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What is employee retention?

Definition of employee retention

Employee retention is an organization’s ability to keep its top employees and reduce employee turnover. When successful retention strategies are implemented, the turnover rate (number of employees leaving the business voluntarily) decreases. It’s key for organizations and employers to recognize that employee retention encompasses a variety of strategies, from providing competitive salaries to enhancing organizational culture.

High employee retention indicates a stable and committed workforce, leading to higher productivity, reduced hiring costs, and a stronger company reputation. Organizations that prioritize retention benefit from greater institutional knowledge, better team dynamics, and sustained business success.

What are the 4 pillars of employee retention ?

The 4 pillars of employee retention are :

1. Employee Engagement & Recognition : Keeping employees engaged through recognition, rewards, and meaningful feedback makes them feel valued and connected. Regular acknowledgment of achievements fosters loyalty, boosts morale, and motivates employees to stay.
2. Career Development & Growth Opportunities : Employees stay where they see potential for growth. Offering training, mentorship, clear career paths, and internal mobility ensures employees remain motivated, see a future within the organization, and feel invested in their personal and professional growth.
3. Competitive Compensation & Benefits : Providing fair, attractive compensation and benefits packages is fundamental. Organizations that offer competitive salaries, comprehensive benefits, and perks aligned with employee needs build long-term employee satisfaction and loyalty.
4. Positive Workplace Culture & Well-being : Creating a supportive work environment that prioritizes well-being, work-life balance, and inclusive culture encourages employees to thrive. Companies that invest in mental health resources, flexible work arrangements, and supportive leadership build trust and commitment among employees.

A robust employee retention strategy built on these four pillars ensures a motivated, satisfied, and committed workforce, reducing turnover and driving long-term organizational success.

How to calculate employee retention rate?

Employee retention rate is a key metric that helps organizations measure how well they retain their workforce over a specific period. The formula is straightforward:

Employee Retention Rate (%) = (Number of employees at the end of a period ÷ Number of employees at the start of the period) × 100

For example, if a company had 200 employees at the beginning of the year and 180 remained at the end, the retention rate would be (180 ÷ 200) × 100 = 90%. This calculation helps businesses track trends, identify areas for improvement, and develop strategies to enhance employee engagement and retention.

Why is employee retention a problem today ? Facts and stats

​Employee retention has become a significant challenge today, influenced by evolving employee expectations and economic factors. The phenomenon known as the "Great Resignation" saw a substantial number of workers voluntarily leaving their positions, seeking better work-life balance, improved compensation, and more fulfilling roles. This trend highlighted a shift in workforce priorities, with many employees reevaluating their career choices in light of the COVID-19 pandemic.

Moreover, the global talent shortage is projected to reach 85 million people by 2030, intensifying competition among employers to attract and retain skilled workers. This shortage underscores the critical need for organizations to adapt their talent management strategies to address the evolving expectations of the workforce. (source : wikipedia.org, go.manpowergroup.com, businessnz.org)

• Financial Stress Among Employees: According to PwC's 2023 Employee Financial Wellness Survey and Research, 60% of full-time employees are stressed about their finances, with this stress impacting areas such as sleep, mental health, and productivity. Financial stress can lead to decreased job satisfaction and higher turnover rates. (Source: ​pwc.com)
• Impact of Remote Work on Engagement: Deloitte's research indicates that flexible work arrangements, including remote work, have become significant factors in employee engagement and retention. Organizations that fail to adapt to these preferences may experience higher attrition rates. (Source: deloitte.com)
• High Turnover Rates: PwC's Saratoga Workforce Index researches that the national average turnover rate in 2022 was 20%, with variations across industries ranging from 10% to 60%. High turnover can lead to increased recruitment costs and loss of organizational knowledge. (Source: ​workforce.pwc.com)

These statistics underscore the multifaceted challenges organizations face in retaining talent today, highlighting the need for comprehensive strategies that address financial well-being, work-life balance, and employee engagement.​

What role does employee retention play in companies ?

