Employee Retention Strategies Best Practises

employee retention strategies

Every organisation desires to nurture and retain talent. Since there are many reasons why employees leave, the organisation should have employee retention strategies in place to reduce attrition.

While formulating a strategy for retaining employees, it is important to understand why employees are leaving or looking to leave. Both industry and internal surveys should provide some indicators on the reasons for employees choosing to leave. Only a small percentage of people leave their companies for unavoidable personal reasons like health or relocation to a place where the company does not operate from. Organisations need to find out the other reasons, those that can be addressed and corrected so that further attrition can be prevented.

Why retain?

At the outset, it seems logical to simply replace the people leaving rather than work on a set of strategies to retain them. However, in the long run, the cost of implementing retention strategies is far less than the alternative.

There are many reasons why companies want to retain their top talent.

  • If an employee leaves, they take with them all the knowledge and experience gained over a period.
  • The time taken to hire, train and make a new employee productive is usually long. Not only is this costly, but it also impacts team productivity and deliverables.
  • Team’s morale is adversely impacted when someone leaves and often results in other employees following suit.

What is a Reasonable Percentage of Attrition?

Before delving into strategies, let us understand what amount of attrition is considered as acceptable. While it could vary for different industries, employee attrition rate of less than 10% and retention rate of above 90% are considered healthy. If your numbers fall in this range, your organisation is already doing well and should continue with existing strategies.

Top Reasons Why Employees Resign

A survey by McKinsey conducted in early 2022, on why employees quit highlighted the below reasons:

  • Lack of career advancement
  • Inadequate total pay
  • Uncaring and uninspiring leaders
  • Lack of meaningful work
  • Unsustainable work expectations
  • Unreliable and unsupportive people at work
  • Lack of workplace flexibility
  • Lack of support for health and well-being

So, lack of career & monetary growth along with a non-supportive organisational culture seems to be the driving factor for employees leaving.

Best Practises Companies Should Follow to Improve Employee Retention

Armed with these kinds of survey results, companies should formulate their own strategies and address the issues. Some of the strategies given here can be a good start and they can be customised to your specific requirement.

Basic Hygiene

There are some things every organisation could do to improve the working experience of their employees in general. There are many touch points where the employee experiences the organisation and its culture starting from the hiring process and all the way to exit formalities. Companies could improve their HR processes and facilitate happy experiences for their employees by investing in a HR software that is reliable. Such software streamline various processes like:

  • Hiring and onboarding
  • Access to various letters
  • Leave application process and approvals
  • Access to policies and other documentation
  • Learning management
  • Payroll process
  • Performance management

Improving and automating most of these processes will have a positive impact on employee satisfaction.

Career Planning

Career planning for employees should be carried out proactively with discussions starting as early as the job interview stage when the employee is still an aspiring candidate. Leaders should provide realistic feedback and performance expectations so that employees can understand what they need to do to achieve their career objectives within the company. Employees should be provided with alternate career options when their interests and capabilities change during their employment. It is not always easy and appropriate opportunities may not exist for every employee. However, an active and periodic discussion between the manager and employee will prevent unpleasant outcomes related to career progression.

Total Compensation

In a highly competitive industry, it is very difficult to get this right consistently. However, organisations must try and evaluate total pay compensation and make a comparative study within its industry. It is a balancing act between paying too much or too little. A high compensation can be difficult to justify in the long run especially when earnings of the company are not commensurate with their salaries. Markets will perceive it is a lack of financial control and can impact stock value. On the other hand, if the pay is much lower than the industry standard, retention becomes difficult. Knowling where they stand as a percentile within their industry and being transparent with that information will get employees on their side.

Leadership Training

“People leave managers, not companies” is a common phrase when it comes to discussing leadership and what role they play in retaining employees. The leadership culture of an organisation is always top-down. . While culture is a broad term, it is important to establish ground rules on how employees are treated. The HR and training department should ensure leaders at every level are aware of the values that the company holds in high esteem and would not compromise on.

Work Assignment

It is really old school for a manager to be seen as a tough task master who is unrelenting in pushing people to deliver more in less time. As part of the work allocation discussion with the team, the manager should be able to provide clear expectations of the deliverable as well as the timelines. The discussions are fruitful when both parties see the process as fair and reasonable. With modern practices like Agile HR, it is the team that takes the decisions on who does what and the deliverable for that sprint. The manager usually acts as a moderator and a facilitator who can remove any blockers in the project progress. Such good practices where employees actively participate in making decisions will remove the arbitrariness around work allocation and delivery deadlines. A meaningfully engaged workplaces reduces unnecessary stress and improves employee satisfaction resulting in lesser attrition.

Supportive Organisation Culture

It is not enough to have supportive leaders. The organisation culture should be evolved such that employees experience a reliable and supportive work environment. Workflows and processes should be designed in such a way that employees feel safe to try something new. Any failure while trying something new should be viewed as a learning experience rather than individual failure. In non-supportive cultures, employees with high potential and creativity feel stifled and eventually leave.

Flexible Workplace and Work From Home Options

COVID times have proved that people can work from any location and still be as productive and effective. Taking advantage of these learnings, organisations should provide flexible working options. These options could include a mix of working from office space for a number agreed hours per week or as the role demands. Some organisations are providing complete flexibility for employees to work from home with minimal office visits. For many employees flexible working has become a key factor in their work-life balance.

Focus on Employee Health and Well-being

Another outcome of the COVID pandemic has been that it put focus back on employees’ health and well-being. Organisations have started investing in both physical and mental health of their employees. Tie-ups with local reputed hospitals, resident doctors and counselling facilities are some of the investments being made. A lack of such facilities can be felt acutely and may push some employees to look for other companies that have better healthcare policies.


The cost of backfill is much higher than the cost of retention of employees for most organisations. Thus, Organisations should look to retain talent by constantly evaluating strategies and making course corrections as they see fit. In this blog we have mentioned the best practises that companies can implement to improve employee retention.

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