Watching an employee walk out the door for good is gut-wrenching. You spend all those resources to hire, onboard, train, and retain them, but other offers seem to swoop them away very easily. A low employee retention rate isn’t just bad for business; it also leaves a dent in your team’s morale, workflow, and growth.
The good news is that it is never too late to invest in more transformative employee retention strategies. And that is exactly why we have created this guide to help you tackle turnover head-on with proven strategies and build a workplace where great employees want to stay.
What Is Employee Retention & What Is A Good Employee Retention Rate?
Employee retention is your organization’s ability to keep your employees long enough to maintain stability, productivity, and continuity. It reflects how well you meet your workforce’s needs and prevent unnecessary turnover. This rate varies by industry, but generally, anything above 90% is considered strong.
For example, industries like technology and healthcare have lower averages (around 70-80%) because of intense competition. In contrast, sectors like finance can hit 90% or higher. Try to aim for a retention rate that meets your industry benchmark and keeps your team engaged.
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13 Proven Strategies To Improve Employee Retention Rate
Use a mix of these 13 strategies to retain your employees for the long term.
1. Offer Competitive Salaries & Benefits
Most of the time, employees leave when they feel undervalued—especially in terms of their compensation. That’s why companies that offer above-average pay are 1.5x more likely to retain their employees compared to those offering below-average packages.
You can make your employees feel more secure and appreciated with competitive benefits like health insurance, retirement plans, and bonuses.
- Benchmark salaries & benefits annually against industry standards.
- Add perks like wellness stipends, mental health support, or childcare assistance.
- Reward high-performing employees with raises or bonuses that are tied to measurable goals.
2. Create Career Growth Opportunities
Your employees will stay if you give them a clear path forward. In fact, 94% of employees say they would stay longer if the company invests in their career development. So, create growth opportunities like leadership programs or certifications to show your commitment and long-term investment in employees.
- Map out individual development plans for every employee.
- Introduce mentorship programs and pair junior staff with senior leaders.
- Reimburse employees for external training or certifications tied to their roles.
3. Build A Positive Work Culture
A toxic work culture is one of the top reasons employees leave. When you create an inclusive environment to mitigate this issue for your employees, you’ll be 2x as likely to meet or even exceed your financial targets. So, create an environment where your employees feel safe, respected, and connected.
- Conduct quarterly anonymous surveys to identify your employees’ primary cultural pain points.
- Celebrate milestones, team wins, and personal achievements publicly.
- Implement zero-tolerance policies for harassment or unfair treatment.
4. Provide Workplace Flexibility
With over 80% of employees claiming they’d be more loyal to companies that offer flexible options, workplace flexibility has now become non-negotiable. When you offer flexible work options, you reduce employee stress and help improve their productivity. However, you need to make sure you extend this flexibility to roles suited for remote or hybrid work models.
- Allow flexible schedules for roles that don’t require fixed hours.
- Offer remote work options, at least part-time, where feasible.
- Track productivity metrics instead of hours worked.
5. Recognize & Reward Contributions
Recognition boosts employee morale and retention. You can convince your employees to stay with you for a whole year with employee recognition initiatives. And this doesn’t need to be anything grand. Even small gestures, like public shoutouts or awards, can go a long way and make your employees feel valued.
- Start a peer-to-peer recognition program.
- Celebrate standout achievements during team meetings or newsletters.
- Use recognition tools to automate and track employee appreciation.
6. Prioritize Mental Health & Well-Being
If your employees face burnout quite often, 86% of them will think about quitting their jobs at least once a month. This makes burnout one of the leading causes of high turnover. So, it’s important to show your employees you care about their well-being with mental health resources.
- Offer access to Employee Assistance Programs (EAPs).
- Provide mental health days as part of paid time off (PTO).
- Hold wellness workshops or team-building activities that focus on stress reduction.
7. Conduct Stay Interviews
Don’t wait for employees to resign. Instead, use stay interviews to learn why employees choose to stay and if there are any areas of concern. It can cost you up to 200% of an employee’s salary to replace them. So, use stay interviews to act on feedback early and lower your average employee turnover rate.
- Schedule one-on-one check-ins twice a year with each team member.
