Many companies often have no clue about how to retain employees. They find their staff hardly ever stay for even a few months and they are always looking for other opportunities. This can be more than frustrating.

High staff turnover affects a company’s bottom line. It is also a reflection of issues in the company’s organization. Of course, young people enjoy a bit of job hopping, but it is good to have people who want to stay with you. If you are trying to find out how to retain employees, you must know why employees chose to join your business in the first place. When you do exit interviews, you should learn more than ‘a better opportunity’ or ‘better pay’. You need to know exactly how to retain employees.

how to retain employees

Most companies include the costs of replacing staff in their annual budget, but this can be avoided if you know some tricks on how to retain employees. Recruitment or headhunting and relocation costs can be anticipated and calculated, and it is possible to estimate the cost of training of new staff.

The cost directly related to replacing an employee is about 50–60% of that person’s annual salary. But replacing staff can cost as much as 90–200%, because staff leaving has a direct impact on the organization from lost sales to reduced morale.

They must figure out why employees stay before they can figure out how to retain employees.

How to retain employees 101

Treating your top performers well and giving them benefits and more pay is much more economical than replacing them.

It starts with recruitment and hiring

A good match from the outset is the first trick on how to retain employees. Employers should present applicants with a realistic picture of the job during recruitment. When they are transparent  about the negative and positive job aspects and are honest about expectations and challenges, they will recruit stronger candidates and retain them. Organizations that define their culture to candidates and identify the individuals who will thrive in their environment make better selections.

Good onboarding

Good onboarding practices are critical, especially during the first days and weeks of the job. Organizations often expect new people to ‘hit the ground running’. This puts a lot of pressure on new hires. They form a perception of the new organization within the first two weeks. And many can decide in this very short time whether they are going to stay, based on that impression.

how to retain employees

It is crucial that all aspects of the job and the organization are explained as clearly as possible. Putting new employees in the middle of a maze of policies and procedures is a serious waste of valuable time.

Performance evaluation

Employees, like anyone else, want to know when they are doing well. Acknowledge good work and use every opportunity to reinforce good performance and encourage innovation. Your expectations, policies and procedures should be clear, as well as accessible and understandable. Establish clear performance metrics which the employee and the organization can monitor. When employees are given clear and specific milestones they can contribute to business goals. People want to contribute, but they want you to recognize them for it too.

Understand your employees’ goals and aspirations

One way to retain employees is to know what they hope to achieve and how they see their future career. Reviews are great for finding out about employees’ career goals, identifying training requirements and slotting talent into future leadership positions. Review progress on a regular basis and offer prospects for improvement or development often.

Train and develop your staff

Companies that provide opportunities for personal and career growth are always in demand. Uncertainty about career development is one of the top reasons employees look elsewhere. Employers who are concerned that providing training will increase their employees’ value in the job market can offer job-specific training that is less transferable. Alternatively they can fund external education under a contract that ties the employee to the company for a specified amount of time.

Create growth opportunities

Look first at your own employees before you offer a senior position to an outsider. Communicate internal openings and encourage your employees to apply for them. Some people prefer to grow within the same organization rather than taking the plunge and applying for a new position with a new company.

Effective leadership

Poor management skills are responsible for far more resignations than any other reason. Supervisors must know how to motivate their employees and build loyalty in their staff. Sound management skills have a direct impact on staff and the performance of the business.

Collaboration has been a buzz word for a while now. But it is still important for the culture of your company. Wouldn’t you like your company to feel like a community of people who share knowledge, rather than a place where red tape forces people to act in rigid ways?


Be clear about what you and your business stand for. Do you have a vision or mission statement? Employees need to know the direction the organization is heading and what they can do to help.

Ask your employees how they are doing and what they need, and be prepared to act on this. Try formal and informal ways of engagement – staff surveys and direct questions are not always the best ways of pinpointing issues. A fear of being targeted can silence employees.

Engage and socialize

The old ‘pat on the back’ is a proven way on how to retain employees. Face time is necessary to establish trust and establish good communication lines. Studies show that younger employees thrive on social engagement with a company where they spend most of their time. Different generations have different expectations from their workplace. Managers must understand how to reach all of them and how to retain employees of different generations.

Socialization practices can involve shared activities, such as team building, where they get to know each other.

Compensation and benefits

Many employees value career development more than compensation, but good pay is still significant. Employees quickly start looking around if they are given a poor salary and allowances. Also, flexible work schedules that allow a better work/life balance are becoming more important and are often rated as number one, above a large paycheck.

Benefits tailored to individual needs, such as child care, a good canteen or gym are becoming enormously popular.

Reward programs

Rewarding good performance with an unexpected bonus or spot award is a proven way to improve staff retention. Nothing says ‘thank you’ better than tangible rewards. If you are seriously thinking about how to retain employees, then be inventive. Think about an increase in time off for new parents, employee stock options, or even just more autonomy in decision-making. Tailor your rewards towards your best talent – this is one of the best ways to retain employees.


The workplace is changing and the market is more fluid than it was. People are looking for satisfaction more than staying in one place for a long time. So employers need to be proactive and adaptable. The question for you is: how to retain employees? Because happy, productive staff make for a happy and productive company!

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