Every seasoned HR professional knows about the hiring challenges, which can shadow anything from posting personalized job descriptions on multiple job portals and screening endless resumes to setting up interviews, collecting references, presenting offers – the list goes on. All this in an attempt to secure the best candidates for the job. HR professionals also have to initiate frequent training programs for employee growth.
An organization invests a lot of resources in the above processes, hence, it is not surprising that they would want to retain their most prized assets for a long time. This is especially true in industries, like Finance, transportation technology, and healthcare, that face constant demand for skilled workforce.
Unfortunately, minimizing employee turnover is still one of the most pressing issues faced by companies every year.
Less learning opportunities, frequent burnouts, inflexible working schedules, inhospitable workspaces, and low wages are compelling employees to leave (or at least consider leaving) the organization at an alarming rate.
When key employees exit the organisation, it also affects the morale of other workers who now have to deal with additional workload. Companies also have to deal with lower operational output, reputation damages, breakdown of client relations, and project delays.
While it is natural for workers to quit a company, an unnatural higher attrition rate can result in financial repercussions for a company.
Employee exits are costly. Hiring replacement workers costs more than retaining skilled employees. There is also the cost associated with the final settlement of outgoing employees.
Like any problem, HR teams need to understand the causes of employee turnover and develop strategies to give employees more reasons to stick around. This can be done through training programs, competitive wages, career assurances, etc.
In this article we will talk about the best practices and effective strategies that impact an organisation’s ability to retain the best members of its workforce.
How To Reduce Employee Turnover And Increase Employee Retention
- Get The Best Talents
Finding the cream of the crop is every recruiter’s dream. But they often fall short of realizing this dream because of unconscious mistakes during the hiring phase.
For starters, not being clear about the candidate expectations and the company culture. Employees join only to find out later that the organization is incompatible with their values and career trajectory, resulting in a higher attrition rate.
Employees need clarity on their current role and future at the organization. Once you do that successfully, they will show remarkable productivity from day one. HR professionals can do that by
- vetting candidates’ current skills and forecasting the evolution of those skills, for long-term employment.
- Involve department managers and other employees in similar roles during the interview process. Talking with people from similar backgrounds can help employees better understand their compatibility with the company.
- Give office tours. You can achieve this task in-person or virtually.
If possible, consider remote-work models and AI technology for broader recruitment coverage.
- Recognize Employee Efforts
Does your company wait after the year’s end and a formal review to complement your employees? If yes, then it is time to introduce a culture where your organization makes its employees feel valued with timely “job well done” appreciation. Because it is not just the major accomplishments, but also the smaller milestones that workers achieve every day, week or month, that deserves your praise.
Studies show that absence of formal appreciation for their efforts is one of the major reasons for employee turnover. Making employees feel good about their contributions, gives them a satisfactory feeling, which converts into more productivity and loyalty towards the organization.
The company leaders can recognise employees in many ways –
- Sending handwritten thank you notes or emails
- peer-to-peer recognition
- Public recognition like during meetings or through posts on the company’s official social media channels.
This significantly improves employee retention rate, while saving millions in turnover cost.
- Offer Competitive Salaries According To Industry Standards And Market Forces H3
Employees come to the office or log in from a remote location every day, because of the money. At the end of the day, salary is the number one motivator for an employee to stay or leave an organisation, with additional benefits coming close second.
If you want to minimize employee turnover, then you have to match your competitors by offering attractive salary packages, especially for high-demand jobs with less supply of skilled personnel.
Competitive salaries are one of the best strategies for reducing employee turnover and attracting qualified professionals, which you can offer by following the below methods.
- Monitor the salary and bonus structures of your rival firms.
- Analyse the cost of living in the area, inflation rate, and industry labour cost for specific job profiles, before preparing salary packages.
- Define A Clear Career Pathway
You can try keeping your employees happy with new salary increases or benefits, but if they do not see a future at the company, their passion for the job diminishes slowly to a point where they start looking for an exit. To reduce employee turnover, you need to make them visualize a secured future at the company through personal interactions where you discuss promotion or transfer opportunities.
