Employee Retention

What is employee retention?

Employee retention is a goal that most organizations hold dear. It’s the desire to prevent employee turnover and retain talent that the company has invested time and money to attract and train. Employee retention initiatives are essential because losing experienced, well-trained employees is costly, disruptive, and even harmful to a company long-term.

Employee retention capabilities are communicated within a company through a cohesive range of policies and programs. These aim to develop and transform the employee experience by creating a supportive, inclusive work environment where the employee can flourish.

An employee who feels engaged and valued at work and has the tools available to maintain steady output and a healthy work-life balance is likely to stay put. But that’s just a quick summary of how retention looks on the surface. So let’s dig into its specifics.


Why is employee retention necessary?

As we’ve hinted above, there are more than a few reasons retention is necessary. More specifically, retention is essential for reasons we’ll explore below, including consistency, development, morale, damage control, and revenue.


For a company to run smoothly, employee consistency is vital—this relates to having long-term employees and creating a consistent experience for those employees. When employee experience is rooted in a supportive work environment, working relationships between employees and between the company and its employees are good. These professional relationships create a strong foundation for essential work, including everything from collaborating on new ideas to troubleshooting when a crisis hits.


Employee retention is essential for maintaining a cohesive workplace, as team building and trust are critical elements of a successful company. Customers come to know they can depend on a consistent level of support and professionalism from a regular team of reliable workers. If the customer deals with a constant flow of new faces, it gives a poor impression and often places customers on the wrong end of a new employee’s learning curve.Employee resignations can hurt company morale. A high employee turnover creates an unsettled work environment and can lead to even more departures.

Damage control

Damaging dips in productivity and variations in competitive advantage are prevented by effective employee retention, enabling a company to fully embrace its mission through continuity, experience, and knowledge.


Talent recruitment and acquisition are time-consuming, costly exercises. Constant administration around these issues can weaken the company’s mission by wasting intellectual and financial resources because of increased employee turnover. The Gallup report State of the Global Workspace: 2022 reveals that employees who are not engaged or actively disengaged cost the working world $7.8 trillion in lost productivity. That equals 11% of the global GDP. Employee turnover costs across all business sectors in the USA are estimated at around $1 billion per year.

Benefits of employee retention

Retaining employees in a positive workspace has compelling benefits for the company and customers.

Promotes morale

When employees are valued in a company, their sense of security will foster high confidence. They will be proud of their work, and their performance standards will increase. The disruption caused by high employee turnover can produce the opposite effect.

Fosters efficiency

Longer-term employees are familiar with company culture and have developed instinctive knowledge over time regarding company processes. This enhances work efficiency and focuses firmly on the company’s mission.

Increases productivity

Speed and efficiency are developed, as are intuitive skills of the long-term employee. The constant introduction of new employees usually causes costly delays, interruptions, and mistakes, which can be ruinous over time.

Saves money

Recruiting and training talented employees is a time-consuming and expensive exercise. Retaining employees significantly reduces costs.

Pleases customers

Generally speaking, customers would rather engage with a familiar face or team they have come to know over time. Relationships can develop with one or more employees creating mutual sentiments around commitment, loyalty, and trust. Low employee turnover rates usually foster positive customer perceptions.

Increases revenue and ROI

There are parallels between effective employee retention and higher revenue. Positive employee experiences and higher morale are also contributing factors.

What causes high employee turnover?

Many factors can contribute to high employee turnover, and not all are necessarily a result of employee experience failures. For example, some people change location due to a particular situation within the family, and some seek a direction change for personal reasons. While a certain level of turnover is expected for many companies, increased or high turnover is a cause for concern.

The following have a significant influence on high employee turnover:

Poor compensation

Employees must feel valued, but if they receive inadequate compensation for their best efforts, they will become discouraged and likely look elsewhere for employment.

Low benefits

Adequate benefits are essential to engender a sense of security. Without this support, employees feel a sense of anxiety which can affect productivity.

