research topics on employee retention

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It’s Time to Reimagine Employee Retention

• Helen Tupper
• Sarah Ellis

Three ways to increase the chance that top talent sticks around.

According to Gartner, the pace of employee turnover is forecast to be 50–75% higher than companies have experienced previously, and the issue is compounded by it taking 18% longer to fill roles than pre-pandemic. Increasingly squeezed managers are spending time they don’t have searching for new recruits in an expensive and competitive market. Unless efforts are refocused on retention, managers will be unable to drive performance and affect change. Leaders need to take action to enable their managers to keep their talent while still being able to deliver on results. Managers need help with three things. First, they need help shifting the focus of career conversations from promotion to progression and developing in different directions. Second, they need help creating a culture and structure that supports career experiments. Finally, managers need to be rewarded not for retaining people on their teams but retaining people (and their potential) across the entire organization.

This is a challenging time for managers. Alongside their day-to-day roles, many are facing a never-ending cycle of reskilling and recruiting on their teams. The need to reskill isn’t new, with the OECD estimating that 1.1 billion jobs are liable to be radically transformed by technology in the next decade. However, managers are now being asked to close the skills gap at the same time as they’re responding to pandemic-prompted resignations.

• Helen Tupper is the co-founder and CEO of Amazing If , a company with an ambition to make careers better for everyone. Together with her business partner Sarah Ellis, she is the author of two Sunday Times bestsellers, The Squiggly Career  and Y ou Coach You . Sarah and Helen are also hosts of the podcast Squiggly Careers, which has had 4m downloads, and their TED talk, The best career isn’t always a straight line , has been watched by almost 2m people.
• Sarah Ellis is the co-founder of Amazing If , a company with a mission to make careers better for everyone. Together with her business partner Helen, she is the author of two Sunday Times bestselling books, The Squiggly Career and You Coach You. Sarah and Helen are also hosts of the podcast Squiggly Careers, which has had 4m downloads, and their TED talk, The best career isn’t always a straight line , has been watched by almost 2m people.

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• Front Psychol

Factors Affecting Employee’s Retention: Integration of Situational Leadership With Social Exchange Theory

Wei xuecheng.

1 School of Management, Universiti Sains Malaysia, George Town, Malaysia

Qaisar Iqbal

2 Centre for China-India-Pakistan Studies, Sichuan University of Science and Engineering, Zigong, China

3 School of Chemistry and Environmental Science, Inner Mongolia Normal University, Hohhot, China

Associated Data

The original contributions presented in this study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.

Sketching on the Social Exchange Theory (SET), the present study aims to investigate the direct relationship between training and development, work environment, and job satisfaction with employee retention. The contingent role of transformational leadership was also analysed under the Situational Leadership Theory (SLT). Accordingly, we collected data from 287 employees of SMEs in northern China by employing a convenience sampling approach, exhibiting a response rate of 57.40 percent. The Partial Least Square-Structural Equation Modelling (PLS-SEM) analysis was then run to test the proposed hypotheses. The findings revealed a significant positive impact of training and development, work environment, and job satisfaction on employee retention. However, no moderating effect of transformational leadership was indicated on their direct relationship. This study has enriched the literature on employee retention and the leadership arena. To the best of the authors’ knowledge, there is no prior evidence concerning the study’s integrated relationship of the continuous variables. The implications and limitations were finally expressed at the end of this manuscript.

Introduction

Employee retention is intricate in a competitive market, albeit vital for the long-term competitive advantage and organisational success and longevity ( Das and Baruah, 2013 ; Arachchillage and Senevirathna, 2017 ; Kaur, 2017 ; Mahan et al., 2018 ; Paul and Vincent, 2018 ). The current COVID-19 situation has seen employee retention emerge as the core problem for organisations across the globe ( Karatepe and Olugbade, 2017 ; Yousaf et al., 2019 ). Low employee retention results in various issues, that is, increased training and recruitment cost, insufficiently skilled employees, and disruption to organisational operations ( A’yuninnisa and Saptoto, 2015 ; Ping et al., 2021 ). Due to these circumstances, small and medium enterprises (SMEs) view employee retention as highly complex and uncertain ( Park et al., 2019 ; Tian et al., 2020 ).

In China, SMEs are the driving force of its social and economic development ( Hadj, 2020 ; Hui, 2021 ), though they are presently finding it hard to operate at their full efficiency. This situation is exasperated by the COVID-19 pandemic, limited resources, low anti-risk capabilities, and diminished production scale ( Zhanjie et al., 2017 ). These SMEs face bankruptcy and employee retention ( Hui, 2021 ) due to adverse market conditions and economic uncertainty ( Yu X. et al., 2019 ). China possesses approximately 770 million people in its workforce ( Zhang and Chen, 2019 ), albeit maintaining the most significant global average turnover rate, that is, 18% ( Friedman and Kuruvilla, 2015 ; Yu X. et al., 2019 ). Hence, practitioners and academicians continuously report the severity of employee turnover in China ( Karatepe and Olugbade, 2017 ; Afsar et al., 2018 ).

High employee turnover weakens employees’ commitment and sets up negative perceptions of organisations ( Hadj, 2020 ). Privately owned enterprises in China reported a 20% turnover rate, while state-invested enterprises and foreign-invested enterprises displayed 8% and 15%, respectively. Such staggering employee turnover is a pressing issue for Chinese SMEs as they grapple with managing employee retention ( Zhang and Chen, 2019 ; Hu, 2021 ). Thus, practical managerial tools must be employed to alter employees’ behaviours ( Choi and Peng, 2015 ). Given these points, it is imperative to investigate the underlying factors to enhance employee retention, considering the scarcity of research in China ( Hom et al., 2017 ; Yousaf et al., 2019 ; Li et al., 2021 ).

Organisations are currently discussing varying strategies and practices to preserve their employees ( Tanwar and Prasad, 2016 ; Bibi et al., 2018 ). Employee retention is a process through which employees are influenced to stay with their organisations for a longer period ( Hom and Griffeth, 1995 ). Generally, employees are easy to retain, provided they see a good match with their employer ( Umamaheswari and Krishnan, 2016 ). Extent literature concluded the significant role of various elements in relation to employee retention, such as intrinsic and extrinsic motivation factors ( De Sousa Sabbagha et al., 2018 ), job promotion ( Woodall et al., 2017 ), and bonus ( Chinyio et al., 2018 ). Others include organisation commitment ( Perreira et al., 2018 ), compensation ( Colson and Satterfield, 2018 ), and knowledge sharing ( Agarwal and Islam, 2015 ). This list can be extended to peer support, organisational culture, and work-life balance ( Deshwal, 2015 ; Ombanda, 2015 ).

Notably, career development opportunities, benefits and rewards, and psychological factors are deemed vital for employee retention ( Bibi et al., 2018 ; Lyman et al., 2020 ). Academicians and practitioners have developed a consensus about the crucial role of human resource management in developing this idea ( Deshwal, 2015 ; Tian et al., 2020 ). Drawing on the basis of Social Exchange Theory (SET), this study aims to examine the direct effect of training and development, work environment, and job satisfaction on employee retention among China’s SMEs.

The leaders in an organisation commonly initiate change, execute, and interconnect with the desired results ( Bass and Avolio, 1996 ; Bass and Riggio, 2006 ). In essence, employee retention is also not possible without effective leadership ( Covella et al., 2017 ). In the last few years, numerous leadership styles have been examined concerning employee retention, such as laissez-faire, instrumental, transformational, and transactional leadership ( Antonakis and House, 2014 ; Iqbal, 2016 ). Transformational leadership highly impacts employee commitment in contrast to transactional leadership ( Deichmann and Stam, 2015 ). These leaders are highly concerned about real-time problems and establish new benchmarks, develop understanding, shape employees’ behaviours, and accomplish organisational objectives ( Middleton et al., 2015 ; Tian et al., 2020 ; Iqbal et al., 2021a ).

Transformational leadership comprises four dimensions, that is, individual consideration, intellectual stimulation, idealised influence, and inspirational motivation. The first dimension, individualised consideration, is the extent to which leaders understand and prioritise the team member’s needs. Meanwhile, intellectual stimulation is the extent leaders offer support and encourage employees to generate innovative ideas beneficial to delivering optimum performance. Moreover, inspirational motivation provides necessary support to the employees, enabling them to pursue organisational goals. The final dimension, idealised influence, encourages practical examples of a leader exhibiting innovative thinking, faith, pride, uprightness, interest, effective communication, and trust ( Bass and Riggio, 2006 ).

Employees in China prefer leaders who exhibit transformational leadership attributes in the form of role models, non-use of abusive power, selflessness, and centring on employees’ well-being ( Su et al., 2019 ). Hence, transformational leadership has become one of the most crucial roles in the organisational success of China’s SMEs ( Lin and Sun, 2018 ). The current pandemic has resulted in economic uncertainty, environmental challenges, and the suitability of transformational leadership. Therefore, the Situational Leadership Theory (SLT) is applied to investigate its moderating role in the proposed relationship of training and development, work environment, and job satisfaction with employee retention.

Numerous contributions are made in this study concerning the theory and literature. First, the study developed the SET by revealing the direct impact of work environment, job satisfaction, training, and development on employee retention. Second, the insights on the conditional role of transformational leadership were elaborated in the context of SLT. The literature presented conflicting results and lacked clear explanations of the relationship’s nature of antecedents with employee retention ( Abeysekera, 2007 ; Haines et al., 2010 ; Mangi et al., 2011 ; Ahmad et al., 2017 ). In this context, further studies are recommended to better comprehend the training and employee retention relationship ( Bibi et al., 2018 ). Given these points, this study enriches the empirical evidence, specifically regarding the direct connection of training and development, work environment, and job satisfaction with employee retention. The final contribution included the literature on employee retention from the perspective of China’s SMEs.

Literature Review

Theoretical background.

The SET is widely applied to unravel the employer–employee relationship, especially in the employee turnover and retention literature ( Coyle-Shapiro and Conway, 2005 ; Gopalan et al., 2020 ). According to this theory, a person, who benefits from someone, feels obligated to repay that person through positive behaviours and devotion. Furthermore, this theory postulates that employees deliver their optimum performance upon achieving support and perceiving value from their employers ( Eisenberger et al., 2001 ). Hence, the theory is used to investigate the employees’ behaviour, enabling organisations to enforce certain HRM practices and igniting unique social exchange relationships.

From the SET perspective, employee retention can be induced by training and development offered by employers, which facilitate mutual benefits and create reciprocated obligations. This phenomenon occurs because individuals and organisations are involved in exchange relationships ( Raihan, 2012 ). Employees perceive responsibility to repay their employers upon providing a conducive working environment. This repayment may derive in the form of increased loyalty, commitment, and stay for a long time ( Settoon et al., 1996 ). Simultaneously, their job satisfaction and proper behavioural responses will increase, owing to the perception of fulfilling emotional needs ( Iqbal and Hasnah, 2016 ; Latorre et al., 2016 ; Iqbal et al., 2017 ; Rubel et al., 2021 ) and improving employee retention ( Rubel et al., 2021 ). Therefore, the current study posits that job satisfaction and work environment followed by training and development are positively related to employee retention.

A specific type of leadership is required to tackle the distinct needs and current challenges of a particular environment. Hence, according to the SLT, a single leadership style is insufficient for every situation ( Hersey and Blanchard, 1969 ). In this case, effective leadership, that is, transformational leadership, emerges as a promising idea and is applicable across diverse fields. This concept facilitates the concept of adapting to varying circumstances and work environments ( Hersey and Blanchard, 1969 ). In the context of employee retention, an environment must be structured where they feel empowered, valued, and connected to their employers ( Ohunakin et al., 2019 ; Frye et al., 2020 ); thus, this leadership style is consistent with these requirements ( Kim and Park, 2020 ). Consequently, this leadership style enhances the employees’ capability and reshapes the organisational image in the marketplace ( Mwita and Tefurukwa, 2018 ; Singh et al., 2020 ). Drawing on the SLT, the current research claims the moderating role of transformational leadership on the relationship of training and development, work environment, and job satisfaction with employee retention.

Hypotheses Development

Training and development with employee retention.

Training and development is the degree to which training within the organisation is offered to the employees to foster their skills ( Delery and Doty, 1996 ). As an overarching HRM practice, it is often considered a broad collection of activities that refer to continual learning and developing general job and career-related skills ( Boon et al., 2011 ). Furthermore, training is the fundamental source of competitive advantage and employee retention ( Umamaheswari and Krishnan, 2016 ; Yamin, 2019 ). Training and development intensify the social exchange relationship between the employee and their employer ( Dysvik and Kuvaas, 2008 ), offering employees valuable abilities, skills, and knowledge ( Fletcher et al., 2018 ). This idea elicits obligations within employees to repay the organisation ( Koster et al., 2011 ).

