Employee retention: definition, pitfalls and strategies for HR leaders

Every company is only as good as the people it keeps. Yet, according to the CIPD, a staggering 35 percent of UK employees leave their jobs each year – significantly higher than the global average of 20 percent. This highlights that almost all UK businesses have room to improve how they retain employees.

With this in mind, let’s look at why staff retention matters, what employee retention strategies are most effective and how a HCM solution can help you measure and improve your retention approach.

What is employee retention?

Sometimes also called staff retention or talent retention, employee retention is simply the number of employees your company retains over a given period (often a year). In other words, it’s how good your company is at keeping staff on board.

Why is employee retention important?

The LinkedIn Workplace Learning Report 2025 revealed that a whopping 88 percent of organisations are concerned about employee retention. And for good reason. Low retention means lots of turnover, which can be costly and disruptive. Here are five of the main benefits of employee retention.

Competitive advantage

Retaining employees who know your business inside out helps keep both talented people and valuable know-how within the company. This experience and consistency translate to more innovation, stronger customer relationships and higher revenues.

Improved customer experiences

Continuously having to acquire and train new talent affects both continuity and the service customers receive. Experienced staff typically handle issues faster and keep customers happier, highlighting the value of personnel retention for both customer service and business success.

Lower recruitment costs

Research shows that talent acquisition regularly runs into the thousands for each new employee. When you add on training costs and all the time and effort spent on onboarding, it’s clear that retaining employees is much better for your finances than hiring new ones.

Higher productivity

When people stick around longer, they get better at their jobs, work faster and make fewer mistakes. Teams also run more smoothly because they’re wasting less time training new recruits or picking up extra work, all of which leads to increased productivity.

Improved morale

Higher staff retention helps build cohesion and trust between workers because they can get to know each other over time. This creates a sense of belonging and team spirit that also improves your employer brand and attracts more talent.

What causes poor employee retention?

Now that we understand why retaining your best talent is key to business success, it’s time to turn our attention to what causes employees to look elsewhere. Here are some of the most common factors that should be considered in any employee retention program.

Lack of career opportunities

When employees don’t feel they’re being offered any paths to advance their careers, they’re more likely to move on. ADP’s People at Work 2025 Report found that 34 percent of workers struggling to advance at their current employer are looking for a new job.

Pay inequality

Workers who feel unfairly paid are less engaged and loyal. As you might expect, a higher salary makes workers more likely to stay with their employer, making pay rises one of the top workforce retention strategies.

Lack of engagement

Engaged workers are more productive, less likely to quit and generally happier with their jobs. When employees stop feeling connected to their work or valued by their employer, it’s only a matter of time before they start looking for something new.

Lack of development

Without clear paths to grow or learn new skills, employees tend to feel stuck. If this feeling lasts, they’ll likely want to jump ship, which is why investing in employees’ development and skills is an essential workforce retention strategy.

Discrimination

Unsurprisingly, workers who feel discriminated against are more likely to be looking for the exit. In fact, the People at Work Report found that 34 percent of people who feel discriminated against were actively seeking a new job – compared to just 14 percent who don’t.

Workplace stress

The same research also found that more stress aligns with higher turnover. For example, 30 percent of workers worried AI could replace them and 37 percent who experience daily negative stress are actively looking or interviewing for new jobs.

What are some early warning signs of poor employee retention?

When an employee leaves, they leave for a reason. Maybe they were frustrated with their manager or wanted a promotion. Whatever it is, recognising the signs that an employee is thinking about quitting can help you take proactive steps to retain talent and avoid the costs of recruiting, training and lost productivity.

Less engagement

If you notice an employee is less vocal in meetings or doesn’t seem to be collaborating as much with their colleagues as they used to, it could be a sign that they’ve lost enthusiasm for their work and are thinking about leaving. Monitoring and working to improve engagement can therefore help boost employee retention.

Quiet quitting

Quiet quitting is when an employee only does the bare minimum to keep their job. More than just a dip in output, it often takes shape as refusing to work extra hours, avoiding non-mandatory meetings and turning down opportunities to lead projects. Recognising this early on can help prevent it becoming a bigger problem.

Late or off

We all need time off now and then, but if an employee is suddenly calling in sick more often than they used to or taking longer lunch breaks, it could be a sign they’re disengaged, burned out or even actively looking for a new job. That’s why absence and time tracking are key retention strategies for almost any company.

Lack of initiative

When employees stop feeling passionate about their work, they often stop volunteering for new projects, don’t contribute as much to discussions and can generally seem disinterested in long-term goals. Spotting these signs can be tricky, but it’s vital to understanding whether they’ve mentally checked out.

Less communication

If an employee is taking longer to respond to emails or messages than in the past or is skipping team meetings or check-ins, it could be a sign they’re looking for the exit. A useful retention approach is to look for anyone who seems to be distancing themselves from the team and discuss with them what support or help they might need.