- Ask questions like, What do you enjoy about your role?” or “What improvements would help you succeed?”
- Document and act on common feedback themes.
???? Did You Know?
92% of employees agree that constructive feedback boosts performance.
(Source)
8. Improve Your Onboarding Processes
First impressions really do matter. A strong onboarding process can help you increase your organization’s retention rate by 82%. So, create a clear job orientation process to make your new hires feel supported and stay with you long-term.
- Preload tools, resources, and documentation for new hires before day 1.
- Pair each new hire with a buddy or mentor for their first 90 days.
- Set clear expectations and milestones for the first 3 months.
9. Maintain Fair Workload Distribution
If you overburden your employees, 70% of them will feel disengaged at work. This means they will be demotivated and more likely to leave. So, balance workloads to improve morale, prevent burnout, and ultimately boost your retention rate.
- Use workload management tools to distribute tasks evenly across teams.
- Schedule weekly check-ins to assess workload pressures.
- Offer flexible deadlines or support when workloads spike unexpectedly.
10. Encourage Cross-Functional Collaboration
Cross-functional collaboration creates an agile workplace environment. This agility increases your chances of engaging and retaining employees by 27x. Plus, it helps your employees learn and develop new skills, which furthers your career growth initiatives.
- Create task forces with members from different departments to solve specific challenges.
- Rotate responsibilities or introduce job-shadowing programs.
- Host brainstorming sessions to generate innovative ideas across teams.
11. Build Transparent Leadership
33% of employees say a lack of transparency negatively impacts their morale at work. So, team leaders need to maintain open and honest communication about the company’s mission, vision, and goals to build trust and boost morale. This will also create a sense of belonging and loyalty.
- Hold quarterly town halls to share updates and invite employees to ask questions.
- Share company goals, progress, and challenges via email or intranet updates.
- Train managers to communicate clearly and empathetically with their teams.
12. Invest In Tech That Eases Work
Outdated tools and systems can frustrate your employees and waste time. This also negatively impacts 83% of employees’ job satisfaction and morale. This is why you need to invest in better technology and prove that you want to make work more efficient for your employees.
- Upgrade software to automate repetitive tasks.
- Train employees on how to maximize existing tools.
- Gather employee feedback before investing in new technologies.
13. Conduct Exit Interviews
You can’t stop every employee from leaving your organization. But you can use their reasons for leaving to improve retention and prevent others from following suit. When your employees do leave, use exit interviews to gain valuable insights into what went wrong. In most cases, a follow-up exit interview encourages employees to give a reason for their resignation.
- Create a structured exit interview process with a focus on actionable feedback.
- Ask open-ended questions like, “What could we have done to make you stay?”
- Track trends and use the data to adjust policies or processes.
How To Calculate Employee Retention Rate
Here’s how you can calculate your retention rate and see exactly where you stand.
Retention Rate = [(Number of employees at the end of the period – Number of new hires during the period) ÷ Number of employees at the start of the period] x 100
Below are 3 scenarios to help you understand how this works.
Example 1: Stable Workforce
A company had 100 employees at the start of Q1. By the end of Q1, it had 95 employees, and 5 of those were new hires.
Calculation:
Retention Rate = [(95 – 5) ÷ 100] x 100 = 90%
The company retained 90% of its workforce, which indicates a relatively stable retention rate.
???? Interesting Fact
75% of disengaged employees blame it on poor relationships with management.
(Source)
Example 2: High Turnover
At the start of Q2, the company had 150 employees. By the end of Q2, it had 140 employees, and 20 of those were new hires.
Calculation:
Retention Rate = [(140 – 20) ÷ 150] x 100 = 80%
An 80% retention rate suggests higher turnover, which means the company needs to evaluate its retention strategies.
Example 3: Growth With High Retention
A startup began the year with 50 employees. By year-end, it had 60 employees, including 15 new hires.
Calculation:
Retention Rate = [(60 – 15) ÷ 50] x 100 = 90%
Despite hiring significantly, the startup retained 90% of its original employees. This reflects strong employee satisfaction and stability.