Employee retention strategies play a pivotal role in reducing employee turnover and ensuring a company's long-term business success. From fostering a positive organizational culture to offering career development opportunities, discover the keys to keeping your employees motivated and committed. Read on to unlock the secrets of employee retention and decrease your turnover rate in the ever-evolving business world.

1. Encourage Open Communication
2. Invest in the Right People
3. Nurture your Existing Talent
4. Give Positive Feedback to the Team
5. Managers Should be Approachable
6. Encourage Open Communication
7. Address the Needs of Employees of Different Ages
8. Be Flexible
9. Offer an Attractive Benefits Plan
10. Listen to your Employees

‍However, it’s not easy for employers to retain top talent. To keep them on your team, it’s important to have an employee retention plan or strategy that can help reduce employee turnover rates. By using these employee retention techniques, businesses and organizations can retain their best employees and lower the employee turnover rate. Additionally, implementing better management practices and offering flexible work schedules through retention programs play a vital role in retaining employees.

Five main drivers of employee retention are:

1. Motivation – encourage employees to do their job well, increasing retention rates.
2. Progression – provide career advancement opportunities.
3. People – foster a supportive team environment.
4. Compassion – offer programs that ensure a healthy work-life balance.
5. Benefits – provide competitive salaries and attractive benefits to enhance employee retention rates. Alongside these factors, companies should also consider comprehensive wellness programs to address mental and physical health needs.

Experiencing high employee turnover can be a shock to a business, especially since this pattern occurs repeatedly. It could indicate that something is going wrong within the organization's management or culture. The issue may range from poor communication to more serious problems with management strategies, both of which can significantly impact employee retention rates.

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‍Why is employee retention important?

‍Employee retention is important for the long-term success and sustainability of any business. There are several reasons that employee retention is crucial, such as cost savings, improved productivity, and enhanced employee morale. Let's break down some of the reasons retention is vital to the success of a business. A high retention rate helps in preserving critical business knowledge, fostering loyalty among employees, and enhancing company reputation, which attracts top talent and benefits organizations.

• Cost Savings: High turnover rates can be incredibly expensive for businesses. The cost of recruiting, onboarding, and training new workers can far exceed the expenses of retaining existing employees. Moreover, lost productivity during the transition period can be detrimental to a company's bottom line. Effective retention can prevent the financial burdens associated with these processes.
• Knowledge and Expertise: Experienced workers possess valuable institutional knowledge and expertise. Losing them means losing a significant part of your organization's intellectual capital. Retaining them ensures continuity in processes and workflows. Furthermore, seasoned employees often have a deeper understanding of intricate company operations, positively impacting efficiency.
• Improved Productivity: Long-term employees tend to be more productive as they become well-versed in their roles. They require less supervision, make fewer errors, and contribute positively to the company's overall performance. Higher productivity translates to better customer service and increased profitability.
• Company Culture: Consistent retention promotes a stable and positive company culture. Employees who stay with a company for a longer duration often become strong cultural ambassadors, helping to reinforce core values and beliefs among their peers. A robust culture also tends to attract new talent and reduce recruitment costs, benefiting the entire organization.

Employee retention is not just about reducing turnover; it's about fostering a culture of engagement and commitment that benefits the organization's financial health, productivity, and long-term success. Investing in employee retention strategies, such as comprehensive management programs and career development opportunities, is an investment in the future of the company. To enhance retention, businesses should also emphasize promoting diversity and inclusion within their organizations.

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Top 10 Employee Retention Strategies : How to retain employees ?

1. Encourage Open Communication with an Intranet

When budgets are tight and it's hard to give out bonuses or raises, many businesses are choosing to invest in an employee intranet. An employee intranet is a powerful tool for retaining workers because it helps facilitate internal communication and creates a community among coworkers, thereby reducing turnover rates.

