Did you know that employee retention can help reduce cost? Research suggests that direct replacement costs can reach as high as 50-60% of employee’s annual salary, with total costs associated with turnover ranging from 90% to 200% of annual salary.

It becomes quite crucial for companies to retain their employees as cost cutting at all levels to save every penny is the need of the hour. Hiring new talents involves recruitment and training cost plus loss of talent and organizational knowledge. You can save your precious time and energy in retaining employees rather than hiring new.

 What is Employee Retention?

It is an effort by a business to maintain a working environment which support current staff in remaining with the company. Some of the reasons why employees tend to leave the company are better opportunities elsewhere, less compensation and motivation, inequality etc.

Departing employees talk a lot about the health of the organization. If the important employees are leaving it can be estimated that switching of jobs are on the cards.

Good employee retention strategy can help any company maintain the health of the organization. Some of the important Employee Retention strategies are given below:

Top 5 Employee Retention Strategies: 

  1. Quality working environment: Organization’s working environment has a significant effect on an employee. Every employee should be able to relate with the work environment. Most of the organization forgets that unless a good understanding of the company’s policies and procedure is given, the employee feels strange and un-confident to do anything.

 Some Tips:

    • Provide better understanding about the policies, procedure, vision and mission of the company.
    • Share and discuss about the financial and sales status of the company.
    • Create an environment of honesty and integrity.
    • Use the strategy of “work with fun”. This will help the employees enjoy the work and increase their performance.

Working environment is a major factor in companies like Google, Amazon, Microsoft etc who follow work with fun strategy and so are able to retain people.

  1. Employee – Manager Relationship: Most of the employees do not leave the company but the Manager. This is because the manager is unable to create a good bond with his subordinates. The best thing the manager can do is, listen to employees.

 Some tips:

    • Manager should understand that every employee is different. Some are positive others are negative, some are open and some are shy, some may ask for opportunities others may wait till opportunities are given to them.
    • Manager should treat every employee equally. He should not distinguish on the basis of caste, creed, color, gender etc. Equal opportunities should be imparted to employees.
    • A Team Leader of Adwords once said “We understand SPEAKS, that every person does not have same skills. So we give role that you will be good at”. This speaks a lot what a manager has to do.
    • Try to take employee grievances seriously before it becomes a serious issue for the company.
    • Create an atmosphere of fun. E.g. after the company has achieved a major milestone or sales target, hold public celebration or take employees on an outing or tour.
  1. Motivation through Feedback: “Many people are unmotivated, not because they have a great reason to be, but rather because their leaders have not given them a great reason to be motivated and engaged.” Many a times, employees try to contribute in a new task but end up being not motivated to continue. You know why? Because their managers have no time to respond or provide feedback to his employees.

 Some Tips:

    • Manager should keep himself updated with his subordinates’ activities.
    • There should be a proper Performance Management and Appraisal system followed by HR Manager.
    • If the performance of some employees is not up to the mark, the manager should try to find out the reason and put him through a training process.
    • Manager needs to pay their employees – Pay them more attention.
    • Manager should get involved with the employees and participate in their career development plans.
  1. Monetary Benefits: Money is not the only but a major motivator to retain employees. It acts as a stimulator that leads to more hours on work, better performance, healthy competition, quality work etc. Compensation of employees should be based on performance. The employees should be paid bonus, incentives etc for achieving or crossing their targets.

 Some methods:

                 (a) Merit based pay  (b) Skill based pay  (c) Piece rate system  (d) Profit sharing  (e) ESOP – Employee Stock Ownership Plans  (f) Fringe Benefits.

  1. Other Retention Strategies: There are some unique strategies adopted by major players to retain employees. They are as follows:


 ‘Wings within’ programme where existing employees get a chance to quit their current job role and join a different firm within WIPRO. 


 Social gatherings for employees like TGF open meeting, twice weekly outdoor roller hockey game where staffers are encouraged to bring founders.

3 In TCS

 A choice of working in over 170 offices across 40 countries in variety of areas.

Employee retention is important but employee turnover is irresistible due to globalization and changing needs of people. But, a manager can see to it that there is a “positive turnover” ie: the employee should not leave the organization being dissatisfied with the company. He/she should leave the organization with a good note and spread goodness about the organization. The managers can also take “Exit Interviews” to know any issues they faced within the organization and needed steps can be taken to maintain the health of the organization.

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