Training and development programmes deal with the employees’ skills and competencies, enabling them to positively respond to various challenges the organisations face ( Rhee et al., 2014 ). Moreover, positive dispositions of employee growth can be achieved via motivation and modifying their skills or attitude toward organisational effectiveness ( Gope et al., 2018 ; Yamin, 2019 ; Khan et al., 2021 ). These skills and competencies are vital for their managerial positions and professional growth ( Schuler and Tarique, 2012 ; Ambrosius, 2018 ). Past studies have found a positive relationship between training and development with commitment ( Ahmad et al., 2017 ), employee performance ( Sinha et al., 2010 ), and job satisfaction ( Bibi et al., 2018 ). Others include employee retention ( Lee, 2005 ), employee commitment ( Ahmad et al., 2017 ), and employees’ intentions to stay ( Chew and Chan, 2008 ). Therefore, the hypothesis H1 is postulated as follows:

• H1: Training and development significantly and positively influence employee retention.

Work Environment and Employee Retention

The working environment concerns the availability of a conducive workplace ( Edgar and Geare, 2005 ) and is defined as the degree to which employees consider the workplace physically safe. Employees can share their views on their surroundings with their mutual consideration with organisations by assessing the environment ( Lewin et al., 1939 ; Li et al., 2022 ). Some examples of work environment indicators include supervisor support ( Stirpe and Zárraga-Oberty, 2017 ), physical working conditions ( Richards et al., 1994 ), social worker support ( Haggins, 2011 ), and helping behaviours during decision-making ( Subramaniam and Mia, 2001 ). Notably, a study found a significant relationship between work environment and employee retention ( Al-Hamdan et al., 2017 ).

Organisational rules and regulations encompass the work environment, affecting employee retention ( Yam et al., 2018 ). Consequently, an exceptional working environment increases trust among employees, which is useful for employee retention ( Candela et al., 2015 ; Ede and Rantakeisu, 2015 ). The positive energy motivates employees to accomplish their professional goals effectively, enhancing their commitment to the organisation ( Mangi et al., 2011 ; Umamaheswari and Krishnan, 2016 ). The perception of the working environment can either positively or negatively impact specific employees’ job outcomes, such as commitment, participation, and intention to stay ( Gunaseelan and Ollukkaran, 2012 ). Given these points, the discussion above drives the development of hypothesis H2:

• H2: Work environment significantly and positively influences employee retention.

Job Satisfaction and Employee Retention

Job satisfaction concerns employees’ evaluations of their jobs based on perceptions by comparing their actual job outcomes with desired ones ( Schleicher et al., 2011 ). The concept is defined as a positive state where employees share their feelings about their job ( Locke, 1976 ), ranging from moderate- to low-level satisfaction ( Locke, 1976 ; Quigley et al., 2007 ). Furthermore, the idea is considered a causal factor that promotes intentions to stay with the organisation because it is a pleasant psychological state. In this case, individuals perceive content with their work ( Fletcher et al., 2018 ). Therefore, job satisfaction fosters the social exchange between employers and employees, where satisfied employees exemplify positive experiences. This experience is supported by the social exchanges between the employee and the organisation, reinforcing their intentions to stay with the organisation ( Koster et al., 2011 ).

Employees from varying organisations, industries, and geographical locations exhibit different levels of job satisfaction ( AbuAlRub et al., 2009 ). However, job satisfaction positively affects employees’ intentions to stay irrespective of industries and region ( AbuAlRub et al., 2009 ). For instance, a multi-level study found that job satisfaction is positively related to the employees’ intentions to stay in the united kingdom (UK) ( Fletcher et al., 2018 ). Moreover, meta-analytic evidence has demonstrated that those who are satisfied at work are more likely to retain their employment ( Fishbein and Ajzen, 2011 ); therefore, the hypothesis H3 is proposed on the basis of SET as follows:

• H3: Job satisfaction significantly and positively influences employee retention.

Moderating Role of Transformational Leadership

Transformational leadership is considered highly effective in driving employee retention ( Kossivi et al., 2016 ; Amankwaa et al., 2019 ), in which the leaders initiate, execute, and interconnect change with the desired outcomes ( Bass and Riggio, 2006 ). This form of leadership influences employees by altering their perceptions, views, ambitions, and moral standards ( Bass and Avolio, 1996 ). Transformational leaders also offer an ideal approach to employees and exhibit the attributes of significant faith, effective communication, uprightness, trust, and innovative thinking ( Tian et al., 2020 ). These leaders promote intellectual stimulation, idealised influence and inspirational motivation, and individualised consideration. In addition, leaders can facilitate employees by understanding their issues and creating a psychologically safe environment through individualised consideration ( Iqbal et al., 2021b ).

Transformational leaders are viewed as role models and counsellors who encourage them to participate in organisational activities. Supervisor support, training, information accessibility, and counselling lead to higher employee retention ( Ooi et al., 2021 ) and higher employability ( Matsuo, 2021 ). Furthermore, healthy communication positively influences the work environment ( Denton, 2011 ) via sharing of innovative ideas and intellectual stimulation, an indicator of open communication. This approach culminates in improved work that enhances talent management ( Perlow and Kelly, 2014 ). Moreover, open communication and improving resource management in employee allocation ease employees’ adaptation to new work environments ( Castrogiovanni et al., 2011 ).

Organisational support in the form of supervisor support, rewards, and favourable working conditions are vital to stimulating organisation-related outcomes, that is, reduced withdrawal behaviours and commitment ( Rhoades and Eisenberger, 2002 ; Gillet et al., 2022 ). Supervisor support is critical to replenish employee physical and psychological resources to increase their retention probability ( Kalliath and Kalliath, 2014 ). Furthermore, transformational leaders affect employees’ behaviour resulting in high employee retention ( Sow et al., 2016 ). Leaders can develop a reward system within their organisation which is highly effective in retaining employees ( Adekanbi, 2016 ). They must also ensure sufficient resources to employees following the organisational goals. Moreover, shared vision is directly related to the employees’ engagement ( Boyatzis et al., 2017 ) and continuous improvement ( Fardazar et al., 2015 ; Iqbal and Piwowar-Sulej, 2022 ). This leadership style presents a shared vision and elaborates the underlying reasons, enhancing their participation and involvement in decision-making. Previous studies found that transformational leadership negatively impacts employees’ turnover intention ( Maaitah, 2018 ) but positively affects their knowledge base ( Fletcher et al., 2018 ). For instance, a positive impact of various factors on employee retention, that is, idealised influence, inspirational motivation, individualised consideration, and intellectual stimulation ( Jiang et al., 2017 ). Therefore, the following hypotheses, H4, H5, and H6, are proposed:

• H4: Transformational leadership significantly moderates the training and development—employee intentions relationship.
• H5: Transformational leadership significantly moderates the work environment—employee intentions relationship.
• H6: Transformational leadership significantly moderates the job satisfaction—employee intentions relationship.

With reference to the above discussion, the hypothesized model is drawn as shown in the below Figure 1 .

Research framework.

Research Methodology

Context, sample, and data collection.

In China, organisations face fierce pressure to retain employees due to the shortage of skilled and talented employees ( Fu et al., 2020 ). Statistically, 44% of the top management in organisations operating in China view this issue as a critical barrier to employee retention ( Mashiah, 2021 ). China’s manufacturing makes up two-thirds of SMEs ( Zhu et al., 2012 ; Iqbal et al., 2021c ; Xuecheng et al., 2022 ), where most operate in the northern region. Therefore, this study focuses on the SME employees in this region. Moreover, this study requires a minimum of 185 responses based on the sample-item ratio ( Hatcher and O’Rourke, 2013 ). Online survey forms were structured to collect data, comprising six sections that measure various factors. The factors include training and development, work environment, job satisfaction, employee retention, transformational leadership, and respondents’ demographics.

We adopted a convenience sampling approach for data collection, considering China’s time and financial constraints and current COVID-19 restrictions. The present study is cross-sectional in design, where data are collected at a specific time from the employees. The online survey link was disseminated via 500 email addresses with the assistance of the human resource department. Accordingly, 287 responses were received, which is sufficient, indicating a response rate of 57.40%. Furthermore, a gentle reminder was included during data collection to increase the number of responses. In this study, we also marked it mandatory to check against each item in the online survey form, ensuring no missing values in the dataset.

Measurement of Variables

We adopted measurement scales of four continuous variables in the current study. Previous studies have reported reduced quality and high cognitive ability required to collect data using a high Likert scale ( Cummins and Gullone, 2000 ; Iqbal et al., 2020 ). Therefore, a 5-point Likert scale was employed, ranging from 1 = strongly disagree to 5 = strongly agree. Delery and Doty (1996) have defined training and development as the degree to which organizations offer training to employees to foster their skills. We adopted the 4-item scale from Delery and Doty’s (1996) study to measure training and development. For example, one item is “We receive formal development training which increases our promotion chances within the organisation.” Similarly, Bibi et al. (2018) used an identical scale in the context of Pakistan and found it highly reliable (α = 0.918). In this study, the Cronbach’s alpha value of this scale is 0.719.

The work environment is defined as the degree to which employees perceive the availability of a safe and conducive workplace ( Edgar and Geare, 2005 ). Subsequently, 4-measurement items were adopted from Bibi et al.’s (2018) study to assess the work environment. For instance, one item is “We always feel safe working here in this environment.” In the current study, the Cronbach’s alpha value of this 4-item scale is 0.928. Meanwhile, job satisfaction is defined as the pleasurable emotional state emerging from the job appraisal as facilitating the accomplishment of one’s job values ( Locke, 1976 ; Zhang M. M. et al., 2016 ). In this case, we adopted a 3-item scale from Cammann et al.’s (1979) study to measure job satisfaction. An example of this item is “In general, I like working here.” This scale was utilised by Zhang L. et al. (2016) , who found it highly reliable (alpha = 0.870). Accordingly, the Cronbach’s alpha value in this study for the 3-item scale is 0.921.

Transformational leadership is defined as those who have idealised influence, intellectual stimulation, inspirational motivation, and individualised consideration. We adopted 20 items of the Multifactor Leadership Questionnaire (MLQ) to analyse transformational leadership. This analysis was related to the four items, namely intellectual stimulation, idealised influence, inspirational motivation, and individualised consideration. A sample of the item is “my leaders give me tasks with enthusiasm.” A previous study ( Ohunakin et al., 2019 ) indicates high reliability where Cronbach’s alpha values of its four dimensions were between 0.88 and 0.92. In this study, the Cronbach’s alpha values are in the range of 0.875–0.918.

Employee retention is defined as the effort by an organisation to keep desirable employees to fulfil business objectives ( Frank et al., 2004 ; Govaerts et al., 2011 ). We adopted six items ( Govaerts et al., 2011 ) to measure employee retention, for example, “I love working for this company.” The present study’s measurement scale was highly reliable, that is, Cronbach’s alpha = 0.794, aligning with Khalid and Nawab’s (2018) findings.

Analytical Approach

In this study, the research framework is complex due to its prediction-oriented feature and the presence of independent variables, dependent variables, and moderators. Therefore, partial least squares-structural equation modelling (PLS-SEM) was selected following Hair et al. (2020) . This approach is considered a proper analytical strategy compared to covariance-based structural equation modelling (CB-SEM) ( Ringle et al., 2020 ). The technique revolves around the assessment of the measurement model and structural model, though it requires prior evaluation of the former measurement.

Results of the Study

Data screening.

Before analysis, data screening must be conducted, which concerns missing values, outliers, data normality, and common method bias. We ensured the absence of missing values in the current dataset by marking mandatory against each measurement item in the online survey form. Moreover, univariate outliers and multivariate outliers were investigated through Z-score and the Mahalanobis distance test. Accordingly, three responses were removed in the univariate outlier because of the Z-score values greater than 3.29 ( Tabachnick and Fidell, 2007 ). Meanwhile, the Mahalanobis distance test revealed that the P -value of 15 cases is less than 0.001, a clear indicator of multivariate outliers; therefore, the 15 responses were excluded from the dataset.

The normality was assessed based on the skewness and kurtosis values, and in this study, the skewness values of all continuous variables extend from −1.307 to 1.531, which are within ± 3. However, the kurtosis values fall out of the ± 3 range ( DeCarlo, 1997 ), and thus, the data are not univariate normal. The Mardia’s coefficient skewness 0.005 and kurtosis values (β=172.761,ρ < 0.005) confirmed the multivariate normality. Nevertheless, the PLS-SEM does not require data normality; hence, non-normal distribution is not an issue. Next, we applied Harman’s single factor test and the correlation matrix procedure to examine the common method bias. Harman’s single factor test revealed that a single factor only counts for 39.41% < 0.50% of the total variance ( Podsakoff et al., 2012 ), confirming no issues with method bias. The correlation matrix exposed that no single correlation between continuous variables is greater than 0.90 ( Bagozzi et al., 1991 ); thus, the current study is free from common method bias. We have also examined the model fit of hypothesized model based on two-index strategy recommended by Hu and Bentler (1999) . In the present study, hypothesized model was found fit based on comparative fit index (CFI) (0.96 > 0.95) and standardised root mean square residual (SRMR) (0.049 < 0.09) ( Hu and Bentler, 1999 ), as compared to alternative models.

Frequency Analysis

The present study is dominated by male participants ( n = 176, 61.32%), where most participants ( n = 109, 37.98%) fall between the ages of 25 and 35, followed by 85 between 36 and 45. The most significant number of participants ( n = 144, 50.17%) in current research possessed a bachelor’s degree and nine participants (3.14%) with PhDs. Finally, more than 50% of the participants ( n = 153) acquired 5–10 years of working experience, while nine participants with more than 20 years of professional experience.