Lack of flexibility

Offering a digital workspace to employees who prefer or require a hybrid work situation is now the competitive norm. Without this, companies might find recruiting the talent they need challenging.

Poor career opportunities

Career prospects are vital, whether an employee is just starting out or whether they are an experienced recruit. Without a vision of how personal career development might progress within a positive, cohesive workspace, people will look elsewhere for employment.

Poor resources

For employees to deliver their full potential in the pursuit of company goals, they need the correct tools for the job. A good job, well done, reflects positively on the company. If equipment and resources are poor or become outdated, this might cause trained, experienced employees to move on.

Poor work-life balance

Every employee has a life outside work, be they single, with a partner, a single parent, part of a large family, or anything in between. A decent work-life balance positively affects well-being, and this benefits the employee in regard to their productivity and relationships.

Lack of company culture

Within the various attitudes and behaviors contributing to company culture, values and ethics must be sound to promote a positive employee experience. Employees feel disengaged and unsettled if the company lacks a positive culture, which may lead to job searches elsewhere.

No sense of belonging

A modern workspace must be diverse and inclusive for employees to feel they belong. Divisive tactics within a company will cause people to seek a more positive work environment elsewhere.

Poor recognition or rewards

An employee needs recognition for a job done well or doing more and better than required. Without a strong employee value proposition (EVP) such as positive feedback, feelings of rejection and resentment arise, leading to resignations.

Concerns around financial future

Those responsible for financial management in a company must be transparent regarding the ebbs and flows of revenue. If an employee is concerned about possible reduced compensation or losing their job, even on the back of a rumor, they will move on quickly.

Better job opportunities elsewhere

Companies must remain competitive regarding what they offer employees. Without reasonable compensation and benefits, workplace flexibility, clear career and employee development offerings, high-end resources, strong culture, and work-life balance, a company will not be able to recruit talent competitively.

Learn more about the leading causes of employee turnover and ways to reduce it

What happens when businesses experience high employee turnover?


During employee turnover, extra work may fall on the remaining staff. This can lead to unreasonable pressure and burnout. If the situation isn’t effectively managed, productivity will decrease, along with revenue. Resentments are likely to build within the work environment, and this will have negative repercussions on morale and elsewhere.

Increased costs

Given that a company requires a paid team of talented, trained, experienced employees, to work towards and achieve company goals and to uphold a company’s mission, it follows that high employee turnover will weaken that process and damage the revenue stream.

Decreased productivity

High productivity leads to growth, but if employees are overworked and insecure, their output will be negatively affected, and this will have a knock-on effect with regard to revenue.

Low morale

A healthy morale in the workplace promotes performance and, thereby, productivity. In contrast, high employee turnover can lead to overwork and burnout. When high employee turnover causes low morale, the remaining staff might display increased incidences of disengagement. As a result, delays, stoppages, and mistakes will occur, which builds negativity in the workplace.

Poor workplace culture

Shared ethics and strong values are the building blocks of healthy, positive work culture. Such a culture is vital for a company to focus on its mission but can be destabilized by high employee staff turnover. A weakened work culture environment, where employees begin to feel undervalued or unsupported, where communication is poor, and work-life balance is compromised, quickly becomes toxic because of low morale and negativity. Further staff turnover is sure to follow.

Customer dissatisfaction

Customers are the essential lifeblood of a vast majority of companies. Without customers, there is no business, no revenue, and no company. Customers require a constant, reliable, familiar flow of quality services. High employee turnover will negatively affect this process. This disruption in a previously reliable service may lead to the collapse of a long-term business relationship.

Learn how good employee experience can shape customer experience

Negative reputation

Every company strives for a positive reputation in a competitive marketplace. Forgoing this hard-won reputation by losing talented employees is a setback for development, progress, and achievement. Nobody wishes to work for a company with a bad reputation. No one wants the services of such a company, and it is difficult and costly to find a person willing to step in and turn such a company around. High employee turnover results in a bad reputation within and without the company and is best avoided at all costs.

