Understanding Employee Retention

employee retention and business outcomes

HRZone defines employee retention as “a function of the HR department tasked with reducing the number of employees leaving the company by improving key processes and conditions.”

That may be a fair way of defining the term, but two important aspects are missing:

1. The use of the word “ability” (you could replace with “capacity”) is a controversial one.  An organizations “ability” to know (not guess) which actions to take, among an almost boundless smorgasbord of options, determines their ability to retain “desired” talent.  

In some cases, attrition of low performers may be acceptable (or even applauded) while retaining top performers (or top influencers of culture norms) is the primary target.  

Therefore, an organization’s ability to not only know what actions to take, but for which employee segments, is critical to improve the retention of desired talent.  Even the best financial plans are unachievable if the talent tasked with carrying them out are disengaged or now working for a competitor.

2. Retention is no longer just a function of the HR department but also a function of managers, executives and even the employee. All levels of the organization have a responsibility to fuel a culture of high performance that recognizes contributions, appreciates diversity, rewards achievement, strives for transparency in communications and values collaboration.

The HR leader is typically tasked with measuring retention and planning/coordinating the various systems, processes, policies and practices to improve retention but every member of the organization is must be tasked with executing these to achieve favorable outcomes.  

Therefore, retention (just like all other strategic priorities) are not just HR’s responsibility.

Retention is a growing challenge for organizations.

According to the US Bureau of Labor and Statistics, there were 2.7 million “quits” in September 2014. A “quit” is defined as a voluntary separation from the company and is initiated by the employee. Since the 2012 technical end of the Great Recession of 2007, quits have increased steadily to a statistical average of 2.75 million per month for the last 13 months. Interestingly, a note from Kimmel stated, “The average employee only stays at his or her job for 4.4 years” (1).

From a business perspective, low employee retention as a real cost to organizations. According to the Society for Human Resources Management, “employee replacement costs can reach as high as 50 to 60 percent of an employee’s annual salary.”  These costs include:

  1. New employee hiring costs including job post advertising, candidate screening and interviewing and hiring.
  2. New employee on-boarding costs including training, HR and management time.
  3. Lost productivity while the new employee scales the learning curve.
  4. Cultural impact of new employees coming onboard.

Clearly with a growing number of employees leaving and real costs associated to these losses, employee retention has become an increasing concern for senior-level executives and their HR leaders.

employee retention tactics and strategies

The Truth About Employee Retention and Its Influencers

Here are a few quick facts about retention and its tie to business outcomes:

  1. “Employee satisfaction impacts employee engagement, which has a direct effect on your organization’s success. In fact, additional research found that organizations with more engaged employees than average saw 27 percent higher profits” (2).
  2. One third of new hires quit their job after about 6 months (3).
  3. Employee engagement is a business imperative for leaders at all levels—above all, the CEO—and no longer something to be measured just once a year by taking a look in the rear-view mirror (4).higher profits and retention
  4. There is a strong correlation between retention risk and employee engagement: Highly engaged employees score high in all three elements of sustainable engagement—engagement, energy and enablement—while scores for disengaged employees are below average in all three (5).
  5. More than 70% of high-retention-risk employees say they have to leave their organization to advance their careers (6).

figures on why employees leave companiesWhy Companies Tend to Lose Employees

According to a CareerBuilder study, the following reasons were given by employees for leaving their employers.

  1. 65% of workers crave job stability
  2. 57% want better office locations
  3. 55% would like heftier pay packages
  4. 46% want a good work culture (includes a transparent, easy relationship with manager)
  5. 39% have hopes of rising up the corporate ladder.

Employee Retention Ideas for Solving the Problem

What’s the best way to counter high employee turnover and improve your employee retention rates?

[clickToTweet tweet=”There are no silver bullets when it comes to retention.” quote=”There are no silver bullets when it comes to retention.”]Here are some ideas to consider when crafting your employee retention strategies:

  1. Benchmark your employee retention rate. You cannot manage what you don’t measure. Therefore, you need to implement an employee feedback program that frequently captures the beliefs, feelings and behaviors of your employees and how they impact their intent to stay.
  2. Gather employee insights that take out the guesswork on how best to develop and execute an action plan that increases satisfaction, engagement and commitment among your desired talent.
  3. Hire individuals with the right cultural fit which implies you have developed a culture with clear vision, mission and value.
  4. Establish policies, practices and systems that place responsibilities for employee retention among all stakeholders including managers, executives and the employees – not just HR.
  5. Conduct exit interviews to gather feedback on potential retention triggers.
  6. When you implement an employee engagement action plan, rather than roll it out organization-wide, test it on a small segment of your population and request feedback via pulse surveys, to determine fit.

Specific employee retention strategies like free food, dog care, foosball tables, massages and thousands of other “happiness” initiatives are good ideas to consider but know who you are serving first, and then select specific actions to best suit their needs.

[clickToTweet tweet=”Retention strategies are not a one-size-fits-all proposition.” quote=”Retention strategies are not a one-size-fits-all proposition.”]

Turn Employee Insights Into Action

To retain employees, it is imperative to understand what they are looking for in an employer and job position. A successful engagement strategy is fueled by a deep understanding of employee attitudes and needs. Stop guessing and start knowing the best actions to take to truly improve retention.

Talmetrix is more than just software. We work with talent-focused companies to capture insights, analyze data, take action, and achieve organizational growth. Contact us today to learn more about our easy-to-implement and configurable solutions that can fit your organization’s unique needs and culture.


  1. https://kimmel.com/employers/retention/employee-retention-statistics.html
  2. https://www.bamboohr.com/resources/whitepapers/what-recognized-employees-have-in-common/
  3. eremedia.com
  4. https://www2.deloitte.com/global/en/pages/human-capital/articles/introduction-human-capital-trends.html
  5. https://www.towerswatson.com/en-US/Insights/Newsletters/Americas/insider/2015/06/seven-things-to-know-about-employee-retention-risks
  6. http://blog.bonus.ly/10-surprising-employee-retention-statistics-you-need-to-know

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