Designing Employee Retention Strategies for 2024

Between the Great Resignation, Quiet Quitting, and the looming economic downturn, employee retention has quickly grown into a business priority not only for HR, but across the C-suite.

Now, almost every employee is poachable. Now, the speed at which you upskill and reskill employees drives profitability. Now, if you’re not getting retention and growth right, your organizational existence is in question.

In this blog, we’ll highlight some of the root causes behind increased turnover, what employees are prioritizing when it comes to their next job, the secret to long-term solutions that stick, and critical technology to help you redesign the employee journey and improve development, encouraging talent to stay for the long haul.

Table of Contents

• Today’s Talent Landscape
• This is Why Top Talent is Leaving
• What are Today’s Employees Looking For?
• Employee Engagement is Crucial to Employee Retention
• The Role of Motivation in Employee Retention
• The True Cost of Poor Employee Retention
• Creating Effective Employee Retention Strategies
• The Key to a Successful Employee Retention Strategy
• Foster Engagement With These Two Features
• How to Measure Employee Retention
• Tools to Help Boost Employee Engagement and Retention

Today’s Talent Landscape

Post-pandemic, the talent landscape is still tumultuous. In July of 2022, the United States alone saw 4.2 million workers quit their jobs. On top of that, it’s estimated that over 40% of employees are considering changing jobs in the coming year.

With all of these unexpected changes, it’s understandable that 50% of global organizations are struggling to address retention issues.

So what are employees looking for and how can you create an employee retention strategy that supports their needs alongside the needs of the business?

This is Why Top Talent is Leaving

First, it’s important to take a look at the reasons why employees are leaving in the first place.

Although every organization and employee is different, here are a few statistics surrounding what workers have been experiencing in the last 3 years:

• 59% experienced the negative effects of work-related stress during the pandemic
• 52% identified a lack of growth and development opportunities influence stress at work
• 91% cited an unmanageable amount of stress negatively impacts their quality of work
• 77% experienced burnout at their current job, over half citing more than once
• 70% felt that their employers weren’t doing enough to prevent or alleviate burnout

Additional factors that can contribute to employee turnover include cultural mismatches, unrealistic job expectations, organizational instability, and a lack of flexibility that promotes work-life balance.

With the majority of surveyed employees confirming the negative toll of burnout, prolonged stress, and lack of support and development opportunities, employers are being pressed to quickly make changes.

To better support employees and their overall well-being, organizations have to prioritize improving the employee experience using well-balanced employee retention strategies.

What are Today’s Employees Looking For?

According to Microsoft’s 2022 Work Trend Index, employees are looking for 5 things in their next job (beyond adequate compensation):

1. A positive work environment and company culture
2. Improved benefits supporting mental health and well-being
3. A sense of purpose or meaning that aligns with their values
4. Flexible work hours to allow for better work-life balance
5. Upgraded paid time off that goes beyond the standard 2 weeks per year

For employees, these priorities are non-negotiable — 53% of workers are more likely to prioritize health and well-being over work. So where does that leave the employers?

Organizations that can’t offer what employees are looking for are at a disadvantage when it comes to hiring and retaining talent — and job seekers today aren’t afraid to take their time, waiting for the right opportunity that meets their needs.

With a patient workforce and a specific list of priorities that trump the need to work, it’s up to each organization to make the necessary changes that will support employee engagement and retention.

Employee Engagement is Crucial to Employee Retention

Although they’re often used in tandem, employee engagement and employee retention are two different aspects of the overall employee experience.

• Employee engagement describes how committed and dedicated workers are to the goals and values of the company, as well as their individual job.
  
• Employee retention refers to an organization’s ability to keep employees and reduce turnover.
  

Employee engagement influences retention, directly impacting the overall performance and success of the business. According to Gallup, engaged employees increase profitability and sales specifically by over 20% — while disengaged employees can cost an organization over $400 billion dollars per year.

Related: 6 Ways To Engage Employees for a More Meaningful Employee Experience

The Role of Motivation in Employee Retention

Motivation and employee retention are interconnected. A motivated employee is 87% less likely to resign from their current position.

When creating employee retention strategies, however, it’s important to keep in mind that although motivation influences retention, it doesn’t always influence engagement.