Strategies for improving employee retention

Employee retention can be considerably improved using the following strategies:

  • Offer competitive compensation and benefits. This indicates that the company values and supports employees and wishes to retain them.
  • Be flexible because workplace flexibility fosters a resilient, adaptable workforce. In addition, employees can fine-tune their work-life balance if they have a choice between office, home, or hybrid workspace.
  • Good career opportunities are vital for progress and growth, both personally and for the company. Offer these, and employees will remain loyal, feel they have a future in the company, and thereby increase its advantage in the market.
  • Good resources are essential. Whether employees work in the office, remotely, or both, they need the correct equipment and support to communicate and develop. If quality input is made easy, then quality output is guaranteed.
  • Foster work-life balance because everyone has a life outside work. Support employees at work and through the joys and woes of life beyond the workspace.
  • Develop a healthy, cohesive work culture around shared values, and allow morale to flourish. Effective internal communication fosters a diverse, inclusive, transparent community where employees feel a sense of belonging.
  • Recognize when employees have excelled, and reward them competitively. A shared sense of achievement motivates everyone.

How to retain top performers

  • Compensate well and competitively. Prevent top performers from defecting to the opposition by paying them well and offering good benefits.
  • Respect the work-life balance they have chosen and adapt.
  • Maintain a discreet knowledge of their lives beyond the workspace to recognize essential milestones and be tactful around sensitive issues.
  • Refrain from overworking a top performer, which can lead to disillusion and burnout.
  • Recognize and reward appropriately and in line with the competition.
  • Be transparent about career opportunities, company mission and goals.
  • Make Diversity, Equity, and Inclusion (DEI) a priority.
  • Ensure that employee retention is a top  priority because stable companies attract star performers, and star performers enable a company to thrive.
  • Give top employees frictionless support and the resources they need for optimal performance.
  • Communicate and share, listen and hear, and encourage feedback.
  • Be flexible and allow top performers to be flexible too.

And above all—foster a healthy work culture where morale can flourish.

Measurement and metrics

How important is the measurement of employee retention, and how is it done?

The importance of calculating employee turnover cannot be over emphasized. Hiring, onboarding, and retention of employees is expensive. So it’s a given that high employee turnover affects any company’s bottom line and can potentially lower morale and divert focus away from its mission.

Measuring and then focusing on relevant employee turnover metrics is vital to gain solution-driven data. It enables companies to compare the rates of their industry peers and how these may fluctuate over time.

Tracking employee turnover rate can also alert management to any sudden changes. They can identify and monitor causes, and potential causes, of any significant variations and divert or prevent any trends.

Some of the important employee retention metrics of value to HR include:

  • Employee satisfaction
  • Overall retention/turnover rate
  • Voluntary/involuntary turnover rate
  • Absence rate
  • Absence/retention rate per manager
  • Retention rate of top/low performers
  • Turnover costs

How are employee retention and turnover rates calculated?

Retention and turnover percentage rate calculations are easy and straightforward:

For this example, Company X’s retention and turnover rates are being calculated for the year 2022.

  1. Define a specific time period during which employee retention/turnover rates are required
    01 January 2022 – 31 December 2022
  2. Calculate the number of employees of the company on 01 January 2022 and again on 31 December 2022
    01 January 2022 – 800 employees
    31 December 2022 – 700 employees
  3. Divide the number of employees retained during this period (700) by the initial number of employees during the same period (800) and times that by 100
    700/800 = 0.875
    0.875 x 100 = 87.5
  4. Therefore, Company X has an employee retention rate of 87.5% from 01 January 2022 to 31 December 2022.

The turnover rate for the same period is calculated as follows: 100 – 87.5 = 12.5%

An ideal retention rate is 90% depending on the industry and sector.

