10 Employee Retention Strategies for Reduced Turnover

Imagine a high-performing team so engaged and loyal that turnover becomes a distant memory.

For HR teams and CEOs, this isn't just a dream—it's a strategic goal that can be achieved with the right employee retention strategies.

As the battle for top talent intensifies, retaining your top performers is crucial to maintaining competitive advantage and organizational stability. High turnover rates not only disrupt operations but also drain valuable resources in recruiting and training new employees.

Many companies use employee engagement software to get real-time insights into employee sentiment to identify potential issues before they escalate into turnover. However, many are still unaware of how factors like a high-quality onboarding experience, corporate values, and culture tend to have on keeping top performers in the fold.

Here are 10 employee retention strategies to implement to reduce turnover at your firm.

1. Offer comprehensive employee benefits

The first important feature that should form the bedrock of any retention-focused compensation plan is a comprehensive employee benefits package. Getting this part right plays an outsize role in retention outcomes. To begin with, create a package that offers all of the generally-expected benefits, including:

• Healthcare coverage: This is the most common and sought-after benefit for US employees. The rule of thumb is to offer the best insurance package the company can afford.
• Paid time off (PTO): All new employees should begin with a minimum of two weeks of paid time off. For especially hard-to-fill positions, new hires should start within three weeks.
• Dental coverage: Like healthcare coverage, dental coverage is another sought-after benefit, as it relieves the employee of a major financial burden when care is needed for themselves or their covered family members.
• Retirement packages: Although the days of employer-sponsored pension plans are long gone, employees still want their employers to provide them with options to save for retirement. A great way to do this is to offer a 401(k) plan with a high employer contribution ratio. 

It's important to recognize that every workforce has different needs, however. That means it's advisable to conduct surveys of existing employees to determine which benefits matter most to them. This will help in crafting the best package from a retention standpoint.

2. Provide training and education subsidies

Today's workers, particularly those drawn from younger demographics, now value professional development as a key factor in their employment decisions. 

From a retention standpoint, offering training and education subsidies is a valuable tool in the drive to keep workers happy. For the average company, it should be possible to create a robust training initiative consisting of online coursework or on-the-job education, which may be managed by existing human resources staff.

To augment this, it's also a good idea to offer tuition reimbursement to employees who wish to pursue educational opportunities outside of work.

Businesses can even use such a program to further other aims, such as increasing gender and racial diversity in their ranks by upskilling existing employees to work in new fields. Many technology firms are doing this now as a way to increase female participation in STEM-related fields that are now overwhelmingly male-dominated.

3. Don’t overlook bonuses and awards

Few companies pay much attention to employee recognition, another excellent form of compensation that serves employee retention goals. This is a critical oversight, especially when you consider that surveys have revealed that as many as 87% of employees who are recognized for their work by their employers report high satisfaction with their jobs.

To take advantage of that, it's an excellent idea to craft compensation packages that feature employee bonuses and other performance-related benefits. This serves the dual purpose of providing a means of direct service recognition and incentivizing high productivity.

It's important to realize, though, that not all employee recognition needs to come in the form of a monetary benefit. Sometimes, a simple weekly shout-out or an annual employee awards dinner can do just as well. The best approach will vary by industry, but one thing is certain: the more you recognize your employees' valuable contributions, the more loyal they will be. 

4. Pledge employees a vested ownership plan

Although it should be obvious, one of the most effective things a business can do within a compensation package to improve retention is to create an employee stock purchase or vested ownership plan. Doing so gives every employee a direct stake in the business's performance, which will encourage them to stay and work hard to increase the company's value.

For maximum retention effects, it's important to engineer any such plan with direct links to time-of-service and other relevant metrics. That serves as a guarantee that employees will remain with the company to achieve maximum financial benefits since they'd pay a direct penalty for departing before they're fully vested in the plan. It also serves as a key defense against employee departures, especially at the executive level.

5. Lay out work-life balance perks

Employee retention is inextricably linked to the ability to maintain a healthy work/life balance. Engaged employees, who feel they can manage their personal and professional lives, are far less likely to leave. To enhance this balance, consider introducing specific perks that cater to the varied needs of your workforce. For example:

• Flexible working arrangements: Offering employees autonomy over their schedules and the option to telecommute can significantly improve their work/life integration, allowing for greater personal productivity and satisfaction.

• Paid caregiver leave: As the workforce ages, many employees will find themselves in caregiver roles. Providing paid leave for these responsibilities helps employees manage their personal lives without sacrificing their professional obligations.

• Volunteer time off (VTO): Many employees are eager to engage in their communities. Allowing them paid time off to volunteer demonstrates that your organization supports their values and interests.

