Increasing employee retention is one of the main goals every employer has, In fact, a recent study revealed that 87 percent of employers state that improving employee retention rates within the company is one of their top priorities.

What is Employee Retention?

Employee retention is a company’s ability to keep its employees in the organization. In addition to improving employee motivation, most companies across the world strive to decrease employee turnover.

Employee retention is usually expressed as a percentage. For example, an annual retention rate of 70% indicates an organization kept 70% of its employees that year and lost 30%.

Another way to understand employee fluctuation in the organization is by measuring employee turnover. Employee turnover is the percentage of people who left an organization in a given period of time.

💡 Check out our guide for Building a Better Company with Internal Communications.

How to Calculate Employee Retention?

Employee retention rate is a very helpful metric every employer should calculate. Understanding your company’s employee retention rate can help you compare your company with the competitors and measure changes over time within your organization.

The formula to calculate employee retention is simple. Simply divide the number of employees who left during a period by the total number of employees at the end of a period.

Here is a simple employee retention calculation from PeopleKeep.


Standard employee retention rates are anywhere from 70% – 85% but vary greatly by industry, job position, location and the calculation method.

Employee Retention Hacks [INFOGRAPHIC]

To have all the hacks to improve employee retention in one place, we have made an infographic for you. Read further to find out details on each hack.

14 ways to increase employee retention

14 Best Ways to Increase Employee Retention

Even though there are many different strategies to improve employee retention, here are the top 14 ways that have proven to have a positive impact on it.

1. Set clear goals and objectives

Employees who don’t understand their own and company’s goals and objectives often feel lost. Not understanding what exactly do employees need to achieve cause low employee satisfaction. Therefore, lack of goals and objectives is one of the main reasons for low employee retention.

In order to boost employee productivity and increase retention, you have to give them clear goals to work towards.

In addition, it is crucial that you communicate your company values to all of your employees.

2. Improve internal communications

Poor internal communication disables employees to stay in the loop with what is going on within the organization.

Companies with well set internal comms are much more likely to keep their employees engaged and motivated. Consequently, higher employee engagement leads to higher employee retention.

Boost your internal communication by encouraging employees to regularly communicate their thoughts and ideas. Open communication will demonstrate to employees that their opinions are important.

3. Manage expectations

Managing expectations is crucial for improving employee relations and retention. Expectations are closely related to how clearly employees understand their role, goals and objectives.

In addition to employees understanding what is expected from them, it is also important for employees to understand what can they expect from an employer if all the expectations are met.

This can only be done using transparent and open communication with employees.

4. Empower your employees

Employee empowerment means giving employees autonomy and responsibility for decision-making. Employees who are empowered to make decisions feel more in control over their job and career. When they do feel that way, as per a survey by TINYpulse, they are 20% more likely to stay in their roles.

However, employee empowerment has its negative sides, so employers need to be smart about it.

Want to empower your employees? Learn how to do employee empowerment the right way.

5. Offer career growth opportunities

According to Gallup, 87% of millennials say professional growth and development opportunities are their top priorities.

chart: top reasons why people left their old job

Therefore, career growth opportunities have a big impact on employee retention. Not being able to advance can be very discouraging for employees. Moreover, LinkedIn’s 2018 Workforce Learning Report states that 93% of employees would stay at a company longer if it invested in their careers.

Still not convinced? Here is another stat.

According to Willis Towers Watson, nearly 70% of employees who fall into the “high-retention-risk” category are considering leaving their current roles because they feel there is no more room to climb their current organization’s career ladder.

6. Offer fair and competitive salary and benefits

When considering a job, salary will be one of the main factors influencing candidates’ decisions. However, we can see that Millennials and younger generations also look for additional benefits.

Therefore,  some other factors influencing employee retention may include flexible work schedules, remote work, training opportunities and other amenities, such as bonuses or extra vacation time.

Harvard Business Review has released a research on which benefits employee prefer.

For example, a research from Owl Labs found that supporting a remote work program can have a meaningful impact on employee retention.

In addition to having benefits, it is extremely important that employees feel that their salary and benefits are fair compared to other workers. Otherwise, they may leave for a higher paying opportunity.

7. Encourage upward feedback

Employees in companies that don’t support a culture of upward feedback are 16% less likely to stay at their companies. Same as managers give feedback to employees, employees should give feedback to managers.

An interesting report by Qualtrics showed that 60% of U.S. employees are able to provide feedback about their own employee experience. However, only 30% said their feedback was encouraged by their employer.

8. Recognize and reward

As per TINYpulse data, 21.5% of employees who didn’t feel recognized for good work have interviewed for a job in the last three months. In contrary, only 12.4% who did feel recognized interviewed for a job in the last three months.