A modern employee intranet is a place where employees can access the information they need to do their job and encourages them to engage and communicate across teams. Encouraging open communication plays a critical role in retaining employees as it helps them feel more connected and informed, enhancing job satisfaction and reducing turnover rates. Furthermore, consistent and clear communication can help in mitigating misunderstandings and reducing workplace conflicts, positively impacting the organization's turnover rate.

When employees are given the right tools to do their work, they perform better and achieve job satisfaction. Employee happiness means workers are more likely to stay with the organization.

An intranet also crosses borders, which is essential for global businesses. If employees can contact their colleagues on the other side of the world with ease, company goals are achievable by international teams. Encourage your company leaders to be active on the intranet and create regular updates to help workers feel informed and connected, thereby reducing turnover rates.

A well-built intranet can assist employees in many ways: online learning, messaging, social media, company information, and reward systems. Integrate other platforms such as Microsoft 365 or Google Workspace and you have an intranet that will boost employee engagement, improve retention rates, and reduce turnover within the organization.

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2. Create an employee recognition program

Employee recognition is essential for fostering a positive workplace culture and boosting employee morale. Recognizing and appreciating employees' contributions not only motivates them but also strengthens their commitment to the organization, thereby reducing turnover rates. An employee recognition program formalizes this process, making it systematic and inclusive, which benefits both employers and the overall business.

The LumApps intranet includes a space for virtual employee recognition where managers can send awards to employees. Co-workers can also send virtual thanks to colleagues. These awards will remain on the employee's profile for long-lasting visibility of team contribution, enhancing their experience and encouraging them to stay with the organization.

Employee recognition programs can increase satisfaction in the workplace, improve employee retention rates, and enhance overall productivity. By acknowledging and rewarding exceptional performance, whether through verbal praise, awards, or other incentives, employers create a supportive environment where employees feel valued, leading to a more engaged and dedicated workforce. In sum, employee recognition programs are a powerful tool for reducing turnover and nurturing a thriving, motivated, and loyal workforce within organizations.

To create an effective employee recognition program, start with the following steps:

• Define clear objectives and criteria for recognition, ensuring alignment with company values and goals.
• Involve employees in program design to gather their input and preferences.
• Develop a variety of recognition methods, including verbal praise, certificates, awards, or even monetary incentives, tailored to individual and team accomplishments.
• Establish a consistent and transparent process for nomination and evaluation, and consider implementing peer-to-peer recognition.
• Promote the program actively, ensuring everyone knows how it works and why it's important.
• Review the program regularly and adjust in order to keep it fresh for changing employee needs and performance expectations. 

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3. Invest in Training for your Existing Talent

Once you’ve hired the best candidates available, you have to keep them. Skilled workers with a love for their work want a challenge. They want to know where their career path is going and how they’re going to get there within the organization.

To empower them to reach their goals, employers should care for and develop their people. One way to empower your existing workers is to invest in training and continuing education programs.

Training can be a series of short courses that take a few hours. These kinds of courses can be easily installed on an internal intranet for employees to access during designated work hours, providing opportunities for career advancement and reducing turnover rates.

Here are some simple ways you can invest in training from within your LumApps intranet:

• Create a video learning library within your intranet.
• Create a streamlined onboarding plan using employee journeys.
• Design employee email campaigns after key moments in an employee lifecycle.

Nurturing talent also includes paying for formal education if the organization can afford it. This knowledge development can benefit both the employer and the employee, enhancing the overall experience and reducing turnover rates.

Training does not always have to be job-specific. Build your talent pool by offering courses on First Aid, health and safety, social media, creative writing, or even catering, providing better opportunities for employees to grow within the organization.

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4. Give Positive Feedback to the Team

This is more than telling people they’re doing a great job. It’s about recognizing if someone is working in a challenging situation, is doing more than their normal workload, or is working extra hours. In any situation, praise is important, but when a worker goes beyond their job description, it should be acknowledged to enhance retention rates.