An employee can be motivated, but still remain disengaged. An employee can also be engaged, but not motivated.

So how can you ensure a positive balance between the two?

One major influence on an employee’s motivation is their relationship with their manager. According to Gallup, managers accounted for up to 70% of variance in employee engagement scores.

Here are 6 ways managers can help improve employee motivation:

1. Cultivate a trusting relationship as a mentor to your employees. Workers who trust their managers are more likely to perform better and show an increased prosocial motivation — meaning they promote the well-being of others.
   
2. Give employees feedback on a frequent and consistent basis. According to Gallup, almost half of highly engaged employees receive feedback at least once a week, creating a feedback loop that promotes ongoing communication.
   
3. Create an open dialogue. Employees that feel empowered to voice their opinions are 4.6 times more likely to perform at their best compared to workers who don’t feel as if they can comfortably communicate their perspectives with their manager or coworkers.
   
4. Connect employees with growth opportunities. Using an internal talent marketplace or learning management system (LMS), managers can recommend courses, gigs, or short-term projects that will help employees acquire new skills. Managers can also give their team members more responsibilities to help them get hands-on experience.
   
5. Share internal communications regularly. When managers share company news, updates, and success stories, 85% of employees become more engaged, feeling motivated and empowered to work towards the company’s goals.
   
6. Recognize their accomplishments. Appreciation and recognition for their contributions go a long way when motivating employees to perform at a higher level.

Related: Movement Matters: How Managers Should Reinvent and Encourage Career Growth

The True Cost of Poor Employee Retention

The truth is, businesses are losing one trillion dollars every year due to voluntary turnover. Shifting priorities and improving retention are essential to remain competitive and successfully grow.

But the real cost of poor retention goes beyond generalized figures and impacts the business in both tangible and intangible ways:

• On average, turnover costs 21% of an employee's annual salary
• It takes up to 2 years for a new hire to be as productive as an existing employee
• Losing team members hurts morale, motivation, and productivity
• It takes an average of 42 days to fill an open position
• Bad retention rates damage company reputation, making hiring more difficult
• High turnover negatively impacts customer service

Let’s do some quick math: Based on the 21% average cost of turnover, excluding highly skilled positions, replacing an employee that earns $50,000 annually costs $10,500. And that’s only for one employee.

If your company experiences high turnover, that number can increase at an unsustainable rate based on the salary earned annually for each position.

Related: Four Benefits of Employee Retention & How to Improve It At Your Organization

Now, let's look at what it costs to upskill an existing employee. Upskilling an existing employee costs an average of $986. Compared to the cost of hiring new employees, investing in employee development is a no-brainer.

Next, let’s take a look at how you can create a successful employee retention strategy that future-proofs your workforce and gives employees exactly what they’re looking for.

Creating Effective Employee Retention Strategies

Employee retention strategies are a vital part of the success of every organization. Luckily, focusing on building an employee retention strategy that benefits both employees and the employer is a win-win scenario.

It’s clear that job seekers are looking for more than just a job. They’re seeking out organizations that will invest in their development, offer a healthy work-life balance, support their overall well-being, and make them feel connected to the company’s mission, vision, and goals.

Overall, employees are asking to be engaged members of your organization!

When workers are aligned with company goals, actively engaged, and supported by their managers they create impactful results that drive businesses forward. Highly engaged and motivated employees:

• Outperform other employees by 20%
• Experience a 66% increase in well-being
• Are involved in 64% fewer safety incidents
• Exhibit a 17% increase in productivity

Engaged employees are critical to long-term success, but they only make up 36% of the workforce. That leaves plenty of room for improvement across all industries.

The Key to a Successful Employee Retention Strategy

While there are many ways to develop effective employee retention strategies, we believe in the importance of focusing on employee development, growth, and evolution within your organization.

By investing in the development of your existing workforce, you can create a more engaged community that supports both the goals of the company, and their own individual careers.

To build a strong employee retention strategy, here are 6 core elements to keep in mind and ensure your workers have the tools they need to stay motivated and engaged:

• Career Pathing
• Learning & Development
• Upskilling with Gigs & Projects
• Mentoring
• Internal Mobility

1. The Importance of Career Pathing

Career pathing is a must-have element of the employee experience, as it provides employees with the opportunity to identify the next steps in their careers — and the road to get there within your organization.