Descriptive Analysis

In this study, the mean values of training and development ( M = 4.145), work environment ( M = 4.334), job satisfaction ( M = 4.322), and employees’ retention ( M = 4.167) were found significant. Notably, job satisfaction and employee retention values were higher than those reported by a previous study among employees of multi-national enterprises (MNEs) in China ( Zhang M. M. et al., 2016 ). Regarding four dimensions of transformational leadership, idealised influence ( M = 4.132) has the highest mean value. This result is followed by inspirational motivation ( M = 4.121), individualised consideration ( M = 3.973), and intellectual stimulation ( M = 3.670). Moreover, the current descriptive analysis revealed that participants seek more idealised influence than other dimensions of transformational leadership in Chinese SMEs. In other words, a leader’s ability to exhibit high morality, ethics, and personality enables the realisation of high performance within organisations.

Measurement Model Analysis

The measurement model analysis examines the construct reliability and validity, in which the former is assessed with reference to its indicator and internal reliability. This study revealed that all indicator loadings are more significant than 0.50 and less than 0.944, which are deemed acceptable. An item has sufficient indicator reliability provided its factor loading is more significant than 0.50 ( Chin, 1998 ). Moreover, we examined the construct reliability based on Cronbach’s alpha and composite reliability values. A construct has acceptable reliability, provided its Cronbach’s alpha or composite reliability value is greater than 0.70 ( Sarstedt et al., 2019 ).

Table 1 shows that the Cronbach’s alpha values of various items are greater than 0.70. These items comprise training and development (0.719), work environment (0.928), job satisfaction (0.921), employees’ retention (0.794), and individualised consideration (0.889). Other items include idealised influence (0.918), inspirational motivation (0.875), intellectual stimulation (0.882), and transformational leadership (0.885). Similarly, the composite reliability values of these variables are greater than 0.70 (see Table 1 ). Hence, it is evident that all the continuous variables exhibit acceptable construct reliability.

Factor loadings, reliability, AVE, and mean values.

*Means multiplication/interaction of two variables.

Construct validity is formulated on the convergent and discriminant validity, where a construct has sufficient acceptable convergent validity provided its factor loadings are greater than 0.70. Furthermore, its average variance extracted (AVE) must be higher than 0.50 ( Hair et al., 2020 ). The items of all continuous variables must possess factor loadings greater than 0.70 (see Table 1 ). The AVE values of multiple items revealed values higher than 0.50, that is, training and development (0.541), work environment (0.823), and job satisfaction (0.864). Others include employee retention (0.576), individualised consideration (0.706), idealised influence (0.712), inspirational motivation (0.669), intellectual stimulation (0.692), and transformational leadership (0.677) (see Table 1 ).

Based on the above results, all continuous variables possess acceptable convergent validity. We employed Fornell–Larcker Criterion to examine the discriminant validity of the variables. This method confirms the discriminant validity of a variable provided that the square root of its AVE is greater than its inter-constructs correlation values ( Henseler et al., 2009 ). Table 2 indicates that the square root of AVE of all variables is greater than their inter-constructs correlation values; hence, these variables exhibit acceptable discriminant validity.

Fornell–Larcker criterion.

The bold value stands for the square root of the AVE value of respective variable.

Structured Model Analysis

The structural model analysis revealed that training and development significantly influence employee retention (β=0.824,ρ < 0.05) ( Table 3 ). In essence, one unit change in training and development brings 82.40% variations in employee retention, and thus hypothesis H1 is supported. Notably, the findings indicated the significant positive impact of the work environment on employee retention (β=0.274,ρ < 0.05), supporting hypothesis H2. Meanwhile, job satisfaction significantly influences employee retention (β=0.824,ρ < 0.05) (see Table 3 ). In other words, there is a 20% change in employee retention among SME employees in China for one unit change in job satisfaction, supporting hypothesis H3.

Hypotheses testing.

The effect of its interaction terms with training and development, work environment, and job satisfaction were estimated. This approach was conducted to examine the moderating effect of transformational leadership. In this case, the interaction term of transformational leadership with various dimensions does not significantly influence employee retention in SMEs in China. The dimensions include training and development (β = −0.081,ρ=0.233 > 0.05), work environment (β=0.021,ρ=0.856 > 0.05), and job satisfaction (β=0.078,ρ=0.101 > 0.05) (see Table 3 ). Therefore, moderation hypotheses H4, H5, and H6 are rejected.

The current study examined an essential topic in organisational behaviour: what factors are vital to foster employee retention in SMEs? Accordingly, a research framework was proposed and empirically tested based on the SET to analyse the impact of multiple dimensions (training and development, work environment, and job satisfaction) on employee retention. Similarly, the conditional effect of transformational leadership was analysed based on this relationship. Current findings confirmed the positive connection among the three dimensions of employee retention. However, the contingent role of transformational leadership was not supported by the proposed relationship. Only three direct hypotheses are supported in this study, and the findings are elaborated below.

The SET was applied in this study to propose the positive relationship of the three dimensions with employee retention. The data analysis purported the significant positive relations of training and development with employee retention among SME employees in China; therefore, supporting hypothesis H1. This finding aligned with previous studies ( Zheng, 2009 ; Umamaheswari and Krishnan, 2014 ; Bibi et al., 2018 ). Past studies reported a positive impact of training and development on employee retention in Pakistan’s universities ( Bibi et al., 2018 ) and Indian ceramic industries ( Umamaheswari and Krishnan, 2014 ). A similar observation can be found in the hotel industry of Bangladesh ( Rubel et al., 2021 ) and multinational enterprises in Asia ( Zheng, 2009 ).

A study among millennial employees in Bangladesh concluded a significant positive effect of green training and development on employee retention ( Islam et al., 2022 ). Meanwhile, training and development reported a significant indirect impact on employee retention through ethical climate ( Yamin, 2019 ) and employee engagement ( Fletcher et al., 2018 ). Another study reported a negative link between the practices of perceived human resource management and turnover intention among SME employees ( Reese et al., 2009 ). Deng (2018) similarly claimed that family business retains migrant workers by fostering training and development programmes. Therefore, organisations must carefully design and implement these programmes to increase employee retention.

The current research indicated a positive relationship between work environment and employee retention. The results supported this proposition, resulting in the acceptance of hypothesis H2, aligning with previous findings ( Pek-Greer and Wallace, 2017 ; Frye et al., 2020 ; Wu et al., 2020 ). Other studies echoed the current study’s results. For instance, the work environment was positively related to employee retention among generation Y ( Frye et al., 2020 ). Meanwhile, a qualitative study in Singapore suggested that a supportive work environment strongly predicts employee retention in its education sector ( Pek-Greer and Wallace, 2017 ). In China, the work environment indirectly influences employee turnover through workplace violence ( Wu et al., 2020 ) and India’s organisational engagement ( Kundu and Lata, 2017 ). Other studies supported the positive impact of the work environment on the employee turnover intention in China’s health sector ( Wan et al., 2018 ; Wu et al., 2020 ).

This study proved the significant positive effect of job satisfaction on employee retention based on hypothesis H3, leading to its acceptance, parallel to previous findings ( Tanwar and Prasad, 2016 ; Frye et al., 2020 ). A study found that job satisfaction positively affects employee retention in hospitality ( Frye et al., 2020 ). Meanwhile, a qualitative study among IT industry employees showed that employer branding vis-à-vis job satisfaction strongly determines employee retention ( Tanwar and Prasad, 2016 ). On a similar note, Liu et al. (2010) confirmed that job satisfaction is a strong predictor of employee retention in China’s health centres. Zhang M. M. et al. (2016) similarly supported this positive relationship among Chinese employees working for multinational enterprises. In the service industry, the aforementioned three dimensions are viewed as vital factors in promoting employee retention ( Mohanty and Mohanty, 2016 ).

The present study introduced the moderating effect of transformational leadership on the relationship of the three dimensions with employee retention. A transformational leader is anticipated to significantly moderate the training and development-employee retention relationship, though the findings do not support this proposition. Hence, H4 is rejected. In this context, there is no prior study on leadership as a moderating variable on the link between training and development with employee retention. However, a study suggested a green creativity climate as the potential moderator of the green practices-employee retention link among millennial employees ( Islam et al., 2022 ).

The moderating role of transformational leadership on the work environment-employee retention relationship was not supported. This result is a clear indicator of the rejection of hypothesis H5. Similarly, there is no study regarding leadership as a contingent variable on the work environment-employee retention association. Thus, the current study offers strong empirical contributions to the field of training and development followed by the work environment. Meanwhile, job satisfaction possesses substantial weightage in employee retention, and this relationship relies on the organisational climate ( Sips et al., 2015 ). The current research established the conditional effect of transformational leadership on the job satisfaction-employee retention link.

However, the present findings do not support hypothesis H6, contradicting Sips et al.’s (2015) findings. The underlying reasons are due to the leaders’ direct role in developing organisational climate rather than their immediate effect on job satisfaction. Moreover, another study revealed that servant leaders indirectly influence employee retention through job satisfaction ( Hassan et al., 2021 ). In Nigeria, a significant positive effect of various elements was found on employee retention in universities. These elements include idealised influence, inspirational motivation, intellectual stimulation, and individualised consideration ( Ohunakin et al., 2019 ).

The current study aimed to investigate the direct effect of factors such as job satisfaction, working environment, and training and development on employee retention in China. This study also intended to examine the moderating role of transformational leadership in the relationship between job satisfaction, working environment, and training and development on employee retention based on cross-sectional data collected from employees in manufacturing SMEs in China. The current empirical findings confirm that all three factors such as training and development, job satisfaction, and the working environment significantly influence employee retention. Among these three variables, training and development have the highest positive effect on employee retention. Yet, present statistical findings do not support the moderating effect of transformational leadership on the relationship of job satisfaction, working environment, and training and development with employee retention.

Theoretical Implications

The present study significantly contributed to the extension of the theory. First, the literature is enriched by offering empirical support on the integrated understanding of the three dimensions and employee retention. Furthermore, extant literature provided contradicting findings on the relationship between the three dimensions. However, the role of transformational leadership as the conditional variable in their relationship is still missing. Second, this study augments the SET by examining the effect of training and development, work environment, and job satisfaction on employee retention. Third, the SLT is extended by providing evidence on the non-significant moderating role of transformational leadership, specifically the correlation of the three dimensions on employee retention.

Practical Implications

The current research offered several recommendations for practitioners and policymakers. Extant literature claims that employee retention is a significant challenge for SME employees in China. In this case, the current work emphasises the three dimensions critical to enhancing employee retention within China’s SMEs. The present findings found that training and development is the most crucial element which increases employee retention within organisations. Chinese SMEs may, therefore, plan their training and development programme more effectively based on their employee’s needs.

China’s SMEs should design training and development programmes that parallel their employees’ career growth. However, previous findings focused on offering training programmes related to company-specific skills rather than general skills. Accordingly, general skills enable employees to effectuate professional opportunities outside the parent organisations. Therefore, these SMEs must evaluate their programmes and perform changes concerning their company-specific skills. Equally important, the top management should employ specific strategies to foster a conducive workplace to improve the work environment and cope with employees’ burnout. Such strategies may include special counselling sessions for stress-induced employees and enforcing flexible work schedules.

The management should centre on developing the work environment, ensuring satisfied employees, establishing open communication, and fostering ideas while offering peer support. Moreover, practitioners should work on the proper fund allocation to develop a positive work environment. The current study reported a significant positive effect of job satisfaction on employee retention. Hence, the human resource and departmental managers are advised to make incremental changes, spurring employee satisfaction, that is, providing a fair salary, rewards, and incentives to their employees. Nevertheless, the moderating effect of transformational leadership does not appear significant in retaining employees for SME management in China.

Based on the above, it is proven that transformational leaders are highly effective in designing an empowered and meaningful work environment. For instance, this form of leadership offers individualised consideration and idealised influence, stimulates intellectually, and motivates inspiration. Thus, practitioners and managers should evaluate the development of leadership. Specifically, in China’s SMEs, policymakers, and managers must critically assess the leadership development programmes in their organisations.

Limitations

The current study possesses several limitations despite the significant theoretical and practical contributions. First, this study was conducted in the northern region of China, hence, increasing the generalisation in the context of China. Moreover, the sole focus on China SMEs may not provide comprehensive information on other emerging and developed economies. Therefore, future studies can enrich the quantitative findings by assessing other developing countries, such as Pakistan and India. The survey form was distributed through the human resource management department, decreasing the chance of randomly distributing the survey form to employees. This situation will hinder the generalisation issue further, especially in a broader population.

Second, this study subjectively measured all continuous variables, and such measurement might influence the presence of common method bias. Practitioners and academicians face extreme difficulty in collecting objective data from organisations. Thus, future endeavours could overcome these limitations by adopting improved research design and employing a qualitative approach to unravel the causal relationship. Third, a direct connection was found between the three dimensions with employee retention. The upcoming research must then investigate the potential mechanisms of these relations. Finally, the current study provided multiple shreds of evidence about the non-significant moderating role of transformational leadership; thus, further examinations must be made on the conditional part of other leadership styles, such as sustainable and servant leadership.

