruit new talent, promote from within and part ways with underperforming workers.
There are several ways organizations can improve their employee retention rates and decrease attrition. Maurice Peters, Founder and CEO of PressHERO, shared some of his best tips for encouraging employees to stay.
“In my experience, the best employee retention strategies involve creating a culture of development and respect, including investing in continuous learning, offering growth opportunities and fostering an atmosphere of transparency and inclusion. Employee benefits like flexitime and remote working options also work wonders in retaining talent.”
One of the biggest challenges of employee retention is that each worker has different goals and priorities. Swamy of Perfect Locks LLC explained that “knowing what motivates each team member and tailoring retention plans accordingly can be challenging.”
However, she stressed that such an approach is “critical for long-term employee retention” and that “regular feedback loops and staying on top of the changing needs of your workforce will help you overcome this challenge.”
Peters explained how the “rapidly evolving job market” can produce additional challenges for employee retention. He noted that “employees nowadays are looking for growth and development opportunities, work-life balance and a sense of belonging.”
While companies of different sizes and in different industries will face their own unique challenges, prioritizing employee well-being and growth opportunities will keep morale high and employee turnover low.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
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