Employees seek validation and reward for their work. In addition, they are more likely to show loyalty when they are recognized.

As per O.C. Tanner, here is how much longer stay employees who feel recognized.

average number of years an employee stayed at their previous company

9. Work on your workplace culture

According to FlexJobs, 25% of the US workforce has resigned due to “toxic company culture”.

This makes complete sense. Why? Because the day-to-day work experience of your employees is one of the biggest factors for determining career choices.

In addition, connection among your employees is extremely important. Workplaces where employees feel connected are much healthier and have lower turnover rates.

10. Improve your selection process

Hiring and attracting the right talent is not an easy job!

A survey found that 36% of executives said that a poor skills match is the top factor that leads to a failed hire. This data tells us 2 things:

  1. Employers need to be very clear about the hard and soft skills required for a certain position.
  2. Employers need to improve their selection and testing efforts to choose the best candidates.

When selecting a candidate for a job opening, it is important to understand how this candidate will fit your company’s culture. At the end of the day, we all know about the famous saying:

“Hire character. Train skill.”

11. Invest in Employer Branding

Employer Branding is crucial for companies to present their company culture, benefits work environment and EVP. With that, Employer Branding is considered as one of the most important recruitment and talent acquisition disciplines.

The reason why companies invest in Employer Branding is not to attract any candidates, but to attract the right job candidates.

Candidates who research about your company culture are much more likely to stay longer because they are a better fit.

12. Improve onboarding processes

Onboarding is where it all starts. In this process, new employee role and responsibilities should be discussed and explained in detail.


Employees are 23% more likely to stay if their manager clearly explains their roles and responsibilities. Still, a joint study from Kronos and the Human Capital Institute explains that 76% of HR leaders said their onboarding processes are not utilized enough. Additionally, 24% didn’t even have an onboarding strategy.

Not investing in employee onboarding can cause low employee satisfaction from the very beginning of their employment.

13. Train your Managers

According to Udemy, nearly half of employees said that bad management was why they quit their last job. 56% of employees think that managers are promoted prematurely, and 60% of them think managers need managerial training.

In these cases, managers haven’t been trained thoroughly enough to manage their team effectively.

14. Support knowledge sharing

Knowledge sharing is a great way to help employees develop new skills and stay informed about what is going on in the company.

To support knowledge sharing, employers need to have a strategy that makes knowledge sharing easy and fun for employees.

You can enable people to share their knowledge via training sessions, presentations, mentoring and team assignments. Employees like to share what they know, and training others is a great way to improve learning and development at your company.

The Cost of Low Employee Retention

Many companies are not aware of the real cost of employee turnover. A study from SHRM predicts that every time a business replaces an employee, it costs 6 to 9 months’ salary on average. For a manager making around $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses.

Let’s now see what is in that cost.

Here are the factors that organizations should consider in calculating the “real” cost of losing an employee:

  • New employee hiring costs including job advertising, agency fees, interviewing, screening, and hiring.
  • New hire onboarding and training costs.
  • Time other employees lose to onboard the new hire.
  •  Lost productivity as it takes time for a new person to get the needed knowledge and experience.
  •  Lost engagement from other employees who see that other people are leaving.
  •  Customer dissatisfaction and churn could be a problem if the new employee works in the Customer Success field.
  •  Low employee retention can also have an impact on company culture. Whenever someone leaves, others take time to ask why.
  • New equipment expenses such as including uniform, badges/passes, desk equipment, etc.

10 Signs Employees Might Think of Leaving

Sometimes, there is no way to tell when employees are planning on leaving. However, there are a few signs of employee actions and attitudes that can help you figure out if someone is planning on leaving.

  1. Lower productivity
  2. Lower engagement
  3. More time off
  4. Less time spent with the coworkers
  5. More activities on LinkedIn
  6. More conflicts with other employees
  7. Negative attitude at work
  8. More remote work
  9. More reserved and quiet
  10. More complaints

Use Technology to Improve Employee Retention

Luckily, there are technologies that can help us improve employee retention by improving employee engagement and satisfaction.

Here is the list of possible software solutions that can help you advance employee retention:

  1. Internal communication software for better employee relations
  2. Employee advocacy software for more employee engagement
  3. New hire onboarding software for more efficient onboarding
  4. Employee recognition software for more structured recognition programs
  5. Training and development software to support employee growth
  6. Knowledge sharing software to encourage knowledge sharing within the company
  7. Recruitment software to attract and hire qualified candidates

If you are trying to improve employee communications, engagement and advocacy, we have a tool that covers it all. Smarp is a software solution that has helped companies improve employee engagement, happiness and retention.

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