Data Availability Statement

Author contributions.

All authors listed have made a substantial, direct, and intellectual contribution to the work, and approved it for publication.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

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OPINION article

Employee retention and change management during times of uncertainty.

• Management Department, Faculty of Economics and Business, Universitas Brawijaya, Malang, Indonesia

Introduction

Human resource management is a type of management that focuses on maximizing the abilities of its employees or members through a number of strategic steps in order to improve employee performance and help the company achieve its goals. According to Mathis et al. (2015) . Human resource management has a decisive role in the life of an organization, namely how well the organization performs, how well the organization's strategy can be implemented, and how far the predetermined goals can be achieved. There is a good way to tell how well a company is able to deal with problems if there is a company. Research and discussion on organizational behavior (OB) have been around for about half a century. However, as OB points out, in reality, things never really change, which clearly shows the problems facing managers in an organization have been around since the dawn of civilization ( Luthans, 2012 ). Although the problems in an organization and the solutions provided have not changed much, the emphasis and context of the surrounding environment have certainly changed. For example, from the 1980's to the mid-1990's, managers were busy restructuring their organizations to increase productivity and meet competitive challenges in international markets and increase customer buying interest. A case in point, an analysis of Fortune 500 companies between 1995 and 2005 found the most prominent initiatives were restructuring (downsizing), cost reduction programs, creating shared services, and Six Sigma quality programs ( Luthans, 2012 ).

Based on the literature review, both theoretically and empirically (can be seen in Table 1 ), this study comes up with hypotheses that will lead to an empirical research model. In his explanation, Wayne (2014) explains that there is a significant influence between employer branding, management performance, and employee retention. This finding is supported by research conducted by Sutherland et al. (2002) that employer branding has a direct influence on employee retention. Even in research conducted by Chhabra and Sharma (2014) , employer branding is one of the corporate strategies in modern times that is used to reduce costs from company employee search. Oladapo (2014) explains that talent management has a positive and significant influence on employee retention. This is supported by research conducted by Deery (2008) , which states that talent management and work-life balance have a strong enough influence on employee retention. The research conducted by Fahlevi et al. (2020) is limited to companies engaged in hospitality. However, there are previous studies that have obtained quite the same results regarding the relationship between talent management and employee retention in companies as the research conducted by Hughes and Rog (2008) .

Table 1 . Path analysis.

Figurska and Matuska (2013) found that there is a positive and significant influence between employer branding and employee engagement. Their research reveals that employer branding is one of the company's strategies for maintaining their human resources in order to improve the performance of individuals in a company so that its reputation is enhanced. from the company will make the employee bond better. Kennedy and Daim (2010) explain that there is a significant effect between employee engagement and employee retention. In their research, it is explained that employee engagement can be a major force in maintaining employee resilience and causing a decrease in turnover, but this research is limited to companies that operate in the IT industry. Kashyap and Rangnekar (2016) found that there is a positive and significant relationship between employer branding and organizational trust. It is explained that the perception of a company's reputation has a significant influence in reducing employees' willingness to switch companies. I can mediate between the two relationships. Organizational trust is seen as the output of good employer branding in a company.

Al-Hussaini et al. (2019) explain that there is a significant influence between talent management and employee engagement. This also applies to individual performance variables. This study specifically explains how companies develop talent management to increase bonds between employees, which will have an impact on increasing individual performance. This study also explains the role of talent management as a strategy and the role of employee engagement as a mediator between the two relationships. Özçelik (2015) explains the determinants of organizational trust in talent management in an organization. In this case, talent management can also be interpreted as talent management regarding how the company's efforts to maintain fuel retention of its employees will reduce recruitment costs. Research conducted using nurses in a hospital found that there is a direct influence between organizational trust and employee retention. Researchers not only used organizational trust variables but also added job satisfaction variables in measuring the effect on employee retention.

Suikkanen (2010) explained that employee branding can have a direct and indirect effect on employee retention. The role of employee engagement in mediating the effect of these two variables has a significant and positive influence, so employee engagement is needed to increase employee retention. The same thing was also found by Özçelik (2015) in his research. Backhaus and Tikoo (2004) explain the role of organizational trust in mediating the relationship between employer branding and employee retention, but the research conducted by Backhaus and Tikoo (2004) is only conceptual, and there are no empirical findings that explain the role of organizational trust as a mediator. Research conducted by Biswas and Suar (2016) also explains the factors and impacts of employer branding on organizational trust and employee retention. In support of this hypothesis, no in-depth research has been conducted on the role of organizational trust in mediating the effect of employer branding on employee retention.

Bhatnagar (2007) explains that employee engagement can mediate the influence of employer branding on employee retention. The explanation used by the researcher is that talent supported by work ties will have a greater influence on employee retention. This is in line with research conducted by Hughes and Rog (2008) , although the research is limited to companies in the hotel industry. Chitsaz-Isfahani and Boustani (2014) explain that organizational trust can mediate between employer branding and employee retention, but that much like the relationship between employer branding and employee retention, there is no research that clearly states organizational trust has a positive and significant influence in mediating the influence between these two variables.

The subjects of this research are employees of one of the largest manufacturing companies in Indonesia, which is a company engaged in the automotive sector. This company is the only one in Indonesia that has the right to be the sole agent for the world's leading motorcycle brand. How many samples will be used in this study will be based on Hair et al. (2010) which uses more than 100 samples as the minimum number in the use of this study. Formula by Slovin et al. (1993) this is the minimum recommended size for this research survey.

Based on the formula above, from a total of 23,953 employees, the minimum sample size is 394 employees. Part-time workers and employees of manufacturing companies comprise the sample unit in this study. Considering the number of samples to be studied, which can be done randomly, the researchers used random sampling in their research at this company.

At the data processing stage, validity, reliability, and discriminant validity tests have been carried out so that in the model there are several indicator items that are removed from the model because they do not meet the criteria that have been set to measure or explain the constructs in the model. Figure 1 shows the result of bootstrapping the final modified model.

Figure 1 . Bootstrapping.

The results of the bootstrapping above are used to test the hypothesis that all of the indicator items in all constructs have a statistical value >1.96. In conclusion, all of the indicator items above are able to measure the existing constructs. Meanwhile, to test the effect between variables, the statistical values from the Smart PLS analysis were compared with the table values. The following is a table that provides the results of the relationship between the constructs.

An important contribution to this research is the use of employee engagement and organizational trust as mediating variables based on consideration of the results of previous studies. This study found that employee engagement can positively mediate the influence of employer branding on employee retention. In contemporary research, which is characterized by intense business competition, engagement has received attention from both academics and practitioners and has been established as an important human resource intervention for the survival and growth of companies ( Rai and Maheshwari, 2021 ). Many studies have been conducted to explore the various antecedents of engagement. Job-related antecedents are constructs, strategies, and conditions applied at the job or task level to develop engagement. It has been said in theories like the JCM (Job Characteristics Model) that work has a big impact on an employee's overall motivational potential by affecting their psychological states.

In this study, the contribution to organizational theory regarding organizational trust is an important element of social relations in an organization. At the interpersonal level, employees' trust in managers affects the results of their attitudes, behavior, and performance ( Ozmen, 2019 ). Knowledge-based organizational trust among peers and commitment mediates the effect of employer branding on employee retention and also finds that trust in management partially mediates the relationship between employee-oriented HRM and employee behavior. Employer branding and employee retention are both important parts of this dissertation. One of the new things about adding organizational trust variables between these two things is that this model is used for companies in the automotive industry. From the psychological point of view of employee retention as a future factor for the company to retain talented employees in the future, human resource assets become a valuable asset but are often not visible in the eyes of management ( Fahlevi, 2021 ). Understanding the psychology of employees to stay with the company is something that is rare in today's companies even though it is very much needed now.

This research contributes as input to the automotive industry's business practices in increasing employee retention rates. The automotive industry, which has a high turnover rate, must innovate in the organization related to several main variables. The results obtained in this study are quite high, namely employee engagement and organizational trust. With the increase in these two variables, employer branding and talent management can be improved, which will have an impact on employees. Retention will increase as several variables in this research model will have a direct or indirect impact on the company's employee retention. The benefits of high employee retention for the company will reduce costs, be they recruitment costs or training costs. It is known that the automotive industry requires a large amount of training costs, especially on the part of production employees, which is a must for companies to provide training to their employees so that training costs can be reduced by increasing employee retention.

Author Contributions

All authors listed have made a substantial, direct, and intellectual contribution to the work and approved it for publication.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher's Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

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Slovin, M. B., Sushka, M. E., and Polonchek, J. A. (1993). The value of bank durability: borrowers as bank stakeholders. J. Finance 48, 247–266. doi: 10.1111/j.1540-6261.1993.tb04708.x

Suikkanen, E.. (2010). How does employer branding increase employee retention? (Ph. D. dissertation). Metropolia University of Applied Sciences, Helsinki, Finland.

Sutherland, M. M., Torricelli, D. G., and Karg, R. F. (2002). Employer-of-choice branding for knowledge workers. South Afr. J. Bus. Manag . 33, 13–20. doi: 10.10520/EJC22210

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Keywords: employee retention, change management, COVID-19, talent management, employer branding, employee engagement, organizational trust

Citation: Ekhsan M, Sudiro A, Mugiono M and Hussein AS (2022) Employee Retention and Change Management During Times of Uncertainty. Front. Psychol. 13:916709. doi: 10.3389/fpsyg.2022.916709

Received: 09 April 2022; Accepted: 02 May 2022; Published: 30 May 2022.

Reviewed by:

Copyright © 2022 Ekhsan, Sudiro, Mugiono and Hussein. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Muhamad Ekhsan, mangunjayan@gmail.com

Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.

Employee Retention Research: Questions, Topics, & Objectives

Topics covered ✅.

• Employee retention research topics
• Employee retention program
• Why employee retention is important
• Employee retention examples
• Employee retention articles
• Factors affecting employee retention research
• Employee retention in HRM

Employee retention is a common issue in the modern workplace. In fact, employee turnover rates are high in most organizations, and this can have a negative impact on companies' profitability.

In order to retain employees, it's important to conduct employee retention research and how key factors can be addressed in your company culture.

This article provides an overview of employee retention research and the key considerations it should include.

1. Employees

When it comes to building a great culture, there are few things as valuable as employee retention research.

When you can understand the motivations, experiences, and needs of your employees, you can make real changes that will help them stay with your company longer.

To help businesses retain their best workers and reduce turnover costs, Kahana conducts ongoing research into the factors that contribute to employee retention—including stress levels and voluntary turnover.

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2. Employee Turnover

Two factors to consider for employee retention research are work-life balance and seniority.

Work-Life Balance

The most important factor in employee retention is work-life balance.

According to Forbes, 66% of employees say they would "likely leave their job if they didn't feel appreciated."

Significantly, this figure has increased from 51% of employees who felt this way in 2012.

Companies need to be aware of this issue and take steps to ensure their employees are not being overworked or under-appreciated by management.

Senior Employees

Another key impact on employee retention is seniority levels among employees: those with more experience tend to stay at their current company longer than those who have less.

This may be because they feel more secure in their positions, they have more responsibilities than newer employees do, or they are more likely to receive raises during their tenure with a company, which helps them feel more valued and appreciated by management.

3. Company Costs

Employee turnover is a major concern for companies.

Based on this SHRM Report on Retaining Talent ,  replacement costs can be as high as 50%-60% with overall costs ranging anywhere from 90%-200%.

In a nutshell, this means that if an employee makes $60,000 per year in salary, then it would cost an average of $30,000 - $45,000 just to replace that employee and roughly $54,000 - $120,000 in overall costs to the company.

This is especially true when it comes to senior employees, who are more expensive to replace than their junior counterparts.

Not to mention, a workforce with high turnover rates tends to be less engaged in their work and more prone to stress and burnout, which can lead to other issues like absenteeism or workplace violence.

4. Questions

As a human resources manager, it's important to have a good handle on employee turnover rates.

• What about those employees who voluntarily leave your company?
• Why do they do it?
• How can you keep them around?

When you know how many employees leave your company voluntarily and involuntarily each month, you can make calculated decisions that will help you retain more talent.

Many companies are struggling to find new employees who possess the skills needed to fill these vacant positions.

This shortage has created an environment where talented people are in demand and are able to negotiate their salaries higher than they would have been able to do just five years ago.

With so many unemployed or underemployed people looking for work, it would seem like companies should be able to easily fill their open positions with qualified applicants even without paying them top dollar—but this isn't happening.

Many companies are creating cultures that drive away talented employees who want to feel valued and supported by their employers.

6. Cost of Turnover Relative to Career Length

Employee turnover can be expensive.

According to Built in, the true costs of employee turnover are extremely high.

It’s estimated that losing an employee can cost a company 1.5-2 times the employee’s salary .

Depending on the individual’s level of seniority, the financial burden fluctuates.

• Hourly workers can cost an average of $1,500 per employee .
• Technical positions can cost between 100-150 percent of the salary.
• C-suite turnover can cost 213 percent of salary.

