How to improve employee engagement and retention
Discover effective strategies to boost employee satisfaction and retention, helping you create a more engaged, loyal, and high-performing workforce.
Employers that create a diverse, engaging workplace, with high levels of job satisfaction are more likely to retain high-performing staff and be more profitable in the long term. In fact, organisations that focus on creating an engaged workforce can increase their profitability by over a fifth (21%), according to Gallup.
The cost of replacing, training, and onboarding new employees can impact profits and take up resources put to better use elsewhere. A winning retention strategy that keeps existing employees happy is therefore key to success. However, retaining staff isn’t necessarily straightforward. According to research from Totaljobs, 29% of employers see retaining staff among the top challenges they currently face.
In this article, we’re taking a deep dive into the importance of employee engagement and retention, offering you fresh and relevant advice on how to increase employee retention, driving successful outcomes for your organisation.
What is employee retention?
When we talk about employee retention, we mean an organisation’s ability to keep (ie. retain) employees and prevent them from seeking opportunities for employment elsewhere. Employee turnover, on the other hand, means the rate at which employees leave an organisation.
The importance of retaining existing employees
The cost of hiring employees is significant for any organisation. According to a Chartered Institute of Personnel and Development (CIPD) analysis of data in 2024, more than 3 in 10 UK workers leave one organisation to join another each year.
Studies estimate that the UK is hitting an employee turnover rate of 35.6% (up 9% since 2019) and the cost of a new hire on an average salary of £34,944 can be as high as £48,073 in the first year, and an eye-watering £97,076 for office-based London employees.
This is because, on top of the basic salary, an employer must cover a range of costs, including:
- Employee benefits
- Recruitment fees
- Training
- Equipment
- Pension schemes
A further hidden cost is decreased productivity because there are fewer existing employees to get the work done when other members of staff move on. Morale can drop and stress levels rise as the remaining team members pick up the slack and then adjust to new colleagues. This kind of disruption can also make it harder to achieve business goals in both the short and long term.
Furthermore, losing the institutional knowledge that existing employees build up over the long term can take years to replace, potentially harming your organisation’s competitiveness and innovation.
The relationship between engagement and retention
Engaged employees who feel valued and content in their roles are much less likely to look for a new job. As a result, employee engagement strategies can be an extremely effective tool in improving employee retention.
Beyond that, increasing employee engagement can also help organisations improve their bottom line. That’s because, generally, these workers have higher well-being and lower absenteeism rates, often resulting in higher productivity.
Disengaged employees, on the other hand, will have lower job satisfaction and are likely to look for new jobs, resulting in higher turnover. Furthermore, according to Gallup, nearly six in ten employees are “quiet quitting” – they’re psychologically disengaged from work, and more than half of employees are actively or passively searching for a new job.
9 strategies for improving engagement and retention
The figures are one thing, but working out how to boost engagement and retain employees is another. Here, we delve into specific strategies for improving employee engagement and retention, so employers can benefit from real results.
1. Hire the right people
Hiring the right people, with the skills and experience to succeed in a role, is the first step to ensuring that talent stays within an organisation over a long period of time, with our research showing that a third of new employees hand in their notice within the first six months at a new job.
There are a range of techniques employers can utilise throughout the hiring process to ensure they are filling roles with the right people. For example, implementing skills-based hiring and competency-based interviewing allows employers to identify and hire candidates who are a good fit for any given role. Doing so gives new hires the best chance of a prosperous, long-term future in their new position.
2. Provide comprehensive onboarding
As they settle into a new role, a thorough and well-implemented onboarding process supports new starters and helps lay the foundations for a positive employee experience.
As well as integrating the new employee into their new team, and ensuring they have everything they need (from equipment to training), a comprehensive onboarding process introduces new employees to the work culture and expectations.
When it comes to onboarding new employees, organisations also need to consider requirements related to hybrid and remote work, ensuring that any remote workers can connect with their new roles and benefit from an effective onboarding process.
3. Offer competitive compensation
A competitive compensation package positions you as an employer of choice, attracting top candidates and making them more likely to stay once they are onboard. According to our research, 69% of employees say a higher salary makes them more loyal, and nearly a third (30%) of workers say if their next pay rise doesn’t meet expectations, they’ll look for higher pay elsewhere.
Given these findings, it’s crucial that employers keep pace with the market. To ensure salaries don’t drop too low (or go too high to be financially stable) employers should consider salary benchmarking, which allows them to identify what competitors are offering in terms of basic salary and bonuses.
Once you have a better understanding of compensation benchmarks in the wider industry, you can design and implement packages that appeal to top candidates. Furthermore, ongoing reviews to ensure that compensation aligns with or exceeds what employees could earn elsewhere is an effective way to both boost engagement and retain top performers.