Ways Employee Experience software help with employee retention

Employee experience software helps companies to overcome challenges around connecting and communicating with employees

Hiring the right person for a given job is the first crucial step in the onboarding process. Employee experience software can streamline this process and reduce costs.

These days, many potential employees consider company culture to be as important as, or more important than, compensation. Using employee experience software to offer health and wellness programs and foster a positive work-life balance is a powerful way to communicate a healthy company culture as part of the overall employee value proposition.

From the start and over time, data can be gathered to enable HR to prioritize critical issues and promote improved team management, thereby increasing efficiency and production.

HR data analysis can also assist with fine-tuning training and development initiatives for individuals, including leadership training.

In hybrid work systems, HR software can keep track of complicated issues around compliance and data security.

The administration of compensation and benefits, and employee data, can be streamlined. Efficient systems will reduce delays, errors, and costs.

Employee experience software can provide fast, effective communications, encouraging transparency between employees, management, and HR across a wide range of issues. This includes employee engagement and improved management, both of which can be monitored with regard to enhancing the employee experience.

Do employee retention strategies succeed?

NEI Investments

Mutual fund company NEI Investments used Simpplr to improve communications over a geographically diverse, hybrid workforce vastly. Headquartered in Toronto, NEI’s employees became more remote, and company culture suffered. The sheer volume of emails became untenable, and employees began to feel disconnected. Disengagement from company mission and values soon followed. Using specialized software as part of a dedicated employee retention strategy, the company restored effective communication and re-connected with its workers.

United States Olympic and Paralympic Committee

The USOPC, headquartered in Colorado Springs, ran into trouble when the complex structure of Team USA made internal communications difficult. So the USOPC and Simpplr worked together to bring people together across a wide geographical area and promote team spirit and cooperation via more straightforward access to communications, knowledge, and information.

Employment retention statistics and research

According to a wide-ranging survey by Gallup, 1 in 2 employees in the USA were open to leaving their current organization in 2022. Employees believe now is an excellent time to move on and find that quality job. The top reasons include engagement and culture issues (40%), well-being and work-life (26%), pay and benefits (20%), and leadership (13%).

Work-life balance is also crucial to a positive employee experience, along with increased income, the opportunity for personal growth, greater stability and security, and diversity and inclusivity in the workspace.

Best practices will ensure employees remain engaged and committed to company goals and mission. These employees may then recommend the company to talented peers outside the company, who might become employees.

To further understand the challenges and opportunities involved in retaining employees, here are 10 top guidelines or best practices to consider:

  1. Onboard and assimilate in an efficient and frictionless manner.
  2. Think out-of-the-box, as this will foster flexibility and enhance the employee experience
  3. Pay fair, competitive wages, and offer comprehensive benefits.
  4. Develop and maintain a company culture where employees feel respected, valued, and included
  5. Provide opportunities for personal growth and training, including executive training.
  6. Make the work environment a place the employee really wants to be, whether on-site, remote, or both.
  7. Stimulate effective management to stabilize employees and encourage personal and team development.
  8. Promote competent, transparent leadership, as this enables a culture of trust.
  9. Understand that DEI, work-life balance, and health and well-being are top priorities for employees.
  10. Use HR software specific to your company to optimize the above processes.

How to recognize the tell-tale signs of employee dissatisfaction

  • Decreased engagement: If an employee lacks motivation, they may disengage. As a result, cohesion is lost, and productivity is negatively affected.
  • Increased absenteeism: An employee may be increasingly absent due to a lack of motivation and job search activity.
  • Negative attitude: A negative attitude can indicate dissatisfaction and insecurity, which can influence colleagues.
  • Insubordination: Where leadership is weak or careless, respect is lost, and authority is diminished.
  • Confrontation: When employees feel a lack of respect and trust, confrontation may follow.

Employee retention is incredibly important to any company, of course. Simpplr helps companies create exceptional employee experiences that drastically enhance the effectiveness of these efforts. Reach out for a demo, and we’ll show you how!