7. Development of Employee Turnover

Stress levels and age also have a significant impact on voluntary employee turnover rates.

High-stress environments often lead to increased absenteeism and lower productivity, which contribute to higher turnover rates.

For example, senior employees may leave a company because of the lack of flexibility and remote options, especially during a pandemic.

They will look for companies that are adopting a more hybrid work schedule.

Companies can better retain these valuable workers through improved communication channels between management and staff members or by offering more flexible policies related specifically to older workers.

8. Employee Experiences

If employees have positive experiences at their job, there will most likely be a lower turnover rate.

However, when it comes to identifying signs of negative employee experiences within your own company culture, you should look for low staff morale or frequent absences from work due to illness or personal issues.

If you notice these types of behaviors among your employees, you should consider implementing more flexible work schedules or other policies that might help reduce their stress levels and improve productivity overall.

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9. Management

Another common reason why people leave their jobs is that they don't feel like they're getting enough support from management.

Employees may be unhappy at work due to a bad manager or a toxic culture within the organization.

It is important to make a note of employees' attitudes and feelings at work so that improvements can be made in the workplace.

10. Feedback

If you want to retain your employees longer than usual, you can do a couple of things.

One thing is that there's no harm in asking for feedback from your employees .

You could have meetings with individual employees or a brainstorming session with your whole team to come up with ideas that can improve employee experiences.

If you want to make sure your employees will stay with you for a long time, you should look at hiring people who have been with other companies for a long time and will likely stay with yours as well.

However, this is not the only route to ensuring long-lasting employment.

The key factor in retaining employees is treating them well and appreciating them.

For more insights on building culture, check out our article on employee satisfaction research .

Employee Feedback: The Key to Retention During the Great Resignation

Can there be corporate democracy if employees can’t vote on the actions its companies take? Yes, and it’s needed now more than ever.

The pandemic has brought much employee discontent and activism. Last January, for example, with one-third of the staff at a Starbucks in Buffalo sick with COVID-19 or isolating at home, the remaining workers asked for KN95 masks, better testing protocols, and the right to turn away illegally unmasked customers. These requests were flatly refused—a surprising response from a company whose founder, Howard Schultz, took pride in its human-centric culture. Google, Kroger, Amazon, and many others have experienced similar conflicts.

A recent study finds that “toxic culture”—unethical leadership behavior and disregard for employees’ health, diversity, financial security, and self-respect—is a far more accurate predictor of attrition than the usual suspect—compensation. To those of us who have studied organizations up close for decades, none of this is surprising. But what can be done about it?

“Companies with healthy, high-commitment, high-performance cultures have had comparatively less attrition during the pandemic.”

Intra-industry comparisons reveal substantially different attrition rates among competitors. Companies with healthy, high-commitment, high-performance cultures—such as Southwest Airlines, Johnson & Johnson, and Enterprise Rent-A-Car—have had comparatively less attrition during the pandemic. What makes them less vulnerable to the “Great Resignation” and other challenges from a constantly changing competitive landscape?

First, these companies have CEOs—indeed, leaders at all levels—who care equally about profits and employee well-being and don’t see them as competing or incompatible. They make these goals clear and understandable and they are humble listeners.

Second, these CEOs have institutionalized a governance and learning system , which enables truth to speak to power at the corporate and unit levels through periodic, systematic, well-structured honest conversations about the extent to which the company’s actions are aligned with its strategic performance goals and its human and customer-centric values. Because managers at all levels are held accountable for implementing and maintaining this governance and learning system, it becomes embedded in the culture. That ensures continuous improvement of policies and practices, which, in turn, ensures sustained commitment and performance.

Southwest Airlines, for example, has had, ever since its founding, a high-level culture committee that periodically assesses company culture and reports its unvarnished findings to senior management. It is one reason Southwest employees are so positive about their employer and that Southwest has so long outperformed its industry, and, incidentally, has never had a strike by its union.

Johnson & Johnson’s founder created a credo—to “put the needs and well-being of our customers and the people we serve first”—and requires senior teams at every level to foster repeated honest conversations with lower levels about whether their unit is practicing that credo. According to recently retired CEO Alex Gorsky, this has allowed Johnson & Johnson to sustain its high-commitment, high-performance culture for decades. At the leadership level, promotion depends on adherence to the credo and acting on the findings of these honest conversations.

These companies, while they remain hierarchical, are democratic in that leadership’s legitimacy in the eyes of employees depends on its willingness to listen to them and act on what is learned.

“Allowing employees to safely speak truth to power enables senior management to learn about barriers to performance that employees see clearly—but that leaders often see dimly or not at all.”

But how, specifically, does a democracy based not on voting but on honest conversation prevent a toxic culture? Allowing employees to safely speak truth to power enables senior management to learn about barriers to performance that employees see clearly—but that leaders often see dimly or not at all. Research has found that such barriers are often a root cause of toxic culture and, in fact, hundreds of honest conversations that I and my colleagues have observed revealed their particular company’s toxic culture.

Such revelation wouldn’t be worth much if it didn’t lead to change. But it does, because a properly conducted honest conversation is very emotionally powerful. Leaders are often shocked to learn how far off-base things have become, but are also energized because they learn that if they are willing to act, most employees will give their all to make those efforts succeed. That discovery is very inspiring.

How are honest conversations conducted so as not to go off the rails? We find that a face-to-face conversation between senior management and a task force of eight or so people who have interviewed 100 employees throughout the organization reliably spurs action that surveys and one-on-one conversations do not inspire. Leaders who have proven that they will listen by going through this (sometimes very unnerving) process earn their people’s trust and commitment which, in turn, boosts company performance.

Key to the success and survival of this system is, first, making managers below the senior level accountable to senior management for employing the process regularly, and second, rewarding those who do with recognition and promotion. That is exactly what Southwest Airlines and Johnson & Johnson have done for decades. Of course, CEOs themselves can and have successfully employed the process I describe below at the very top with their own key people.

If you wish to introduce such a governance and learning system into your own organization, here are some guiding principles:

1. Zero in. Focus on the strategic and cultural issues that matter most to the organization’s success.

2. Iterate between advocacy and inquiry. The senior team advocates an organizational direction and then launches an inquiry into the organization’s strengths and its barriers to success.

3. Make sure the conversation is constructive. Keep the process by which lower levels share the truth with leadership disciplined and structured to prevent missteps and outbursts that will shut down the conversation.

4. Make a plan. Having heard the truth, diagnose root causes of problems and develop a systemic action plan to realign the organization.

5. Make the leadership team accountable to those who provided feedback. That is, let the whole organization know the whole truth—both the good as well as the embarrassingly bad and sometimes ugly. Talk about what you heard and what changes you are making.

6. Check in regularly. Repeat the process periodically for continuous improvement and change.

Are you prepared to lead more democratically? It can make all the difference between employees who feel they have to defend themselves from management and employees who feel that they and their leaders are on the same team.

Michael Beer is the Cahners-Rabb Professor of Business Administration, Emeritus, at Harvard Business School and is the author of the book Fit to Compete: Why Honest Conversations about Your Company’s Capabilities Are the Key to a Winning Strategy .

You Might Also Like:

• To Change Your Company's Culture, Don't Start by Trying to Change the Culture
• Rituals at Work: Teams That Play Together Stay Together
• Open Your Organization to Honest Conversations

Feedback or ideas to share? Email the Working Knowledge team at [email protected] .

Image: Unsplash/Dylan Gillis

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Dissertations / Theses on the topic 'Employee retention'

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Kaiser, Sally M. "An examination of new employee orientation and training programs in relation to employee retention rates." Menomonie, WI : University of Wisconsin--Stout, 2006. http://www.uwstout.edu/lib/thesis/2006/2006kaisers.pdf.

Dixon, Sherry Ann. "Retention of Information Technology Employees." ScholarWorks, 2016. https://scholarworks.waldenu.edu/dissertations/3152.

Yadav, Nitin. "Effect of people process culture on the overall productivity and harmony of an organization." Online version, 2008. http://www.uwstout.edu/lib/thesis/2008/2008yadavn.pdf.

Anderson, Sarah J. (Hovland). "A case study of employee training and retention at Company ABC." Online version, 2009. http://www.uwstout.edu/lib/thesis/2009/2009andersons.pdf.

Shelton, Karen. "The effects of employee development programs on job satisfaction and employee retention." Online version, 2001. http://www.uwstout.edu/lib/thesis/2001/2001sheltonk.pdf.

Åberg, Lisa, and Jessica Henry. "Employee Retention : Utifrån ett generationsperspektiv." Thesis, Högskolan i Skövde, Institutionen för handel och företagande, 2018. http://urn.kb.se/resolve?urn=urn:nbn:se:his:diva-15223.

Karas, Melissa M. "Recruitment and retention from a to z variables for all organizations to consider /." Instructions for remote access. Click here to access this electronic resource. Access available to Kutztown University faculty, staff, and students only, 2005. http://www.kutztown.edu/library/services/remote_access.asp.

Karsnia, Elizabeth J. "Best practices for employee engagement." Online version, 2009. http://www.uwstout.edu/lib/thesis/2009/2009karsniae.pdf.

Guma, Pendulwa Vuyokazi. "Organisational factors impacting on employee retention." Thesis, Nelson Mandela Metropolitan University, 2011. http://hdl.handle.net/10948/1530.

Laing, Ann. "Employee Retention Strategies in Nonprofit Organizations." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/7024.

Essel, Bernard. "Employee Retention in Small Retail Businesses." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/7924.

Shikongo, Johanna Nelago. "Staff attraction and retention : a model for a Namibian state-owned enterprise." Thesis, Cape Peninsula University of Technology, 2011. http://hdl.handle.net/20.500.11838/1739.

Lennie, Graeme Mark. "Retention strategies for skilled SARS customs employees." Thesis, Nelson Mandela Metropolitan University, 2008. http://hdl.handle.net/10948/999.

Muir, Kate Rosemary. "Forest Industry Employees: training, safety and retention." Thesis, University of Canterbury. School of Forestry, 2014. http://hdl.handle.net/10092/10461.

Singh, Alicia. "Employee Retention Strategies in Trinidadian Small Enterprises." ScholarWorks, 2018. https://scholarworks.waldenu.edu/dissertations/5782.

Busch, Andrew. "A critical analysis of research related to workplace retention, satisfaction and motivation of the millennial generation." Menomonie, WI : University of Wisconsin--Stout, 2005. http://www.uwstout.edu/lib/thesis/2005/2005buscha.pdf.

Schouten, Theresa Lynn. "The impact recognition has on employees in the Human Resource Department at Bemis Company, Inc." Menomonie, WI : University of Wisconsin--Stout, 2006. http://www.uwstout.edu/lib/thesis/2006/2006schoutent.pdf.

Human, Ricardo Ronald. "Retention strategies of technical graded employees at Transnet." Thesis, Nelson Mandela Metropolitan University, 2014. http://hdl.handle.net/10948/11080.

Panoch, Amber. "The relationship between diversity and employee retention." Online version, 2001. http://www.uwstout.edu/lib/thesis/2001/2001panocha.pdf.

Javed, Basit, and Muhammad Jaffar. "Impact of Succession Planning on Employee Retention." Thesis, Högskolan i Jönköping, Internationella Handelshögskolan, 2019. http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-43902.

Shaheen, Ahmad. "Successful Employee Retention Strategies in Childcare Centers." ScholarWorks, 2016. https://scholarworks.waldenu.edu/dissertations/3005.

Edwards, Tiffany. "Relationship Between Self-Determination and Employee Retention." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/7136.

White, Gentri Mabelann. "Strategies for Employee Retention in Nonprofit Organizations." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/7904.

Mokoditoa, Jocelyn Molly. "Academic staff recruitment and retention strategies at the University of Limpopo." Thesis, University of Limpopo (Turfloop Campus), 2011. http://hdl.handle.net/10386/393.

Grobler, Elaine Maria. "Retention strategies for gold-collar employees in an institution of higher education." Thesis, Nelson Mandela Metropolitan University, 2014. http://hdl.handle.net/10948/6126.

Cooney, Katherine M. "Retention of child care staff understanding predictors of retention with survival analysis /." Online access for everyone, 2008. http://www.dissertations.wsu.edu/Thesis/Spring2008/k_cooney_042108.pdf.

Sete, Lerato Virginia. "Staff retention at an institution of higher learning." Thesis, Nelson Mandela Metropolitan University, 2015. http://hdl.handle.net/10948/6564.

Ramsay, Mark J. "Comparing Five Empirical Biodata Scoring Methods for Personnel Selection." Thesis, University of North Texas, 2002. https://digital.library.unt.edu/ark:/67531/metadc3220/.

Tanton, S. N. "Talent management in the role of employee retention." Thesis, University of South Africa, 2007. http://hdl.handle.net/10500/142.

Harris, Corey. "Employee Retention Strategies in the Information Technology Industry." ScholarWorks, 2018. https://scholarworks.waldenu.edu/dissertations/5559.

Chaney, Serrita. "Strategies Used by Healthcare Supervisors for Employee Retention." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/6539.

