What is Employee Engagement and Retention?

Across all industries, employee retention is a challenge facing organizations today. In a currently competitive job market with a talent shortage, it's more important than ever for businesses to adjust their retention strategies by prioritizing employee engagement, development, and growth. 

However, only 26% of leaders report that employee engagement is an important part of what they think about, plan, and do every day. This is a shockingly low number, especially when 74% of employees don’t feel like they’re reaching their full potential at work — and are willing to leave because of it. 

But what is employee engagement and retention, and what are the best practices organizations should embrace to support internal talent? In this article, we’ll explore why both are critical and how organizations can create a workplace that attracts and retains the best employees.

What is Employee Engagement in HR?

Employee engagement is the level of commitment and enthusiasm that employees have toward their work and company — and it’s a critical aspect of employee satisfaction, productivity, and ultimately retention.

Many factors can impact employee engagement, including:

• Opportunities for growth and development: Does the organization provide various ways for employees to chart their career paths and develop the skills needed to get there?

• Leadership and management style: Are leaders understanding of, involved in, and committed to employee growth and engagement?

• Company culture: Has the organization created a place where employees feel comfortable expressing themselves and participating in group or company activities without fear of retribution for their beliefs and/or personal backgrounds?

• Work-life balance: Do employees feel like they can prioritize their personal life while still succeeding at work?

• Communication and feedback: Do employees and managers engage in regular reviews and frequent 1:1 meetings to ensure both parties are satisfied with the work being produced? 

Companies that consider the strategies above and implement them accordingly can see increased employee productivity, higher-quality work, a stable workforce, and reduced turnover — all of which ultimately lead to increased cost savings and ROI.

With 63% of employees reporting that they left a job due to inadequate growth opportunities and only 36% stating that they feel engaged in their work and workplace, it’s imperative that companies boost feelings of growth and belonging among their workers.

Related reading: Boost Employee Engagement and Retention with a Talent Marketplace

What is Employee Retention?

Employee retention is an organization's ability to keep employees for a prolonged period of time. However, employee retention is not just about keeping employees for a long time, but keeping the right employees for a long time.

It can cost a company anywhere from one half to two times the amount of an employee’s salary to replace them (think recruitment costs, training costs, and lost productivity). Retaining employees help maintain team morale and productivity, creates a sense of stability and continuity, and preserves valuable institutional knowledge and expertise.

Employee engagement is directly connected to employee retention. At Phenom, we believe one critical way employers can better engage and ultimately retain existing talent is by investing in their learning, development, and growth within the company. 

To do so, organizations should consider implementing the following strategies and resources for their people: 

• Career pathing: Are employees empowered to envision their future career and know the steps required to get there? 

• Internal gigs: Does the organization provide short-term internal projects or gigs that promote on-the-job learning and upskilling?

• Internal mobility: Are employees aware of open job opportunities throughout the company, and have the ability to easily apply?

• Employee Resource Groups (ERGs): Does the organization promote community, engagement, and diversity through internal networks that employees can join?

• Mentoring: Can employees easily be partnered with best-fit internal mentors that will help them grow and progress in their career paths?

• Learning and Development: Can employees take courses that will help them grow the skills needed for future career advancements?

Related reading: Designing Employee Retention Strategies for 2023 

How can organizations improve employee engagement and retention?

To ensure employees have visibility into the opportunities for growth and mobility, many employers are leveraging talent marketplaces. This internal platform has emerged as a powerful solution that allows talent to access personalized recommendations for career pathing, upskilling/reskilling, gigs, internal mobility, mentoring, learning and development, and even ERGs. 

Implementing this technology such as Phenom Talent Marketplace can also provide executives and managers critical talent data and insights that can inform decision-making. As employees utilize the talent marketplace, leaders can get a stronger overall picture of the skills that are available at both the team and organizational levels, any gaps that may exist, and potential employees who can be upskilled/reskilled to fill critical business areas. 

As a result, organizations can build a more agile workforce that can keep up in the midst of changing economic and societal conditions.

Investing in Employee Experience to Boost Engagement and Retention

The success of every business today depends on its ability to promote employee engagement and retention. Not only are engaged employees more productive, satisfied, and committed to their work, organizations can better leverage the workforce and boost retention for the long haul.

For more information about improving employee engagement and retention, download our Definitive Guide of Employee Experience.