Employee Retention Strategies


 Employee Retention Strategies

Employees are the very powerful and the most important resources of the organizations, their efficiency determines the successful running of the business and profit making. Stability of tenure is one of the principles of management; it says that giving priority to minimize the attrition rate and taking necessary actions to retain the employees can act as a competitive advantage to the organizations.

Employee retention means the ability of an organization to reduce the attrition rate and to retain the employees, management must concentrate on playing employee retention strategies because employees are the intangible asset of the organization. Incorporating employee retention strategies in the organization policies can give better results in reducing the employee turnover.

Employee attrition is a major problem in the organizations; it is due to various internal and external factors. Internal factors include job dissatisfaction, work pressure, poor employee relations, conflicts in the workplace, mismatch of salary expectations, low employee morale, etc, and external factors involve globalization and opportunities, scarce human resources, the influence of social media, job portals and severe competition.

High employee turnover not only maximizes cost, it also decreases employee morale and productivity. Whatever the employees may be, whether they are low-performing or highly skilled employees, organizations must take necessary actions and must treat the employees fairly in order to retain the employees for the longer time or at least until the completion of the project.

Employee satisfaction is the major factor which can bring a positive attitude in the minds of the employees towards the organization. High employee morale, job satisfaction, fulfillment of needs, fair remuneration, superior, subordinate and peer relations can motivate the employees to retain in the organizations for a longer period of time.

Employee turnover may affect the entire organization’s performance due to various reasons such as the decrease in employee satisfaction and morale, decrease in employee efforts during the notice period, work errors due to hiring new employees, training and development costs, recruitment costs, induction period and employee perceptions. All these difficulties make organizations to pay larger amounts to stabilize the imbalance.

Reasons behind attrition

Employee attrition is one of the major challenges to the management and in order to stabilize the organization managers must analyze the reasons behind the employee turnover.

The reasons may be

  • Unbalanced job rotation
  • Work stress and workload
  • Poor interpersonal relations in the work environment
  • Lack of recognition
  • Lack of appreciation
  • Insufficient pay
  • Variations in pay structure
  • Better job opportunities
  • Lack of self-actualization
  • Need for belongingness and self-esteem needs
  • Lack of growth opportunities
  • Inequality at the work environment
  • Rotational shifts and shift inconvenience
  • Authoritarianism
  • Racism
  • Poor employee morale
  • Various employee benefits provided by the other organizations
  • Competitor’s strategies to attract the skilled employees
  • Job insecurity

Need for employee Retention

To reduce the cost

High employee turnover shows a negative impact on the organization’s success. The amount invested on the employee for recruiting, training and development become waste. In addition to these cost of recruiting new employee increases with the increase in attrition rate.

To maximize the production

Existed employees can perform better than the new employees even though the new manpower is experienced also. Job satisfaction can motivate the employees and it helps in maximizing the employee loyalty and production as well. Adoption of organization environment, culture, policies, procedures, and strategies can make the existed employees more productive and initiative.

To increase the employee loyalty

Most of the successful organizations have very less attrition rate; even though these organizations take employee turnover as a very serious matter. So they follow strategic approaches to retain the skilled employees such as providing better working conditions, better salary and various other benefits can make the employees loyal towards the organizations.

To reduce the risk of work errors and project rejections

All the new employees may not perform better in the new organizations though they are skilled and experienced also, it may be due to various factors such as difficulty in adopting new work environment, variations in work procedure, new job, and new environment, difficulty in managing new shift timings, improper knowledge transfer and training methods etc.

So the management must strive hard to retain the employees to reduce the risk associated with work errors and project rejections.

To retain the competitive advantage

High attrition rate not only increases the cost but it can act as a competitive advantage to the rival firms. Recruiting and training the employees include efforts, money and time, if the employee leaves the organization within a short period of time, with dissatisfaction then the organization’s knowledge may go out, it causes negative effects to the firm.

Employee retention strategies

Employee retention strategies and tools highly reduce the loss of skilled employees and competitive advantage. Before the increase in attrition rate management must take necessary steps and must implement the strategic decisions. Modem organizations are using various tools to reduce the attrition rate and to retain the manpower.


Better salary and benefits

One of the major reasons that employees wishes to move on is insufficient salary. Employees always compare their salary with others, if they find it less then they get demotivated and search for better-paying jobs. Providing monetary and nonmonetary benefits such as better salary, incentives, allowances, monetary gifts, prizes, rewards, recognition, and appreciation can help the organizations to reduce the employee turnover rate.

So the management must analyze the market demand and pay structure in various organizations. The cost of offering better package is less when compared to that of the cost of recruitment and training. More importantly, organization’s knowledge should not benefit the competitors.

Hire right person

While hiring the manpower managers must check their professional background. Here employees who change more than 10 jobs in 12 years show a high probability of leaving the jobs within a short time period. It is may not be applicable for all the situations/cases.

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In another case hiring the right candidates for the right job is very important. It motivates the employees to stay in the organizations with more loyalty. Most of the employees search for job satisfaction; sometimes they sacrifice other benefits to fulfill the job satisfaction.


Doctors, soldiers, employees at non-profit or social service organizations, teaching filed etc.

Performance Appraisal

Objective assessment of individual’s performance in a clear and systematic way can help the employees understand their roles and organization’s expectations. Performance appraisal is a tool which is not only used to fix the salaries and wages but it helps in boosting the employee’s performance by eliminating their doubts regarding ratings and rankings.

Performance appraisal can fulfill the gap between achieved performance and expected performance by providing proper training to the employees, and facilitates employee feedback; it enables the appraisers to know the problems faced by the employees.

Empower the manpower

Empowering the employees can fulfill their desire for achievement; it can motivate the manpower and helps in reducing the employee attrition rate. The delegation of authority facilitates employee initiation and better decisions.

Empowerment increases the employee capabilities and can transform the lower level employees into strategic decision makers. It stimulates their motivation levels and makes them loyal towards the organization.

Healthy work environment

Healthy work environment and good employee relations can improve team spirit; such workplace does not create scope to conflicts and disputes.

Workplace hygiene and fulfilling belongingness needs can help the organizations to retain the employees. Superior-subordinate relations and peer relations show influence on the employee productivity.

Exit interviews

Exit interviews in the organizations are conducted to know the employee’s reasons for leaving the organization and their experience of working for the firm. Usually, exit interviews are conducted just before the employee leaves the firm.

Conducting exit interviews act as powerful drivers for minimizing the employee turnover rate further. The feedback taken during exit interviews can help in taking necessary actions to increase the employee retention.

Employee retention consultants

Approaching employee retention consultants is one of the best tools in retaining the employees. These consultants can assist organizations in retaining the employees and cost reduction and they can identify the problems associated with the employee attrition and they suggest alternative solutions for retaining the skilled manpower.

The cost of approaching employee retention consultants is very less when compared to that of employee turnover cost.

Employee Surveys

Conducting surveys in the workplace about various factors responsible for attrition and employee’s experience in the workplace enables management to take necessary actions and it can show a path to find solutions to the employee attrition. Usually, employee surveys are conducted by using questionnaire, the questions may be related to the following aspects.

  •     Job satisfaction
  •     Salary and other benefits
  •     Employee relations
  •     Employee recognition and respect
  •     Safe working conditions
  •     Recreational facilities etc.

Taking necessary actions and applying employee retention strategies help in retain the skilled employees.