4. Continually review your benefits package
An attractive benefits package can make all the difference when it comes to retaining talent while helping to create an engaged and loyal workforce. This is particularly true at a time of skills shortages, rising costs and inflation. When people feel supported by a comprehensive benefits package, for example one that offers access to private medical cover, they’re more likely to stay in their roles.
A compelling benefits package helps mark you out as an employer of choice and boosts your organisation’s reputation. For example, our research found that two-thirds of workers view employers who offer uplift new parents and offer family-friendly benefits more favourably.
A winning employee benefits package is one that stays up to date with what candidates and employees consider the most desirable benefits. According to our research, the most attractive employee benefits among jobseekers include:
- Flexible working hours (35%)
- Pension contribution above what’s legally required (27%)
- Bonuses and paid holiday allowance above what’s legally required (both 26%)
- Private health insurance (24%)
5. Recognise success
Reward strategies that focus on employee recognition help build a happy and satisfied workforce, driving the long-term retention of staff. Sometimes all it takes is being recognised and feeling valued, with research showing that the most meaningful recognition comes from an employee’s manager.
There are numerous different categories of rewards employers can offer their workforce in order to keep them motivated and engaged, including:
- Financial
- Educational
- Work-life balance
- Health and wellbeing
- General perks
Creating a reward strategy that motivates staff can foster a positive workplace, where people feel their achievements are appreciated. It can also help an organisation reach its wider business goals, as teams and individuals can compete for rewards. Offering bonuses for team achievements, such as an extra day of annual leave, can also be a great way to encourage employees to collaborate.
6. Make work-life balance a priority
People have complicated lives, and employees are more likely to thrive if they’re in a good place both physically and mentally. Particularly since the pandemic, there has been a noticeable shift towards a new way to find a work-life balance.
In terms of candidate and employee priorities, finding a balance between their professional and personal lives now outweighs a promotion or an easier commute, according to research by Forbes Health. However, further conducted by Totaljobs and the Fawcett Society found that, despite employees wanting balance, only half of mothers (50%) believe their employer promotes a healthy work-life balance.
Remember, when employers facilitate a positive work-life balance across the workforce, employees are more engaged and therefore more likely to stay in their role. The result of this is a stable workforce, better equipped to meet organisational goals and objectives.
7. Listen to your workforce
To create a positive and inclusive environment that keeps workers satisfied and engaged, there needs to be clear lines of communication between employers and employers, where employees’ voices are heard. This is backed up by data, which shows that employees who feel their voice is heard are 4.6 times more likely to feel empowered to perform their very best work.
There are numerous different ways and channels employers can use to listen to their employees, including:
- Utilising employee engagement surveys
- Conducting regular one-to-ones
- Embracing and promoting employee resource groups
- Holding town hall meetings
- Leveraging digital collaboration, especially for remote and hybrid workers
8. Invest in employee development
A culture of continuous development engages employees and creates a forward-thinking environment where everyone can achieve career progression, with research from Deloitte highlighting how organisations with a strong learning culture have 30-50% higher engagement and retention rates.
This is supported by our own findings, which show that nearly three-quarters of workers want more learning and development opportunities from their employers. It’s also proven to help retain talent, with studies showing that 87% of employees would consider switching to a role offering more learning and development opportunities.
9. Provide opportunities for advancement
While allowing employees to hone and develop new skills is crucial, employers also need to provide opportunities for internal advancement in order to achieve higher employee retention. Failure to do so will ultimately lead ambitious members of staff to look for external avenues to advance their careers.
That’s because top performers will leave their jobs if they don’t see the right opportunities for career progression. As a result, almost a third of UK employers now see succession planning as a fundamental part of their business strategy, according to Azets.
By crafting and implementing a comprehensive strategy for succession planning, employers can train, support and develop existing members of staff, making them a perfect fit for future internal vacancies. Succession planning also makes it possible to:
- Ensure leadership continuity
- Promote knowledge sharing
- Improve organisational resilience
- Promote diversity, equity and inclusion
Ensuring long-term success through engaged and retained employees
In today’s competitive landscape, marked by emerging technologies and skills shortages, employers must measure employee engagement and work to retain top talent to achieve long-term success. Those who prioritise these aspects not only enhance their profitability but also foster a positive and productive workplace.
By implementing effective strategies, such as hiring the right people, providing comprehensive onboarding, offering competitive compensation, and recognising employee achievements, organisations can create an environment where employees feel valued and motivated. Additionally, promoting a healthy work-life balance, listening to employee feedback, and investing in their development are essential components of a winning retention strategy. These practices not only reduce turnover costs but also build a loyal, engaged workforce that is committed to the organisation’s goals.
As organisations continue to navigate the challenges of the modern workplace, focusing on employee engagement and retention will be key to driving successful business outcomes and ensuring sustainable growth.