Furthermore, you need to have policies that eliminate transitional barriers. Because there are times when employees will want cross-department roles that give them the opportunity to apply their new skill sets. Employees will not look for opportunities elsewhere if the company has training and promotion provisions in place.
Use different technology to identify skill gaps and plan reskilling or upskilling programs to help internal talents follow their passion.
- Promote Work-life Balance
We would strongly advise against forcing employees to come back to the office because this is one of the major causes of employee turnover in 2025. The pandemic is gone, but the hybrid or remote work practice has continued to grow over the years. Employees are prioritizing their mental and physical health, which means they do not want to spend hours commuting or working after regular hours, or on weekends.
Promoting work-life balance with remote or hybrid work options, can expose companies to more compatible employees who align with the company’s vision. You can also keep employees happy with maternity and paternity leaves, flexible work schedule, and paid vacation time.
Implementing the above options for work-life balance can turn your company into an attractive destination for employees. Also, work with HR executives to ensure every worker has equal access to all the benefits.
- Promote Employee Engagement
Many researchers have found an interesting correlation between employee engagement and turnover. Workers tend to stay in a company longer when they frequently interact with their superiors and colleagues through in-person or virtual communication.
Companies can use a combination of methods to boost engagement between employees –
- Create spaces that employees (from different departments) can access for socialization like cafeterias or game rooms.
- Encourage employee feedback during team meetings.
- Plan company trips
- Celebrate Birthdays
- Organize leisure activities like Scavenger Hunts or Karaoke sessions.
You can get more precise with your employee engagement strategies by monitoring employee discussion forums. Workers use these channels to highlight issues that prevent them from expressing themselves freely. Use these anonymous inputs to help employees open up in workspaces.
What Are The Benefits Of Reducing Employee Turnover?
Positive Employee Morale H3
A higher retention rate creates a positive work culture because employees understand the company’s vision and their career trajectory. They see themselves getting the help they need to develop necessary skills and maintain a work-life balance. This reduces stress and reinforces their commitment to their job. Furthermore, employees do not think about switching jobs when their colleagues do not do that either.
Knowledge Retention
No company wants to lose employees who have extensive knowledge about the company’s operations, culture, and client relations. Especially when there is no system to capture and transfer years of knowledge to new employees.
When such an employee stays with the company, they are able to transfer their experience to new workers through practical examples, timely feedback and personalized stories. This approach not only retains existing knowledge but allows new workers to add something new to years of tested and refined practices.
Reduced and Redirect Spending
The cost of replacing an employee is almost half of the employee’s annual salary. The cost grows for employees at the higher level of management hierarchy.
By raising retention rates, the companies can significantly reduce their recruitment spending. Furthermore, they can use the budget to hire and train additional skilled workforce for vacant positions in the firm.
Positive Brand Reputation
Talented workers want to work at your company when you have a high employee retention rate. Your satisfied employees will spread positive word of mouth with their network, which further motivates potential employees to consider your organisation. The high retention rate highlights the company’s culture, employee commitment, stability, and leadership.
Satisfied Customers
Your clients or customers feel disconnected from your company when they have to communicate with a new face. This is because now they have to re-convey their expectations all over again.
Meanwhile, retaining workers means the same faces will handle business with your clients. They know everything your clients want and will work to provide better customer experiences. This improves clients’ relationship with the company and opens doors for more business in the future.
Conclusion
There is no sure-fire way to bring your company’s retention rate to zero because employees will always leave or consider leaving because of their personal and professional commitments. As a member of the HR department, you can maintain a stable retention rate by keeping your employees happy.
There are many strategies to reduce employee retention rate, from competitive salaries, flexible working schedules, and socialization to growth opportunities, appreciation, and more.
A company benefits by retaining workers for a long time. This can come from retaining years of experience, keeping clients happy, saving more on recruitment costs, having a goal-driven workforce and maintaining a strong brand reputation.