By thoughtfully integrating these perks into your compensation structure, you can create an environment that not only supports retention but also enhances overall employee well-being.

6. Cultivate a strong company culture

Building a positive company culture is key to employee retention. Start by defining your core values and ensuring they are reflected in every aspect of your organization, from hiring practices to daily operations.

Encourage leadership to model these values. Employees are more likely to engage with a culture that is consistently demonstrated from the top down. A strong, values-driven culture creates a sense of identity and purpose among employees, which can significantly reduce turnover.

To foster an inclusive environment, consider implementing diversity and inclusion initiatives that celebrate different perspectives and backgrounds. Host workshops, training sessions, and discussions that encourage employees to share their experiences and insights. By creating an atmosphere where everyone feels valued and heard, you cultivate a community that is more likely to stay engaged and committed to the organization.

7. Implement regular feedback 

Establishing a culture of continuous feedback is vital for retaining employees. Start by scheduling regular one-on-one meetings between employees and managers to discuss performance, goals, and any concerns. These conversations should be constructive and supportive, allowing employees to express their thoughts and feelings in a safe environment.

Regular feedback helps employees feel valued and supported, and it can help identify potential issues before they lead to dissatisfaction.

In addition to individual feedback sessions, anonymous surveys should be implemented to gauge overall employee sentiment. These surveys can provide insights into employee morale, engagement, and areas for improvement. Be transparent about the results and take action based on the feedback received. When employees see that their opinions lead to real change, they are more likely to feel connected to the organization and committed to its success.

Lastly, foster a two-way communication approach. Encourage employees to provide feedback not only about their experiences but also about processes and policies within the organization. 

8. Offer career advancement opportunities

Providing clear paths for career advancement is crucial for retaining top talent. Start by creating transparent career progression frameworks that outline the skills, experiences, and accomplishments needed for promotions. This clarity helps employees understand what is expected of them and motivates them to work toward their goals. Regularly discuss these pathways during performance reviews, ensuring employees know the steps they need to take to advance their careers within the organization.

Implement mentorship and coaching programs that pair less experienced employees with seasoned professionals. Mentorship provides guidance and also fosters relationships that can lead to increased job satisfaction and loyalty. Encourage mentors to share their experiences, insights, and advice, helping mentees navigate their career paths more effectively. This personal connection can make a significant difference in employees' engagement and retention.

Additionally, consider offering lateral moves or job rotations that allow employees to explore different roles within the organization. Employees who feel they have opportunities to grow and diversify their skills are more likely to stay with your organization, reducing turnover and contributing to a more skilled workforce.

9. Encourage engagement initiatives

Empower employees to take an active role in shaping the organization by encouraging them to participate in engagement initiatives. Establish committees or task forces focused on various aspects of employee experience, such as workplace culture, social responsibility, or wellness programs. When employees have a say in decisions that affect their work environment, they develop a greater sense of ownership and commitment to the organization.

Organize regular team-building activities and social events that promote collaboration and strengthen relationships among employees. These initiatives can range from informal gatherings to structured team-building exercises that enhance communication and teamwork. By fostering connections among colleagues, you create a supportive environment that encourages employees to stay engaged and loyal to the organization.

10. Introduce employee wellness programs

Prioritizing employee well-being is essential for reducing turnover and fostering a positive workplace culture. Comprehensive wellness programs can address various aspects of health, including physical, mental, and emotional well-being.

By offering initiatives such as fitness challenges, mental health days, mindfulness workshops, and access to counseling services, organizations demonstrate their commitment to the holistic health of their employees.

A successful wellness program not only improves employees' physical health but also boosts morale and productivity. Employees who feel supported in managing their health are more likely to be engaged and satisfied with their jobs. Consider offering flexible work arrangements to accommodate wellness activities, such as fitness classes or mental health seminars. Encouraging participation in wellness initiatives can lead to a more energized and focused workforce, ultimately reducing absenteeism and turnover.

Compensated, engaged, retained

It's no stretch to say that employee retention is vital to overall business success. In fact, a high retention rate provides bonuses to productivity, decreases recruiting costs, and ensures that vital knowledge and skills don't leave the organization.

Although each company will have different retention goals and needs based on its specific situation, the five compensation areas detailed here are almost always applicable when looking to improve retention. They also tend to be far more cost-effective options than increasing salaries across the board.

For those reasons, any business looking for ways to improve its employee retention rate should consider making these changes to its compensation packages right away. 

Are your employees as engaged as you think? Download our free one-sheet of employee satisfaction questions to find out.

This article was originally published in 2019. It has been updated with new information.