By leveraging artificial intelligence to simplify the process, employees can discover unique career paths based on their skills and interests — immediately removing any confusion about what their next role might be.

Using fit scores to show how closely their skills and expertise match an open role can provide them with the confidence to apply, eliminating the need to look externally for a new candidate.

If an employee doesn’t have the exact skills needed to a particular role, internal talent marketplaces powered by AI and machine learning can recommend some next steps to help them acquire the knowledge they need to make that next step in their career.

This visibility is available at every level of the organization, from employees to managers and c-suite executives. Gaining a greater understanding of what skill gaps exist and which employees are available to fill open roles can streamline time to fill for critical roles and save your company money at the same time.

Pro tip: Choosing the right talent marketplace equipped with AI can not only highlight which employees are available now for open roles, but over time, it can also predict who could be a good fit for roles that will be vacant in the future.

Related: Newell Brands' Plan for A Red Carpet Employee Experience

2. Learning & Development to Close Skills Gaps

Learning and development is an essential part of any employee retention strategy, unlocking the potential of your existing talent.

After an employee is exposed to the potential options within their career path, managers can start helping them acquire any necessary skills or hands-on experience they need to make that next step possible. They can recommend courses on their own, explore recommendations in a talent marketplace, or start assigning projects that help employees evolve.

Going beyond what a manager can recommend, talent marketplaces that feature both career pathing functions and learning and development features are ideal since one informs the other.

With an intelligent talent marketplace, employees can get personalized recommendations for courses, gigs or short-term projects, mentors, and more that streamlines exactly what they need to push their career forward.

Using talent marketplaces to help close any identified skill gaps creates unique learning opportunities and prepares your top talent to meet new or future business needs.

This type of insight is also beneficial in illuminating skills gaps across the entire organization — allowing leadership to gain a better overall understanding of their workforce, what their skills are, and who is available to fill critical roles.

Without a talent marketplace to help automate learning and development matching, you could face a segmented or mismatched technology stack that doesn’t support a well-rounded employee retention strategy.

3. Upskilling Talent Through Gigs & Projects

Simply put, gigs or short-term projects provide an engaging opportunity to upskill employees while supporting the needs of the business.

Within an internal talent marketplace, managers and various department heads can post short-term projects that they need help with. This ability to gain hands-on experience within another department in your organization empowers employees to grow their skills, exposes them to other aspects of the business, fulfills business needs internally, and allows them to create new relationships.

Case Study: How Newell Brands Is Increasing Employee Retention With an Intelligent Talent Marketplace

Combining gig work with coursework-style learning can be a great way to upskill and reskill your talent, meeting their desire for more learning and development opportunities while molding agile, motivated, and engaged employees.

Gigs offer the ultimate learning and development opportunity and create more talent agility that can help your company pivot when business needs evolve, which is why they’re a must-have element in your employee retention strategy.

Pro tip: AI and fit scores can help match the employees to available gigs using skills, experience, and other metrics, accelerating how quickly a gig can be filled and instilling confidence in employees to apply.

4. Boost Engagement with Mentoring

Earlier we mentioned how managers can better support their teams, taking a more mentorship-based approach to foster more engagement and build trust. But establishing mentoring opportunities across an organization can also ensure individual employees get the guidance they need to further their careers.

Mentoring connects employees with the right individual relationships that facilitate growth. Meaningful mentors serve as a teacher, counselor, and advocate to a mentee, resulting in a mutually beneficial professional relationship. The key word in that sentence is meaningful.

Instead of the traditional method of meeting people at work and eventually gaining the courage to ask them to be a mentor, artificial intelligence powers a unique approach that makes finding a mentor much easier.

When supported by AI-powered tech, employees can be automatically matched with mentors within the company based on their skills, career paths, location, goals, and preferred mentoring styles. As a result, employees can request a mentorship with someone that aligns with their goals, accelerating onboarding, boosting employee engagement, and accelerating career growth.

Finding the right intelligent mentoring software can make all the difference in your employee retention strategy. It connects those who want to be mentored with the right mentor for them.

Not to mention, it’s easier for an employee to leave a company — but it’s difficult for them to walk away from great relationships.