Cross, Darren. "Employee Retention Strategies in the Fast Food Industry." ScholarWorks, 2017. https://scholarworks.waldenu.edu/dissertations/3936.

Izard-Carroll, Michael D. "Public Sector Leaders' Strategies to Improve Employee Retention." ScholarWorks, 2016. https://scholarworks.waldenu.edu/dissertations/2157.

Griner, Charles H. "Small Construction Business Owners' Strategies for Employee Retention." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/7871.

Anderson, Andrew. "Decreasing Voluntary Employee Turnover in the Hospitality Industry." ScholarWorks, 2019. https://scholarworks.waldenu.edu/dissertations/6508.

Moroko, Lara Marketing Australian School of Business UNSW. "New perspectives on employer branding: an empirical investigation of scope, nature and success drivers." Awarded by:University of New South Wales. Marketing, 2009. http://handle.unsw.edu.au/1959.4/44753.

Morton, Deborah. "The Relationship Between Authentic Leadership and Employee Retention: Measuring the Perceived Level of Authentic Leadership and the Effect on Employee Retention." Wright State University / OhioLINK, 2012. http://rave.ohiolink.edu/etdc/view?acc_num=wright1340722665.

Mwanza, Besnat. "Retention strategies of key talent at the bank of Zambia." Thesis, Nelson Mandela Metropolitan University, 2009. http://hdl.handle.net/10948/1140.

Ketye, Lungelo. "Retention strategies for knowledge workers at a consulting engineering firm." Thesis, Nelson Mandela Metropolitan University, 2013. http://hdl.handle.net/10948/6247.

Barcus, Sydney Anne Guarnaccia Charles Anthony. "The impact of training and learning on three employee retention factors job satisfaction, commitment and turnover intent in technical professionals /." [Denton, Tex.] : University of North Texas, 2008. http://digital.library.unt.edu/permalink/meta-dc-9797.

Lassausaie, Claire, and Kyler Lotte. "Employees' Needs at Work : A case study of employee retention at a real estate firm." Thesis, Linköpings universitet, Företagsekonomi, 2018. http://urn.kb.se/resolve?urn=urn:nbn:se:liu:diva-151390.

Rowan, Jeff. "Employee satisfaction and retention at Vigil Health Management Inc." Thesis, National Library of Canada = Bibliothèque nationale du Canada, 2000. http://www.collectionscanada.ca/obj/s4/f2/dsk1/tape2/PQDD_0020/MQ49215.pdf.

Thompson, Nicholas W. "Managing the Millennials: Employee Retention Strategies for Generation Y." Scholarship @ Claremont, 2011. http://scholarship.claremont.edu/cmc_theses/240.

Nwabuzor, Nathaniel. "Exploring Employee Retention Strategies in the U.S. Hotel Industry." ScholarWorks, 2018. https://scholarworks.waldenu.edu/dissertations/5388.

Raz, Adi. "Leadership Strategies for Employee Retention in Small Lodging Establishments." ScholarWorks, 2017. https://scholarworks.waldenu.edu/dissertations/4249.

Padron, Thomas C. "Retention of employees in the Wisconsin restaurant industry." Menomonie, WI : University of Wisconsin--Stout, 2004. http://www.uwstout.edu/lib/thesis/2004/2004padront.pdf.

Gie, Liiza. "Theoretical and practical perspectives of employee wellness programmes at a selected South African university." Thesis, Cape Peninsula University of Technology, 2017. http://hdl.handle.net/20.500.11838/2600.

Quader, Kazi, and Sisi Jin. "Managing Selection and Retention of Employees : A Case Study on Länsförsäkringar Bergslagen." Thesis, Mälardalens högskola, Akademin för hållbar samhälls- och teknikutveckling, 2011. http://urn.kb.se/resolve?urn=urn:nbn:se:mdh:diva-12939.

Ntile, Zukiswa. "Assessing the personal development of employees in a municipal environment." Thesis, Nelson Mandela Metropolitan University, 2014. http://hdl.handle.net/10948/d1020420.

Bailey, Rachel. "Evaluating payment systems : the case of nurses in the National Health Service." Thesis, London School of Economics and Political Science (University of London), 1994. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.319904.

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What Is Employee Retention? 10 Successful Strategies for 2024

Grant Kieckhaefer | Content Strategist | March 22, 2024

In This Article

What Is Employee Retention?

Employee retention explained, why is employee retention important, key causes of employee attrition, employee retention and employee experience, benefits of employee retention, 10 strategies and best practices to improve employee retention, how to calculate employee retention, employee retention example, maximize employee retention strategies with oracle me, employee retention faqs.

Retaining valuable employees is a top priority for every organization, but it’s especially critical in sectors that face severe worker shortages, such as construction, education, healthcare, and transportation. Leaders must take steps to improve employee retention to stay competitive—and, ultimately, to stay in business. To help you take the right actions, here’s what you need to know about employee retention, including what it is, why it’s so important, and how you can improve it.

Employee retention refers to an organization’s ability to hold on to its people and reduce turnover. Employers can improve their retention numbers in several ways, including by offering competitive compensation and benefits, creating a positive workplace culture, giving workers some flexibility with where and when they work, formally recognizing high achievers, and promoting work-life balance.

Key Takeaways

• Implementing employee retention strategies is essential to staying competitive.
• Improving employee retention rates can lower costs, increase worker productivity, and ultimately boost revenues and profits.
• Key to improving employee retention is creating a work environment in which people feel valued and supported, engage regularly with their colleagues and managers, and see a well-defined career path.

Too many employers only pay lip service to the idea that their people are their greatest asset. But the most astute employers nurture their people and make employee retention one of the company’s metrics and values. Retaining skilled employees is key to every organization’s ability to execute efficiently, innovate, and maintain a competitive advantage. A company with high employee retention spends less time and money finding and training new hires and hangs on to valuable institutional knowledge—both of which can help the business succeed.

Retaining employees and keeping staff turnover low requires a strong focus on employee engagement and fulfillment. A 2022 global survey by Gallup found that more than half of employees expressed some level of interest in leaving their jobs, 59% were “quiet quitting” (not engaged at work), and 18% were “loud quitting” (actively disengaged). When asked what could change to improve their workplace, 41% of survey respondents cited engagement or culture (including better recognition and communications), 28% cited pay and benefits, and 16% cited well-being (including less overtime and the ability to work from home). Gallup estimates that low engagement levels cost the global economy US$8.8 trillion.

Employee retention plays a large role in the success and sustainability of every organization. Companies with high employee turnover risk financial instability because the cost of recruiting, onboarding, and training new hires can be considerable. So too are the opportunity costs of losing business because of understaffing. Employee morale can also suffer when people see their colleagues leave, especially if they’re forced to take on extra work as a result. Poor morale saps productivity. Meanwhile, the loss of institutional knowledge and continuity can slow down a business at the most critical times. It’s during moments of crisis or emerging opportunity that experienced team members shine brightest, seeing what needs to be done and knowing when and how to take the right actions. Companies with poor retention risk losing the valuable insights and proven skills those veteran employees bring.

High turnover rates can also damage a company's reputation. Customers may perceive the steady stream of new faces as a sign of instability, which can erode brand loyalty and negatively impact sales. By retaining top-performing and highly skilled employees, companies stand a better chance of maintaining or improving productivity, efficiency, and innovation.

Employee attrition refers to the departure of workers from a company due to events such as resignation and retirement. High employee attrition means a company has poor employee retention. Exit interviews are a valuable way to understand why employees are leaving . Departing employees will likely cite one or more of the following reasons:

• Insufficient pay and/or benefits
• Poor work-life balance
• Lack of career growth or opportunities
• Inadequate recognition or rewards
• Better job opportunities elsewhere
• Monotonous, unchallenging work
• Fear about the company’s strategy or financial health
• Ineffective management

The employee experience is the cumulative result of the daily interactions employees have within an organization’s culture and work environment. It encompasses the entire employee lifecycle, from recruitment through onboarding, training, professional development, performance evaluations, promotions, exiting, and even their experience as an alum.

The employee experience is shaped by a wide range of factors, including first impressions during onboarding and training, employee-manager relationships and communications, benefits such as paid time off and healthcare, and career development opportunities, including promotions, salary increases, and new assignments. Employee retention is closely related to the employee experience. Quality workers are more likely to leave their jobs if their day-to-day experiences with colleagues and management don’t match their expectations.

Technology can improve the employee experience, providing easy access to the information people need to do their jobs and navigate HR issues. Having an effective manager who communicates well can significantly increase the chance an employee stays with a company. Companies also build loyalty and strong retention by coming through at key moments of an employee’s life, including personal ones, such as the birth or adoption of a child or the death of a loved one, and by providing professional support—for example, performance reviews and educational opportunities. All these elements factor into the employee experience. An excellent employee experience is a powerful reason for people to stay with an organization for a long time.

Here are several of the benefits organizations stand to reap from keeping their most talented and skilled people.

• Better process efficiency : Employees that have been with an organization for a long time know how things work and how to get things done.
• Higher employee productivity : Long-time employees are usually more efficient and make fewer mistakes than newer ones, who typically need time to get acclimated to the company and its work processes.
• Higher morale : When employees stay on the job for some time, they tend to feel a sense of belonging, which can contribute to higher morale. High employee turnover rates, however, can demoralize the people who remain, as they see their colleagues leave and often have to cover for them.
• Lower costs : The hard costs of employee turnover, including recruitment and training, vary by employer, industry, and position. Estimates of the cost to replace a person put the general range at one-half to two times the employee’s annual salary. That doesn’t take into account the costs of lower productivity (due to lower employee morale, higher burnout, and lost institutional knowledge) and lost business due to staff shortages and damage to the employer’s reputation.
• A better experience for your customers : People gravitate toward businesses they view as stable and approachable, ones with which they’re able to develop a consistent relationship. According to a study conducted by Gallup , highly engaged business units achieve 10% higher customer ratings and 18% higher sales than those deemed to be less engaged. Companies with low employee turnover rates tend to have high engagement rates.
• Greater profitability : The Gallup study also found that businesses with highly engaged employees and low turnover rates are 23% more profitable than those with employees who aren’t engaged.

In the current job market, individuals have more employment choices than ever before. Workers feel empowered to find not only higher-paying jobs but also ones that offer them more career growth and a greater sense of purpose. Here are 10 best practices employers should consider to keep their top people from moving on.

• Refine the hiring and onboarding processes . A survey of job seekers in 11 countries across four continents, conducted by HR consultancy Robert Half, found that 91% would be willing to quit within the first month. Improving employee retention starts with recruitment and the ability to identify skilled and talented people likely to fit well into the organization’s culture. It’s also important for employers to make a great first impression. Needlessly lengthy and complicated interview processes are likely to cause job candidates, especially the most in-demand ones, to go to nimbler competitors. Once employees are hired, set them up for success by teaching them not only about the job and internal processes but also about the company and how they fit in. Introduce them to colleagues. Take them out to lunch. Assign them a mentor. Show them that the company culture is a nurturing, engaging one.
• Offer competitive pay and benefits . This is a no-brainer. Employers need to continuously benchmark what they’re paying their people (including bonuses) against the going market and industry salaries for their positions—and adjust them accordingly.
• Add workplace perks . Offering employees perks can help create a positive, energizing workplace, one where people will want to stay for the long term. Popular perks include flexible work schedules, the ability to work from home or from different locations, free food or beverages at company offices, subsidized onsite or nearby daycare for children, after-hours team sports leagues and social events, the opportunity to travel to live conferences or workshops, tuition reimbursement or subsidies, and opportunities to do community service on company time.
• Improve wellness offerings . The pandemic challenged many organizations to offer new or extended physical and mental health programs to support their employees’ well-being—for example, stress management and nutrition programs, reimbursement for onsite or offsite fitness or yoga classes, and onsite vaccinations. These offerings can also include financial wellness programs run by the organization’s 401(k) administrator or a specialist advisory firm.
• Communicate clearly (and often) . The shift to remote and hybrid work hasn’t reduced the importance of strong workplace communications, even if it has changed the channels we use to communicate. Regardless of whether your workers are onsite, remote, or hybrid, they should feel they can come to you at any time with ideas, questions, and concerns. And organizations with remote and hybrid workers must make sure their workers still have opportunities for engaging conversations and face-to-face interactions online.
• Solicit continuous feedback and provide support . Every organization needs to gauge how engaged its employees are and whether they’re invested in its success. Yearly surveys provide some insights into workplace challenges that might cause employees to leave, but pulse surveys are a better alternative. These surveys are conducted more frequently, tend to focus on a particular topic, and can be used to drive timely changes. Pulse surveys also convey to employees that the organization is interested in and responding to their input on an ongoing basis and isn’t just going through the motions once a year.
• Schedule frequent performance check-ins . Similar to the continuous feedback loop described above, managers should schedule more-frequent performance discussions with their reports. More than half of the voluntarily exiting employees surveyed by Gallup said that in the three months before they left, neither their manager nor any other leader spoke with them about their job satisfaction or future with the organization. Frequent one-on-one meetings are an opportunity to talk with your people about their professional goals.
• Offer training and development . As part of helping their reports identify areas for professional growth, managers should help them identify related training and development courses, workshops, and other programs. Training and development programs not only help employers retain their key people, but they also bring new and enhanced skills into the organization.
• Weed out bad managers . The cliché that “people don’t quit jobs, they quit managers” holds truer than ever. In an employee survey by GoodHire , 82% of respondents said they would consider quitting because of a bad manager. Look for higher-than-average employee attrition in each department and figure out whether poor managers are to blame. If they are, give them the training and support they need to improve—or replace them.
• Recognize and reward top performers . Everyone wants to feel appreciated for the excellent work they do. At a minimum, take time to thank employees who go above and beyond. And by formally recognizing and rewarding truly outstanding work—with bonuses, promotions, awards, and/or special perks or privileges—you’ll not only increase the chance those employees will stay with the organization, but you’ll also showcase a model for others to follow.