Giving this kind of feedback should be a core part of every manager and supervisor’s day. Get into the habit of being positive instead of jumping on the things that go wrong. A useful strategy to build employee morale and reduce turnover is to try to praise team members a certain number of times each day. If people do make mistakes (which they will), remain professional and look at how the employee can learn from the error.

This behavior commands respect and is far more likely to encourage employees to stay with the organization rather than being the manager that yells every time there is a crisis, thereby positively impacting retention rates.

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5. Managers Should be Approachable

Another key employee retention strategy is for managers to be approachable and available to listen and offer solutions, enhancing the overall management experience within the organization.

Often managers are busy and can appear unapproachable. If time management is difficult, try setting a specific time each day or week when staff can ask questions, either individually or at a team-building meeting. This avoids interruptions that can break a manager’s workflow and helps maintain effective management practices to reduce turnover rates.

If employees work from home or remotely, this listening time could be a chat room conversation on the intranet, either individually or with the entire team, ensuring that remote workers feel supported and connected to the organization.

When employees see they can approach their manager, they’ll feel confident about asking questions. This simple communication strategy can help retention and build trust between employees, managers, and organizations. A survey by the Harvard Business Review reported that people who trust the business they work for are 50% more productive than those who do not, positively impacting employee retention rates.

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6. Encourage Open Communication

Communication is at the heart of successful employee retention. Spread the news of successes such as increased performance figures, new products, strategies, and plans. It’s just as important to communicate if things are not going so well since gossip can spread like wildfire and damage the organization’s reputation. If a merger is being planned or the company is thinking of downsizing, be as open and honest as you can. Employees will appreciate this and are more likely to stay with a company that tells them the truth, thereby improving retention rates.

Keep the lines of communication open through group chats, news bulletins, surveys, and social media. It’s easy to install apps for these on the company intranet to keep everyone up-to-date. Ensure teams communicate about projects that may affect other departments. The organization should gel and work as one for successful retention and reduced turnover rates.

One-on-one communication also boosts retention. For example, if there’s a performance issue, deal with it immediately. Employees who wish to develop will appreciate constructive criticism, enhancing their experience and commitment to the organization.

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7. Address the Needs of Employees of Different Ages

How an employee feels about their job and the organization they work for may depend on their generation, affecting their likelihood to stay with the business.

• Millennials (age 26-40) have grown up with technology, are comfortable with it, and use it for both work and leisure. A strategy to retain them is to be the modern company that everyone wants to work for. Use media they are familiar with such as likes, comments, and images for feedback on projects or ideas. This can easily be created with a state-of-the-art company intranet, enhancing their experience and reducing turnover rates.
• Gen Xers (age 41-55) are at the peak of their careers and are possibly the hardest group to retain. They’ve gained knowledge and experience and are still ambitious. They want to learn more and offer their skills to a company that values them, providing better opportunities for career growth within the organization.
• Baby Boomers (age 56-76) are nearing retirement and are more likely to stay with a company. However, they still need to be motivated and feel part of the company culture. Their skills can be invaluable and professional development is important to them, impacting overall employee retention positively.

8. Be Flexible

When looking at what factors affect employee retention, you should consider flexibility. Employers who want to retain employees should be fair and operate with a culture of understanding that people cannot be expected to work 24/7. They need time off to recharge their batteries and enjoy time with their family, reducing turnover rates.

Employees who work for an employer who understands life carries on outside work are much happier. They know they can ask if they need to take some time off. They don’t feel guilty about switching their cell phone off on weekends or when on vacation, enhancing their work-life balance and reducing the likelihood of leaving the organization.

Don’t take employees for granted — well-rested and relaxed workers will do a better job. Be the employer that considers working from home or flexible hours. Allow employees to propose what works best for them and the organization and reach a compromise. This will foster employee satisfaction, enhance their experience, and encourage them to stay, thereby reducing turnover rates.