Why HR Leaders Should Care: Employee Retention Statistics
Review these 5 stats that highlight why employee retention deserves your immediate focus and how it affects your organization’s bottom line.
- Turnover is preventable: 42% of employees say their organization or manager could have done something to stop them from quitting their jobs.
- Employees need security: 37% of employees worry about their job security in their current role, which forces them to seek other opportunities.
- Retention saves costs: You’ll need to spend 33% of your employee’s annual salary to replace them.
- You can always do better: 65% of employees believe they can find a better role with higher pay elsewhere.
- Long-term employees boost productivity: Your employees will reach full productivity after 6-12 months, with a 5-10% productivity boost in 2+ years, a 10-20% boost in 4+ years, and a 20-30% boost in 6+ years.
Use these key areas to address turnover effectively and retain turnover.
This highlights the correlation between transparent communication and higher employee engagement, which emphasizes the need for open leadership practices.
Benchmark your turnover rates based on this and customize your strategies based on your sector’s unique challenges.
5 Key Best Practices When Calculating Retention Rate
Use these 5 best practices to avoid errors, track trends, and measure retention rates effectively.
- Set a consistent timeframe: Always calculate retention over a defined period (e.g., monthly, quarterly, or annually) to track trends and identify patterns effectively.
- Exclude new hires: Only include employees who were with the organization at the start of the timeframe to ensure an accurate retention rate.
- Segment by department or role: Break down retention rates by departments, roles, or locations to find specific areas of concern.
- Account for voluntary and involuntary turnover: Separate these categories to pinpoint if issues are due to dissatisfaction or structural changes.
- Benchmark against industry standards: Compare your retention rates to industry norms to see if your company is competitive or needs improvement.
???? Food For Thought
In just one month, 4.4 million Americans quit their jobs.
(Source)
What Is Employee Retention vs Turnover Rate?
Employee retention rate measures the percentage of employees who stay with your company over a specific period. In contrast, the turnover rate measures how many employees leave voluntarily or involuntarily. Both these metrics help you understand workforce stability and the overall health of your organization.
Retention keeps top performers, whereas turnover reveals areas that need improvement, like engagement, management, or competitive compensation strategies. Try to reduce voluntary turnover (top talent leaving) and maintain functional turnover (underperformers leaving). Focus on functional retention (keeping high performers) to do this.
How Genius Can Help Improve Employee Retention Rate
At Genius, we understand that great retention starts with hiring the right people from the get-go. So, we connect you with dedicated, pre-vetted talent who fit your business’s needs and values.
Our meticulous 12-step vetting process and local partnerships in the Philippines and Latin America ensure you get skilled professionals who are committed to growing with your company. We screen 250+ candidates to find the ONE who meets your standards.
With 5+ years in the field, we’ve created a talent pool filled with qualified professionals who speak perfect English and have a strong work ethic. Plus, our 80% cost savings model means you get senior-level talent at 80% less than typical US hiring costs without any compromise on quality.
And to make your hiring experience completely risk-free, we back every placement with a 6-month talent guarantee.
Conclusion
Employee retention rate isn’t just a metric—it’s the pulse of your organization’s health. Use the actionable steps in this guide as a roadmap and build a workplace where top performers thrive, and turnover becomes a thing of the past.
At Genius, we connect you with pre-screened professionals from the top 1% of talent in the Philippines and Latin America to ensure reliable hires committed to your organization’s success.
Ready to build a team that sticks around? Hire with Genius today to secure a lasting talent solution.
FAQs
What are the common challenges in improving employee retention rates?
Businesses often struggle with high workloads, lack of career growth, limited recognition, and inadequate compensation, which can lead to low employee satisfaction and high turnover.
How does employee retention rate affect company culture?
A high retention rate contributes to a stronger company culture by promoting trust, teamwork, and long-term relationships. Consistent teams build deeper connections and improve collaboration and engagement.
Can employee retention rates vary by department?
Yes, retention and turnover rates can differ across departments due to varying job demands, management styles, and growth opportunities. Tracking these differences helps identify areas for improvement.
What is the impact of retention rates on customer satisfaction?
High retention rates lead to experienced employees who deliver consistent service, resulting in improved customer satisfaction, employee experience, and loyalty.