Employers typically calculate retention rates annually, dividing the number of employees that stayed with the company for the duration of the period by the number of employees at the beginning of the period and then multiplying that number by 100.

• Choose the period you want to measure retention for, such as a specific quarter or the fiscal year.
• Count the number of employees at the beginning of the period.
• Count the number of employees at the end of the period.
• Count how many new employees were hired during the period.
• Subtract the number of new hires from the number of employees at the end of the period, divide this by the number of employees at the start of the period, and then multiply by 100 to get the percentage.

Employee retention rate = [ (number of employees at end of period – number of new employees during period) / number of employees at start of period ] × 100

To deliver on the 10 employee retention best practices cited above, it’s important for employers to leverage the latest human capital management (HCM) applications to help them manage recruiting, onboarding, employee engagement, training, performance management, payroll, benefits, and other HR processes. Here is an example of how one company uses those tools.

Silver Fern Farms : Silver Fern Farms, a New Zealand—based food manufacturer with 7,000 employees, replaced its homegrown HR tools with a single cloud-based HCM system, Oracle Fusion Cloud HCM, to improve several HR processes. For example, through an initiative linking Oracle Learning and LinkedIn Learning, company executives can more easily track employee development and provide opportunities to enhance skills, which in turn has boosted employee engagement. Using Oracle Workforce Compensation, Silver Fern Farms streamlined its annual review of workforce remuneration, stating that it reduced that process by 10 days while allowing multiple compensation processes to be handled simultaneously. Using the performance management application, half of the company’s permanent staff outlined their impact and development goals by the end of the first year the application was implemented. The application also promotes organizational transparency and effective internal communications.

Employees expect their work experiences to be positive, collaborative, rewarding, and meaningful. Oracle ME , part of the Oracle Fusion Cloud HCM suite of applications, is a complete employee experience platform that guides employees through professional and personal activities, delivers responsive HR service support, and streamlines communication across the organization. It provides tools to strengthen the manager-employee relationship and connect employees with their peers to nurture a greater sense of workplace belonging that encourages people to stay.

Which types of companies should use employee retention strategies? Any business looking for ways to keep its top talent and stay competitive can benefit from implementing employee retention strategies.

How do I know if my employee retention strategies are working? One indicator is to compare your organization’s retention rate at the time the retention strategy was implemented with what it is now. Another way is to gather feedback from current employees and those who are leaving the organization.

How does employee experience relate to employee retention? Organizations that create a positive, collaborative work environment for their employees generally have higher retention rates than those that don’t.

Would it be more effective to hire new employees versus trying to retain them? In general, it costs far less for organizations to retain existing employees than to recruit, onboard, and train new ones, especially in industries where the demand exceeds the supply of qualified candidates.

CHROs face a chasm between employee expectations and business goals. Here’s how to bridge the gap.

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The Most Critical Employee Retention Statistics for 2023

Pivotal Stats on Employee Retention

1. one-third of new employees quit after 6 months., 2. 50% of employers leave their jobs because of burnout., 3. lack of respect and trust., 4. over 57 percent of disgruntled employees quit because of their managers., 5. 93% of young professionals left their previous jobs because of a lack of challenge., 6. the turnover rate skyrocketed to a monumental 20% in 2021, twice the rate in the previous year., 7. the relationship between colleagues matters more compared to bosses., 8. transparency can improve the employee retention rate., 9. almost 80% of workers will consider another job when they have a bad day in the office., 10. almost 80% of employees will decline an upgrade in wages with a work ethic they don’t agree with., 11. despite numerous factors, wages are very important to the employee., 12. despite the increase in the employment rate, the turnover rate in 2021 was 47.2%., 13.  28% of employees are aligned with the company policies due to transparency., 14. about 45% of us-based employees have an eye for better jobs., 15. working remotely is known to reduce turnover by 25%., 16. 60% of business owners don’t include new staff in their goals..

The normal consensus is nobody loves to lose a thing of value, right? It’s for a good reason. There is an overwhelming feeling of “going back to stage one” when that happens. A rare quality that could stem from an objective or sentimental point of view is  precious because of the time, resources, and attachment to the subject or object.  

The same ideology reflects the business point of view from human relations (HR) that delves into the advantages and disadvantages of losing an employee. The ability of a business owner to command loyalty and keep his employees within a set time frame is referred to as employee retention.  Let’s take a look at the mind-boggling statistics.

• Recent research shows about 94% of employees are more likely to stay if business owners send employees to long-term training and courses. 
• A business owner will certainly lose about 33% percent of the employee’s yearly income when they are replaced. 
• Interestingly, 87% of human relations leaders concur that improved employee retention is paramount to business owners.  
• A business owner stands a chance of improving their profit margin when employee retention is made a focal point . 
• Employers in the public sector have a high employee retention rate compared to those in the private sector. 
• 21.5% of employees whose efforts weren’t appreciated had done onboarding and sought new employment.

Overview of Retention Statistics Necessity for You

A low retention rate is influenced by varying factors that must be brought to your attention. Listing the basic agents that affect this cannot be over-emphasized.

About 3 to 4.5 million workers quit their jobs in the US, with 94% stating they preferred to stay on the job if their employers offered training seasons and courses. This research shows besides what staff is paid as their wages , they also see the importance of equipping themselves with the knowledge that will the future.

The prevalence of employees’ working conditions needs to be brought to your attention. The major complaint is most staff are overworked, leading to severe stress and fatigue known as BURNOUT . Of course, there is a limit to the threshold for both physical and mental stress, and once that limit is crossed, a worker seeks an alternative job or quits before searching for one. What’s alarming is that half of the employees who left do so for this reason.

26% of workers exposed to a lack of respect among their colleagues are likely to quit their jobs, while 61% made it known that trust between themselves and their superiors meant a lot to them. These factors can create a toxic environment, and the staff could decide to leave because their mental health is at stake. Confidence and morals greatly influence the employee’s work output, which could translate to better profit margins for the worker and the business owner.

Feedback from the employees is difficult to achieve because the manager has the power to influence the work environment both positively and negatively. Consequently, companies have lost good and devoted workers because they perceive the manager as toxic. Workers rarely have channels for employees to give reviews about their managers. It needs to be addressed to achieve employee retention.

Due to the younger generation having more adrenaline, they yearn for new challenges. They want to take up new challenges, which could be viewed as a dedication to work and wanting to give more. Business owners must find the right challenges to find equilibrium in work-life dynamics .

Covid-19 had a devastating effect on the economy of the world. Business owners found it extremely difficult to retain their staff as revenue was drastically reduced. To survive, many employees were sacked to stop their business from sinking. The turnover rate was exceptionally high in March of the previous year, mainly because of the fear factor of the novel disease. 

Recent research shows an employee’s happiness is 23.3 percent more dependent on their relationship with colleagues than their bosses. A working environment where colleagues see themselves as another extension of a family unit has a high retention rate . It encourages loyalty and gives a reason not to leave. 

In our day-to-day life experiences, trust is an integral part of any legal business. When it comes to the relationship between an employer and an employee, transparency or honest communication link has a soothing effect on the worker. Such a relationship goes a long way to build loyalty from the staff and is directly involved in job security. No connection whatsoever can thrive without trust.

Essential Employee Retention Statistics

Emotion poses a big issue that business owners have to contend with. Business owners mostly overlook the individual threshold for pain or stress . Reaction to a stressful scenario varies between individuals and can affect the company’s progress. Knowing what challenges to give to specific employees goes a long way toward reducing BURNOUT. Consequently, almost 80% of employees will likely start looking for another job when they experience a bad day at work. 

An emotional employee will not consider turning down a lucrative offer if the company’s work ethic goes against their basic principles or personal ethics . Social norms and ethics go a long way in shaping how a person views life generally, including their expectation in certain scenarios.

Research revealed that 44% of staff will leave their jobs for a 20% wage increment for another business owner. Business owners’ decision highly influences the dynamics of the employees, known as THE GREAT RESIGNATION. Certainly, it has to be compared between increasing the employee’s wages to 20% or bearing the cost of low employee retention that comes with a price.

As much as the employment rate is rising, the turnover rate is of great concern. This exceeds the turnover rate 2018, 44.5%, and the employee rate was 45.1%. 56.8% of turnover in 2020 is the highest in recent times .

Many research efforts have revealed that employees need to be fulfilled in their work to command loyalty. When a staff connects with the company’s policies , it brings out the best in the employee and goes a long way to maintaining a life-work balance . When the employee’s goals are the same as the company’s, a symbiotic connection is established between the staff and the company. The company’s profit margin can be multiplied four times in some cases.

Many employees are holding on to their jobs not because the job commands loyalty or meets their financial and otherwise expectations. They do so because they are still awaiting another owner’s better offer.

Working remotely has improved the employee’s output toward the job. There are a lot of factors that contribute to this. Life-work equilibrium is almost perfect because employees work from their comfort zone and give their best. 68% of remote e mployees are satisfied and rarely seek other job opportunities.

Only about 40% of businesses make it a priority to carry their staff along with the goals and policies of the company. The rest don’t care or consider the benefits this will have in the business in the long run. Hence, there are a lot of disgruntled employees who don’t see a future in working with the establishment.

The cost of changing staff without considering its serious impact on resources and the profit margin of the business owner should be taken seriously. People are in business mostly to make money. So, all factors hindering this goal should be avoided at all costs. Many employers are not satisfied with the revenue from their businesses because they don’t fathom the devastating effect of sacking experienced employees and replacing them with new ones. 

What is work-life balance?

It’s the time you spend on work compared to time spent on your issues like family, loved ones, and personal goals outside work-related goals. Balancing brings the best of both worlds, the ultimate goal of every employee, the closest to perfection they can achieve.

How does employee attitude affect work input?

The mental state of an employee decides whether he aligns with the goals of the company, which can be influenced by factors like family background, religious beliefs, and accepted social norms and ethics of the environment they grew up in.

Does empathy improve employee retention?

Humans, by default, are emotional and crave attention. When given, it provides powerful motivation towards work and company goals. It makes them feel they matter and goes a long way to boost morale and confidence levels, which ultimately benefits the company.

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Jeff Beckman Tech Writer

Jeff Beckman is a content writer and copywriter with 5+ years of experience in technology. He provides enjoyable, educational content through his experience working for various publications.

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What Is Employee Retention?

Employee retention refers to an organization’s ability to reduce employee turnover.

Employee retention is a success metric that’s top-of-mind for HR teams and company leaders in any era of  mass resignations and  talent shortages .

The good news is, managers have the power to make a serious impact on their organization’s ability to retain talent. According to Gallup research,  52 percent of employees who choose to leave a job say their manager or employer could have done something to keep them around. Managers who step up in these make-or-break moments are driving employee retention. 

Below we look at actionable steps managers can take to raise employee retention, the potential benefits they’ll enjoy from these efforts and the common causes of employee turnover.   

Employee Retention Strategies

Here are some employee retention strategies your business can use to create continuity among your workforce.    

1. Provide Professional Development Opportunities

Employees are more likely to remain at a company if they can envision a future where they’ve grown or moved up within the organization. Businesses can set up skills training programs, offer online learning courses and connect employees with mentorships . These steps show workers they’re being invested in for the long haul, convincing them it’s worth it to stick around. 

2. Support Different Work Formats 

Almost half of U.S. workers would want their next job to be remote , so flexible work is essential for retaining top talent. Work with your HR staff to design policies that support hybrid work , remote work and other flexible arrangements.

3. Offer Compensation Incentives

To keep top performers around, companies can offer compensation structures that increase each rung as one climbs up the organizational ladder. Bonuses for those who stay longer or deliver exceptional performances are other good incentives. Embracing pay transparency also keeps employees in the loop about what their peers are making and what they could earn in positions further along their career path at the company.    

4. Build a Strong Benefits Package

A well-rounded employee benefits package is one of the easiest ways to maintain loyalty among your workforce. Perks may include a company 401(k) plan with employer matching, generous vacation time, learning stipends and parking or public transit reimbursements. And since over 90 percent of workers want to work for a company that offers mental health support, organizations may want to consider reinforcing their wellness benefits.

5. Encourage Employee Work-Life Balance

With 47 percent of U.S. workers feeling burnt out, it’s no surprise 53 percent are ready to move on to their next job. Companies can reverse this trend by setting clear work boundaries for in-person and remote workers alike. Establishing specific hours for sending emails and designating one day a week as a no-meeting day are ways to encourage work-life balance . 