5. Unlock Internal Mobility for Faster Hiring

Internal mobility is not a one-size-fits-all solution. Each employee has a unique career background and different goals than someone in a similar position. With each employee looking for something different, your employee retention strategy needs to be robust enough to support them.

Implementing a talent marketplace is the best way to ensure their needs are met, improve engagement, and help them evolve their skill sets. Internal mobility refers to how employees move throughout an organization. This doesn’t always mean moving vertically — some individuals might move horizontally into new departments and roles, expanding their knowledge to other areas of the business.

Internal mobility and career pathing go hand-in-hand. With an illuminated career path, employees can consider all possibilities instead of immediately looking externally when they’re interested in taking on a new opportunity. By leaning on existing talent to fill open roles, companies can:

• Reinforce a supportive company culture
• Capitalize on employee productivity
• Keep team morale’s high, fostering engagement
• Reduce cost to hire and time to hire when promoting internally
• Inspire other employees to move internally towards their next role
• Quickly mobilize their workforce to meet high-demand areas of the business

Unlocking internal mobility is a critical aspect of building a culture that’s supportive of development and creating an agile workforce that can adjust to any unforeseen challenges.

Related: Quadient's Key to Internal Mobility & Creating an Agile Workforce That Lasts

Foster Engagement With These Two Features

Once you’ve accounted for employee career pathing, learning and development, upskilling with gigs, mentoring opportunities, and internal mobility within your employee retention strategy, it’s time to look at weaving in opportunities for continual employee engagement.

Here are two additional ways to not only motivate employees, but also help strengthen a sense of culture, connection, and belonging:

• Establish Employee Resource Groups (ERGs). ERGs allow for an inclusive work environment and play an important role in an employee’s career development. After joining an ERG, they’re immediately connected to colleagues and resources that can connect them with new opportunities, such as open jobs, gigs, or even mentors.
  
• Create a referral program. Happy employees are one of the best referral sources you can find. They already know about your company culture, the work environment, and your mission — empowering existing talent to refer their friends, family, and colleagues is a great way to find top talent. An incentivized referral program can also catapult hiring and drive great results that accelerate time to hire.

By incorporating these two programs within your employee retention strategies, you can expand your support of top talent and create an environment where they can thrive.

How to Measure Employee Retention

Calculating employee retention is just one aspect of your employee retention strategies that you should be tracking to better understand how satisfied, engaged, and motivated your employees are.

To calculate the employee retention rate, divide the number of employees that stayed with your company during a certain period of time by the number of employees you started with at that time. Then, multiply that number by 100 to get your employee retention rate.

(Remaining employees / Starting employees) x 100

If your remaining number of employees after a year is 1900, and the starting number is 2000, your formula for retention would be: (1900 / 2000) x 100 = 95%

On top of calculating your company’s overall retention rate, you should also be tracking the following Key Performance Indicators (KPIs).

Turnover rates, both voluntary and involuntary

Looking at turnover rates is another KPI that can add context to your overall retention rate. It helps assess how many employees are leaving your company, and is the inverse of the employee retention rate.

Meaning instead of looking at the percentage of workers who have stayed with the company in a year, it highlights the percentage that left.

To calculate the employee turnover rate, take the total number of employees who left in a specific time frame and divide it by your average number of employees during that same time. Once you calculate that number, multiply it by 100 to get your percentage.

For example, if 100 employees left in a year and you had 2000 employees, your formula for determining turnover would be: (100 / 2000) x 100 = 5%

Employee absenteeism rates

Absenteeism refers to how often employees miss work without a good reason, aka the frequent number of missed days beyond legitimate causes and scheduled absences. Looking at the rate of absenteeism per department and per employee can help managers as well as leadership become more aware of any potential issues that could cause turnover in the coming months.

This KPI can help highlight employees that may need additional attention to assess if they have the right tools to perform their job, if their work/life balance is okay, or if there are any external issues preventing them from completing their job to the best of their ability.

Although absenteeism isn’t always an indicator of potential turnover, it should be tracked to help measure engagement as well as retention.

The average length of employment

This KPI focuses more on the health of the company as a whole. Looking at the average length of employment across the entire organization can help leadership visualize how engaging their employee experience is and how likely employees are to stick around at every level of the organization.

If your company has a low average length of employment, your employee retention strategy should focus on improving the experience overall versus fine tuning a couple areas that show less engagement and higher turnover.