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9. Offer an Attractive Benefits Plan

Staying in a job is not always about money. Many employees favor the all-round package as a reason to stay with their employer. Often organizations will offer a free lunch or chill-out zones as benefits to employees. What can you offer employees that’s different? One of the objectives of employee retention strategies is to offer attractive benefits outside of the working environment.

When setting budgets, it’s crucial to include employee perks that will make your organization unique. Employees who work for a company that offers holidays or discounts on items such as cars as a reward are those who will stay. If your budget can’t stretch to high-ticket perks, there are still options like extra paid time off, free child-care, insurance, health care, and shopping discounts that can help you keep your employees and reduce turnover rates.

Consider what your competitors are offering. If you pay less than similar employers in your field and offer fewer attractive benefits, employee retention is likely to drop. Invest in your employees through competitive rates and benefits, and they are more likely to reward it with loyalty and dedication to your company.

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10. Listen to your Employees

Listening is essential to retain employees. This applies to current employees and those who leave. It’s even important to listen to happy employees as they can give valuable insight into the ambiance of the organization and what makes people happy or unhappy, impacting overall employee retention rates.

A great way to find out people’s opinions is to run surveys. These can be short, three-minute opportunities to gather feedback on the intranet by checking boxes to more in-depth questionnaires. It is important to show employees you’ve listened and will take action. For example, staff may wish to leave because of management style or lack of communication from the top down. These situations can be easily fixed, and showing you listen and respond can reduce employee turnover and improve retention rates.

This policy also applies to exit interviews. There can be many reasons for an employee to leave, from dissatisfaction with the salary to a lack of career development or personality clashes with colleagues. The key is for organizations to prevent these situations before they arise by addressing issues proactively, thereby reducing turnover rates.

Bottom line : How to improve employee retention?

To conclude, Improving employee retention requires a strategic approach that focuses on engagement, career development, and workplace culture. Organizations must invest in competitive compensation, benefits, and flexible work arrangements to meet evolving employee expectations. Providing clear career growth opportunities, continuous learning programs, and mentorship initiatives ensures that employees see a future within the company, reducing the likelihood of turnover. Additionally, fostering a positive work environment through strong leadership, recognition programs, and well-being support helps employees feel valued and motivated to stay.

Beyond compensation and growth, companies must prioritize employee experience and work-life balance. Implementing Employee Experience Platforms (EXPs) and modern intranets enhances internal communication, collaboration, and knowledge-sharing, keeping employees connected and engaged. Regular feedback loops, employee sentiment analysis, and proactive HR strategies help organizations address concerns before they lead to attrition. By focusing on these areas, companies can build a loyal, productive, and satisfied workforce, ultimately driving long-term success and stability.

Are intranets good solutions to enhance employee retention ?

Yes, intranets play a crucial role in enhancing employee retention by improving communication, engagement, and access to critical resources. A well-designed intranet creates a connected workplace, ensuring employees feel informed, valued, and supported in their roles. It reduces information silos, streamlines workflows, and fosters a strong company culture, all of which contribute to long-term employee satisfaction and commitment. By providing a centralized hub for knowledge sharing, collaboration, and recognition, intranets help employees stay engaged and motivated, reducing turnover risks.

Among the best solutions available, LumApps stands out as the leading intranet for driving employee retention. Unlike traditional intranets, LumApps is a modern, AI-powered digital workplace that delivers personalized content, integrates with essential work tools, and provides an intuitive user experience. It enables employees to stay connected through targeted communication, access training and development resources, and receive real-time recognition for their contributions—all key factors in boosting engagement and loyalty.

By implementing LumApps, companies can create a seamless, engaging, and inclusive workplace where employees feel supported throughout their journey. With features like social collaboration, smart search, and AI-driven insights, organizations can proactively address employee needs, foster a sense of belonging, and create a culture that prioritizes retention. In today’s competitive job market, investing in a next-generation intranet like LumApps is a strategic move to enhance the employee experience and build a loyal, high-performing workforce.

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