6. Establish a Recognition and Rewards Program

Companies can ingrain recognition into their everyday culture by organizing a formal employee recognition program . Awards can be given to an employee of the month, an employee who embodies a company value and an employee who reaches a career milestone, among other recognitions.

7. Cultivate Healthy Workplace Relationships

Having a best friend at work makes workers 17 percent more likely to confirm they’re satisfied with their workplace. To create more cohesion among employees, coordinate company outings, happy hours and fun virtual events for hybrid and remote members.

8. Solicit Employee Feedback 

If you want employees to see a future for themselves at the company, it helps to let them play a part in shaping that future. Employee engagement surveys are a great way to get workers’ input on how processes, benefits, manager-employee relations and other aspects of the company can be improved.

Why Is Employee Retention Important?

Your organization’s ability to retain talent — to keep great people at your organization and help them thrive — touches virtually every part of your business. Employee retention has the capacity to boost everything from team morale and workplace culture, to revenue and customer experience.

Inevitably, people come and go. The stigma around job-hopping is dissolving . Every organization is going to have some turnover but too much puts you at a business disadvantage. Here are a few ways that high employee retention rates helps a company stay competitive.

1. Boosting Employee Retention Reduces Costs

Job postings, candidate screenings, background checks, possible recruiter pay or referral fees: These are just some of the expenses associated with hiring. Then, your organization will need to make expenditures on training, onboarding, corporate equipment, credentials and more. If your new hire doesn’t stick around, all of that investment is lost. Keeping employees longer means reducing your hiring costs and saving money.

2. Longer Employee Tenure Means a More Productive, Experienced Team

It costs money to rehire for a position — and it also costs time. Hiring ,  onboarding and training are a time commitment for all involved. Every time an employee leaves, the process starts all over again. On the flip side, businesses with high talent retention rates are more likely to have employees who like their jobs, who are engaged in their work and more productive overall. 

3. Higher Retention Indicates a Happier Workplace

When employees choose to stay at their jobs over a long period of time, they have the opportunity to build stronger relationships with one another, strengthening the fabric of the entire organization. On the other hand, low retention might indicate that workers are unhappy, and that can become a vicious cycle of negativity: Every time someone leaves, it leads to more work for the people who stay as they pinch-hit to cover gaps, help new team members get up to speed and more. That can add stress, risk  burnout and ultimately spur a domino effect of turnover.

4. A More Experienced Workforce Will Serve Your Customers Better

Teams with long-time employees have deep experience working with one another and deep experience in their jobs and at the company. This earned knowledge and developed skill set bolsters an employee’s ability to provide the best service to their customers. New hires, on the other hand, are still learning the ropes. They lack knowledge of the workplace’s dynamics and they don’t have firm relationships with coworkers and customers yet. It will take them a while to get up to speed and contribute at the same capacity as a seasoned employee.

What Causes Employee Turnover?

Employee retention and employee turnover are two sides of the same coin. To inform your employee retention strategies, consider some of the main factors that fuel employee turnover in the first place.

1. Low Pay: Top talent may decide their true value is higher than what they’re getting paid and go to a company where the grass is greener.    

2. No Career Development: Almost half of U.S. workers would move on to another job if it provided skills training .

3. Lack of Recognition: When employee recognition is a priority, employees are 56 percent less likely to job search .

4. Poor Work-Life Balance: When boundaries are lacking, employees may experience burnout and jump ship for a company that allows for greater work-life balance .

5. Limited Flexibility: Businesses unwilling to make room for any amount of remote work may see employees walk out the door in search of more accommodating workplaces.

6. Incompetent or Toxic Management: An employee’s time at a company is largely shaped by their manager, with managers being responsible for 70 percent of the variance in employee engagement .

7. Homogeneous Team: An absence of diversity and inclusion initiatives can result in a mostly homogenous workforce, leaving workers of marginalized groups feeling isolated.

Frequently Asked Questions

What is employee retention.

Employee retention refers to the practice of keeping talented employees from leaving their roles by cultivating a positive work environment.

What increases employee retention?

Professional development opportunities, competitive compensation, flexible work options and strong employee benefits packages are a few factors that can drive up employee retention.

Why is employee retention an issue?

Employee retention is crucial to keeping top talent at a company. Companies that don’t invest in employee retention may suffer higher rates of employee turnover, which can impact productivity, employee morale and company expenses.

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Employee Retention Strategies for Small Businesses

As a small business owner, you may worry you'll never be able to offer the kind of world-class incentives that spur talent acquisition and employee retention at larger companies. But if you're willing to do the work, you can still design an enticing and effective benefits program.

Many small businesses struggle to offer benefits on par with those of larger companies, which have more experience and a deeper well of resources. But there are employee retention strategies you can use to compete with your larger counterparts for top-tier talent. It takes a willingness to get creative with the perks you offer, the right partner to assist you in budgeting for those offerings and a desire to set your business apart.

Why are employee benefits important?

When thinking about employee retention strategies, you likely understand the impact of offering solid benefits. According to the Employee Benefit Research Institute, nine out of 10 small business owners who offer a retirement plan say they do so to foster a positive attitude and boost employee performance.

"The number one reason businesses come to us to start a retirement plan is to attract and retain [talent]," says Brian Sherwood, vice president and Institutional Service Group consultant at First Citizens.

Most employees appreciate having access to benefits like a 401(k) or other retirement plan, as well as medical insurance and wellness and health incentive programs. According to employee research from Gitnux , 80% say they'd opt for more benefits over a salary increase, while 78% say generous benefits would make them more likely to stay with their current employer.

Investing in an employee benefits package can help lead to considerable savings. Some experts estimate that the cost to replace an employee who leaves may be as much as half to two times their salary. By keeping employees happy, engaged and pleased with their benefits package, your business could potentially save thousands of dollars in the long term.

How to improve employee retention

You may not know where to start when it comes to crafting the right benefits package. Benefits can seem both costly and confusing, and many small business owners wonder whether their employees or prospective employees will even want what they're looking to provide. Here are a few things to consider.

Experiment with options

A recent MetLife survey found that 70% of employees say they'd be more likely to remain loyal to their current employer if their benefit offerings were more customizable. The takeaway? Choice in benefits can make a big difference.

The best way to help ensure success is by aiming for a variety of options, says Melissa Tillman, senior vice president and Senior Director Benefits at First Citizens. "It's important to recognize that different benefits are more important for different groups," she explains. "If an organization can offer choice, that can be really helpful."

Research shows that Gen Z employees desire more wellness-oriented health benefits like wearable devices and fitness apps, while millennials are more interested in affordable health insurance coverage. Small business medical benefits that feature varied health and wellness programs may offer attractive options for both groups.

Fitness incentives often require a minimal investment to establish but may pay off tremendously in reduced healthcare costs. These engagement programs—which can involve health-related challenges like quitting smoking or keeping up with preventive care—help cultivate a healthier staff and set a benefits portfolio apart from the rest.

Many millennials and Gen Zers carry significant student debt, making employer-sponsored student loan repayment assistance especially enticing. While the cost of this benefit may be higher than others, it could still be worth exploring—especially if you're having difficulty recruiting or retaining these workers.

Pay for benefits that matter

It can also be difficult to figure out how your small business can afford to provide desirable benefits. Tillman believes it's about making your resources stretch as far as possible while also thinking strategically.

"It's looking at the dollars an organization has to spend and determining how to provide the best offerings and as much choice as possible," she says.

There are many benefits that won't have a big impact on your budget either. Fun engagement activities and small incentives—like a gift card to a local restaurant to reward outstanding work, tickets to sporting events or employee-of-the-month initiatives—can go a long way toward creating the collegial, encouraging atmosphere many small businesses like to foster.

And they matter greatly to employees, 56% of whom say they prioritize perks over salary when considering a job offer, according to Gitnux.

The new workforce wish list

Crafting a strong benefits package requires knowing what appeals to the working public—and it starts with flexibility. In the post-pandemic years, this has become the buzzword among forward-thinking organizations and a top criterion for job searchers. Flexible hours and hybrid work arrangements are particularly attractive to today's employees, especially when you're trying to support women in your business .

In fact, Gitnux data shows that companies offering flexible working conditions experience a 12% lower turnover rate. Another benefit that's persuasive to employees is access to courses that assist with career advancement. A staggering 94% of employees say they'd stay longer at their current job if their organization invested in their professional development .

As Sherwood says, it's all about knowing both what your employees want and what your organization can provide. "There are several different layers of the onion to peel back as far as not only what's available and what's affordable," Sherwood explains, "but also what that particular business needs to keep their people around and keep them happy."

The bottom line

While there are some challenges to competing with the marketplace on benefits, there are also creative solutions. Securing an experienced financial partner for employee benefits can be a valuable asset to start. A strong financial partner—like a bank you trust with a track record of working closely with small businesses—can help advise the selection process, offer guidance on compliance issues and assist with logistics, ultimately helping you create a competitive package of benefits while keeping costs down.

The sooner your small business gets its benefits-related ducks in a row, the sooner you're likely to see a positive return on investment in talent acquisition and retention.

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Employee Onboarding Guide

Onboarding definition & overview.

Last updated: May 15th, 2024

Quality onboarding is crucial for new employees' long-term success and organizational productivity. Learn why a solid employee onboarding process can make a significant impact on employee experience and retention, plus innovative ideas to approaching welcoming new staff.

Onboarding Guide Navigation

> Definition & Overview

What Is Onboarding?

Onboarding is the process of integrating new employees into an organization. It includes the orientation process and opportunities for new hires to learn about the organization's structure, culture, vision, mission and values. Onboarding can span one or two days of activities at some companies; others offer a more extensive series of activities spanning months. 

Onboarding is often confused with orientation. While orientation is necessary for completing paperwork and other routine tasks, onboarding is a comprehensive process involving management and other employees and can last up to 12 months. 

Why Is It Important to Get Onboarding Right?

All new employees are onboarded—but the quality of the onboarding makes a difference. Too often, onboarding consists of handing a new employee a pile of forms and having a supervisor or HR professional walk the employee around the premises, making introductions on an ad hoc basis. When onboarding is done well, however, it lays a foundation for long-term success for the employee and the employer. It can improve productivity, build loyalty and engagement, and help employees become successful early in their careers with the new organization.

A study by  Gallup  showed that while only 12 percent of employees felt their company did a great job with onboarding, those employees were nearly three times as likely to say they have the best possible job. Overall, only 29 percent of new hires felt they were prepared and supported to excel in their new role. This leaves a lot of room for improvement.

Other studies consistently show a positive correlation between engaged employees and a company's profitability, turnover rate, safety record, absenteeism, product quality and customer ratings. An effective onboarding plan offers an ideal opportunity to boost employee engagement by, for example, fostering a supportive relationship between new hires and management, reinforcing the company's commitment to helping employees' professional growth and proving that management recognizes the employees' talent.   For further reading learn  how to optimize the onboarding process  and the importance of good onboarding . 

Relatedly, an  employee value proposition  (EVP) defines the value employees will get from working for a particular organization. It embodies the promises made during recruitment and is lived out every day through company culture. Onboarding gives employees their first look at how an organization's EVP may or may not be realized.

Onboarding Process Summary

While there are many ways to design an onboarding program, some components are integral to the process:

1. Preboarding

Consider inviting new employees to tour the facility, sending informational material, providing care packages, and assigning a buddy to help them integrate before their official start date.

2. Orientation

Introduce employees to the organization's structure, vision, mission, and values; review employee handbook and major policies; complete paperwork; cover administrative procedures; and provide other mandatory training.

3. Foundation Building

Ensure the onboarding process consistently embodies an organization's culture, mission, employee value proposition, brand, and other foundational elements, recognizing that assimilating these values takes time.

4. Mentoring and Buddy Systems

In partnership with hiring managers, enlist mentors or buddies to provide new employees with guidance, assistance, and insights into organizational nuances.

View our full guide on onboarding process steps.

Innovative Approaches to Onboarding

Various components of an onboarding program can be delivered using different approaches and methodologies combined to suit the organization and available resources.

Some employers are using innovative practices, such as games, video, and team-building exercises, to get new hires excited about joining the company. They're also working to make sure people can hit the ground running with functional workstations and equipment. Some examples of this include: 

Facebook has its "45-minute rule," which means all new employees can begin to work within 45 minutes of arriving because all of their systems and devices have been set up before they report for their first day.

Leaders at Suffolk Construction, a national construction firm based in Boston, invite entry-level hires to participate in a variety of team-building exercises, including rowing the Charles River. 

New employees at Bedgear, a Farmingdale, N.Y.-based manufacturer of performance bedding, take a walking tour of downtown Manhattan to visit other retailers that sell customized products, including Warby Parker and Samsung.

View more  original onboarding options, shared from 4 HR leaders . 

Continue Learning About Onboarding

Additional resources:.

• Checklist for Developing Onboarding/New Hire Practices
• New Hire Orientation Checklist
• New-Hire Orientation Process
• New Hire Survey
• New Hire Survey – Remote Employee
• Onboarding Companies and Vendors in the SHRM Vendor Directory  
• SHRM Store resources on  Onboarding

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