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Employee retention: definition, causes and strategies for HR leaders
Published on 18 Nov. 2025 - Reading time: 8-10 mins
Table of Contents
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 HR insights 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.
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.
Provide benefits
As you might expect, paying employees competitive wages is one of the best employee retention tactics. But salary isn’t everything. Keep in mind that many workers are willing to go without a raise to get their most desired benefit – whether it’s flexible work arrangements or a comprehensive health and wellness package.
Develop employees
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.
Onboard properly
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.
Offer flexibility
Hybrid and remote working options are one of the most popular retention approaches in recent years. Giving employees more control over their work-life balance ultimately helps reduce burnout, which in turn improves both satisfaction and long-term commitment.
Manage well
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.
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 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 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. Find out more about Workforce Analytics HR applications in our recent guide.