Pairing average length of employment with turnover and retention rates can create a well-rounded view for c-suite executives to make data-driven decisions surrounding next steps and the implementation of employee retention strategies.

Pro tip: Tracking this metric before and after implementing employee retention strategies will help show ROI for any HR technology your company invested in and highlight if your strategy is working the way it should.

New hire retention rates

Although it’s important to look at veteran employee turnover, analyzing new hire retention rates can be helpful as well — especially when assessing the onboarding process at your company. A complicated or non-engaging onboarding process can push away new employees before they have a chance to integrate into your workforce.

A seamless onboarding process that supports candidates as they transition to employees can set them up for success and long-term retention.

Employee engagement and satisfaction rates

This KPI is a little harder to track since it rarely is assessed accurately using a mathematical formula — meaning it goes beyond what you can track in a spreadsheet. Employee engagement and satisfaction play a large role when you’re asking how to improve employee retention.

Engagement and satisfaction surveys are one of the best ways to get valuable feedback from your employees but to improve their effectiveness, they should be conducted more than once a year. An annual engagement survey doesn’t do enough when you’re trying to get a pulse on your workforce and solve retention issues.

Consider incorporating employee engagement and satisfaction questions into manager one-on-ones on a weekly basis. With managers closely monitoring, they can intervene to help employees feel more comfortable, engaged, and motivated.

For the greater organization, think about sending engagement surveys once a quarter and ask questions like:

• How valued do you feel as an employee?
• How satisfied are you with your work/life balance?
• How do you feel about your career prospects?
• How likely are you to recommend working at our company to a friend or colleague?

The answers may surprise you. Having concrete feedback surrounding engagement and satisfaction will allow your company to fine tune your employee retention strategies in a way that’s impactful for your workers and your business.

Cost of turnover rates

Earlier, we uncovered some of the true costs of poor retention, like damaged company reputations and the actual cost to replace a lost employee. However, those are just averages.

It’s vital to determine the cost of turnover for the various positions within your company to understand the true impact of turnover on your balance sheet. This includes assessing hard/fixed costs as well as intangible costs, like measuring a drop in team morale.

Overall, the more exact you get regarding the funds your company is losing every year due to retention, the easier it will be to assess how effective your employee retention strategies are in achieving the results you’re looking for.

Tools to Help Boost Employee Engagement and Retention

Innovative employee retention strategies always involve AI-powered HR technology. Without it, your team is segmented and lacking the valuable data insights needed to make informed decisions, evaluate ROI on employee retention strategies, and improve employee satisfaction.

A must-have tool for any employee retention strategy is an internal talent marketplace. When powered by intelligent AI and automation, talent marketplaces can:

• Illuminate best-fit career pathing options
• Recommend learning and development opportunities
• Match employees with gigs or short-term projects
• Add visibility into skills gaps within the workforce
• Perform mentor/mentee matching

The right artificial intelligence and talent marketplace platform can streamline and automate a lot of the hard work that goes into creating a well-balanced employee experience. In addition to a talent marketplace, ERG software and referral programs are a must when fostering engagement long-term.

Your Unique Employee Retention Strategy

Unhappy employees translate to high turnover rates, low retention rates, damaged company reputations, loss of money, and much more. With a highly competitive talent landscape, businesses can’t afford to watch their best assets walk out the door.

By creating well-rounded employee retention strategies focused on employee development, growth, and evolution, you can boost employee engagement and retention. The future of your workforce depends on how well you can support your top talent, keep them motivated, and empower them to voice their unique perspectives while working towards your company’s goals.

Implementing AI-powered technology, like a talent marketplace, you can make a valuable impact on your employees without adding more manual work to your HR, leadership, or management teams. With improved visibility into the state of your workforce, it will be easier to make data-driven decisions that help solve key challenges in your organization.

Before rolling out your employee retention plans, determine which KPIs you’re going to track throughout the process. Setting a baseline for retention, turnover, and satisfaction creates a foundation for comparison — helping to prove ROI and fine tune what’s not working.

Overall, employees are asking for exactly what organizations should want out of their workforce: engagement, productivity, alignment with values, and a healthy work/life balance.

Ready to implement your employee retention strategies with a talent marketplace?

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