How to Improve Employee Retention

In the modern business world, your employee retention rate is a key driver of success. That doesn’t mean it’s easy, however. Research suggests around ⅓ of UK employees switch workplaces every year, leaving average turnover rates at 34%, according to the CIPD. Retention has become more of a challenge for companies as employee expectations around work-life balance have gradually changed.

Finding top talent can itself be tricky, but holding on to skilled, reliable employees is a balancing act that managers and business leaders need to master so they can secure long-term growth and performance. 

In a separate article we looked at different aspects of employee retention, such as how to measure it, why it’s crucial for companies, and what makes a good retention strategy. Here we’ll take a deeper dive into how employers can increase employee retention, and how offering employee benefits affects employee retention.

Recap: Why Do Employees Leave?

There’s no one reason why an employee decides to move on (for example, a life change could be taking them to a different town, city or country) but there are some common motivators that researchers have identified that lead people to leave their current workplace.

 1. Salary

Whether it’s because an employee has been working at the company for a long time, believes that they are ready for a promotion, or has to pay for higher family and living expenses, many employees will feel at some point or another that they want a better pay.

2. Pressure

People may simply feel that they are being overworked and not able to do their job in a way that is balanced and healthy, inspiring them to look for something new. Stress and burnout are frequently reported across the UK’s workforce. In fact, a report from Mental Health UK in January 2024 found that 1-in-5 working adults had to take time off in the previous year due to work-related pressure or stress.

3. Career Growth

Employees may want to advance their careers but do not see the right opportunities happening at their current company. They may also feel that they’re simply not being challenged enough, and as a result do not feel fully engaged or stimulated in their role.

4. Company Culture

Colleagues do not always get along, which can be difficult to work through. Management styles can also contrast with employees’ expectations. This is especially true where managers do not consistently project the company values, which can impact a supportive work culture. 

Sometimes, however, it just comes down to the kind of company that individual employees are looking for—some may be used to a horizontal and collaborative structure, where others will thrive in a more hierarchical environment with clear procedures, ranks, and reports. This can depend on the sector, but it’s important to tease this preference out in the interview process.

5. Work-Life Balance

The pandemic shifted working patterns beyond expectations, and there’s a simple reason: work patterns that combine remote and in-office days have proved popular years after lockdowns—they work for people. Last year, it was reported that the majority of employees would walk out if their companies did not adopt hybrid working. 

6. Impact

If an employee is unable to see the impact of the work they’re doing day-in and day-out, this can affect their sense of self-worth in the workplace and make them more likely to leave. Sometimes this is down to a mismatch of expectations. After all, it can take time to see results for your graft. But if someone feels chronically as if their input is not resulting in much output, often they will feel it's time to move on.

What is the Impact of High Employee Turnover? 

Employee turnover has long been recognised as a drain on business resources. This includes the cost of recruiting new staff, periods of lost productivity, disrupted workflows and long-term planning, and damage to staff morale. 

Some have put the financial cost at £11,000 per person, while a 2022 CIPD report found that replacing a mid-level employee can cost up to £30,000 due to hiring temporary workers, training periods, and productivity losses.

Employees who regularly see colleagues come and go are also more likely to struggle in feeling a sense of belonging at work, may trust their leaders less, and also suffer from an unstable company culture. When the turnover rate is low and the workforce is stable, however, the work environment is more positive.

What Leads to Higher Retention?

There are a range of factors that can persuade employees to stay, from professional development to a more competitive salary. It’s often a mix between the environmental reasons, e.g. work benefits, location, job satisfaction, and if the work suits the worker.

Finding out why employees stay helps a company figure out how to reinforce those reasons, rather than a more reactive approach to simply bring down turnover levels. For that, you need a retention strategy—and there are several different types to choose from.

What Are Some Effective Employee Retention Strategies?

Understanding why employees leave is the first step, but in order to keep them on board you need to know where to intervene in the employee-employer relationship. Here are some of the employee retention tactics and strategies which are proven to be effective: 

Onboarding

If companies can master the onboarding process from the beginning it can help them build a supportive and inclusive environment in the workplace. Proper training and orientation can help new starters to feel engaged and recognised early on. Statistics even suggest proper onboarding can improve retention by up to 82%, which means the time and investment is certainly worthwhile. 

Communication

A positive work environment is usually an open one, where employees feel free to go to their line manager with ideas or questions. This is a real test of leadership within an organisation—are managers and senior team members promoting positive communication within the workplace? If not, it will hurt the chances of talented employees sticking around long-term. 

So, it’s essential that teams are given opportunities to talk things through, whether about workload, personal development, or managing client or colleague relationships.

Training and Development

If you proactively help employees grow their knowledge and invest in their skills and career progression over the long-term, this can build loyalty to your business. This is because relevant training and development helps employees feel valued, and contributes to job fulfilment and satisfaction, partly tied to the success of the organisation they belong to.

Recognition

A poll from SurveyMonkey revealed that 63% of employees who felt they were “always” or “usually” recognised also said they were “very unlikely” to go job hunting in the next 3-6 months. This can come in the form of recognition rewards, peer recognition, public showcases of employees’ good work, but also meaningful, regular, and specific feedback. 

Flexible Working

One of the lessons of the COVID-19 pandemic was that remote working works well, at least in a hybrid setup. Not having this as an option may take its toll, as employees may find it difficult to achieve a strong work and life balance if they are spending more time commuting to and from work week-in and week-out.

In-Work Benefits Packages

Both competitive salaries and comprehensive employee benefits packages are vital to retaining employees. From wellbeing programs to salary sacrifice schemes, health cash plans and other perks, potential hires will see attractive benefits as a strong incentive to join your organisation, and existing employees will feel their physical and mental wellbeing needs are being met, and be more inclined to stay.

Competitive Salary 

A simple truth is the direct relationship between fair pay and good employee retention. The data backs this, with 35% of people admitting that salary was the most important factor to them remaining with their current company.

The Relationship Between Employee Benefits and Retention

An effective compensation structure is about more than financial rewards, and getting this right is crucial for improving employee retention. On the one hand, your benefits package needs to be aligned with your organisation’s values. But it should also be carefully designed to match your employees’ expectations and needs.

How to Improve Employee Retention through Benefits Packages

Tailor your benefits 

Every team member is different, and the benefits package you offer should be tailored to their individual preferences. Some may need more flexi-time, others might be focused on health cash plans and other support schemes for physical wellbeing.

Do your research

Start by doing your research to find out the most attractive benefits for both new recruits and current employees. Employee surveys which rank benefits on offer in order of preference are a strong place to start.

Adapt over time

Employee feedback will be essential to find out which benefits are working and which aren’t. By testing and learning you can make sure your offering is meeting the current needs of your employees.

Vivup can support your company to deliver benefits that will help you improve your retention. Find out more today.