Avoiding plans for the future

Not wanting to get involved in or commit to future projects is a classic sign that an employee might not intend to hang around for too much longer. Make sure to gauge employees’ behaviour in Personal Development Plan (PDP) meetings and any one-on-one career discussions.

How can you improve employee retention?

Talent retention is all about creating an environment where employees want to stick around. Let’s look at some of the most effective staff retention strategies you can use to keep your employees on board.

Improve your onboarding process

Many new recruits resign within the first few weeks due to poor training and a lack of support. Good onboarding helps prevent this by making sure people feel confident and know what’s expected from day one. Don’t forget to assign new employees a mentor and organise regular check-ins to keep them motivated.

Offer competitive pay (consistently)

Our People at Work Report revealed that 27 percent of workers feel their pay isn’t fair. As you might expect, paying employees competitive wages is one of the best employee retention tactics. We recommend conducting regular salary reviews to make sure pay remains competitive and prevents staff from leaving for more money.

Tailor employee benefits

Salary isn’t everything. Keep in mind that many workers are willing to go without a raise to get their most desired benefit, making them a powerful workforce retention strategy. Offer perks that employees actually value, such as extended parental leave or flexible holidays, rather than generic benefits.

Provide hybrid/remote flexibility

Promoting a healthy work-life balance is essential. Hybrid and remote working options have become one of the most popular retention approaches – driven by demand. Giving employees more control over their work-life balance ultimately helps reduce burnout, which in turn improves both satisfaction and long-term commitment.

Create clear career paths

Clear paths to climb the ladder at your company are vital to employee retention. In our People at Work Report, 15 percent of employees believed strongly they would need to change employers to get ahead. Use frequent one-on-one meetings to understand these employees’ professional goals and map out their future.

Provide training and development opportunities

Nobody wants to feel stuck in their career, which is why talent management and growth are so important. Workers who believe their employers are investing in them are much more likely to stay the course, making upskilling opportunities and clear career paths key human resource retention strategies.

Invest in wellness and wellbeing

Make sure your company offers a wide range of mental health and wellbeing support options – beyond your legal duties. Comprehensive Employee Assistance Programmes (EAPs), mental health days, confidential counselling and free gym memberships are all great retention strategies to keep employees healthy and productive.

Schedule regular feedback and performance reviews

Although collecting feedback from employees once a year provides useful insights, it doesn’t allow you to rectify any problems quickly. More regular surveys and performance discussions can help managers spot any trends affecting employee retention. Clear and consistent communication is key in all employer-employee interactions.

Put the right managers in place

Good managers provide regular feedback to help motivate employees and are crucial to creating an inclusive, positive culture. When it comes to staff retainment, keep in mind that workers who feel their manager is monitoring everything they do are 3.3 times more likely to quit, according to the People at Work Report.

Recognise and reward top performers

If an employee has gone the extra mile or produced some impressive results, celebrating their achievements is not only vital to keeping them on board but also motivating others to follow suit. Consider rewarding outstanding performance with a bonus, promotion, award or other benefit – and keep it consistent and transparent.

How can you measure employee retention?

Implementing a human resources retention strategy is an important step, but you’ll only be able to ascertain the impact if you start measuring how many employees you’re retaining. Let’s go over the basic formula.

Employee retention rate formula

(Number of employees at the end of the period / number of employees at the beginning of the period) x 100

For example, if you had 90 employees at the end of June but 100 at the start of the year, your employee retention rate for the first half of the year would be: (90/100) x 100 = 90%.

Measuring your own staff retention rate is a great first step, but it doesn’t tell you a whole lot in isolation. That’s why it’s a good idea to use established benchmarks to compare your rate with others in your industry.

We also recommend tracking your rate over time to see how you’re doing and help you identify any problems before they snowball. Other important metrics to consider include employee satisfaction, retention per manager and absence management.

How HCM software can help you retain employees

Human Capital Management (HCM) solutions help HR teams understand what’s really happening across their workforce. When your managers have clear, accessible insights at their fingertips, they can spot early signs of disengagement, identify potential flight risks and understand which teams might need extra support.

Going further, predictive analytics can help you forecast turnover trends and build better retention programs. By analysing patterns in performance, absence and engagement, you can pinpoint the issues most likely to be driving people away – and address them before they become costly problems.

How ADP can help you retain more employees

Keeping employees on board can sometimes feel like a dark art. Fortunately, a single source for workforce insights and reports can remove a lot of the guesswork by making it easy to spot trends and better understand why people might be leaving.

ADP’s HR software systems help connect the dots between hiring and talent retention – from flagging potential turnover risks using predictive analytics to leveraging real-time employee data to build stronger employee retention programs.