chapter 1

introduction: employee retention — and why it matters

Why do some workers remain loyal to their employers while others surreptitiously sneak away to interview elsewhere — perhaps under the pretense of yet another "doctors appointment"? 

It's a confounding, but no less critical, question. And in this ebook we'll help you answer it. But before we can dig in, let's lay down a simple definition of employee retention, as opposed to employee turnover, so that everyone understands the distinction. 

What's the difference between retention and turnover?
  • Retention rates measure the percentage of current employees who exit a company over a given time period. Retention rates do not factor in new hires joining or leaving the company within the time period.
  • Turnover rates measure the number of current employees and new hires who exit during a specific time period. In other words, a company can experience different retention and turnover rates during the same time period.

Now that we're clear on that, let's talk about why it's important. 

For starters, companies that are able to retain a single employee for three years instead of two stand to gain as much as $1.3 million in bottom-line value over that three-year period, according to research. Another study, based on data from more than 234,000 exit interviews, found that, while one in four employees leaves their jobs each year, nearly 77 percent of those departures are preventable.

And the overall cost of employees leaving? That's expected to climb to roughly $680 billion by 2020, according to the same study.

So there's clear bottom-line value associated with employee retention (a topic we'll discuss in greater detail in chapter three). However, companies also need to understand just how pressing an issue this is today. Take the following dire data points from Randstad's findings, for example.

  • Fifty-eight percent of workers say their companies don’t currently offer enough growth opportunities for them to stay with the organization over the long term.
  • Sixty-nine percent would be more satisfied if their employers better utilized their skills and abilities.
  • More than half (57%) believe they need to leave their current companies in order to take their careers to the next level.

In the course of this ebook, we'll ultimately help you understand that retention is only one lever in your toolkit for understanding, diagnosing and improving any number of related talent pain points. In turn, you'll find that making meaningful strides on retention pays dividends in a variety of other vital areas — everything from engagement to recruitment, workforce management and more.

Ready to get started, then? In the next chapter, you'll learn how to tell if your company is simply undergoing regular levels of churn — or if, indeed, you actually have an employee retention problem. Let's find out.

thumbs up

low retention and high turnover rates are expected to cost businesses about $680B by 2020.

chapter 2

signs you have an employee retention problem

In this chapter, we'll break down four telltale signs that employee retention is a bonafide issue that your organization needs to tackle head on. 

high levels of turnover

This one may seem like a no-brainer, but it may not always be so obvious — especially since a river of exiting employees often begins as a mere trickle. There are significant business costs to replacing employees, so it’s crucial to stanch the flow as quickly as possible. It’s also key to keep office morale steady when there’s a mass exodus of familiar faces.

Recent research from Randstad, for example, shows that low compensation, limited career paths and issues of work-life balance are the most common reasons employees leave their jobs, so you must take action today to diagnose the root cause of the employee retention issue at your organization. 

most common reasons employees leave:

hand with money illustration timeline path illustration balance illustration
low compensation limited career paths issues with work-life balance

employee tenure is shrinking

Maybe you're not facing a crisis yet, but HR records show you’re hiring more frequently than you used to, and turnover is occurring at a faster rate. If your employees are leaving to take on new roles, that means they were either looking for a new job soon after joining or were successfully poached by another employer. They may have been offered better salary and benefits, a bigger challenge — or they just weren't happy with your organization.

If your employees are leaving without a new role in place, that's a dire sign indeed. Quitting without securing a new job is a sign that they were so unhappy that they were willing to risk their financial stability to escape your organization. And we're all aware that a brief tenure looks questionable on a resume, so consider why your employees are risking having to answer questions about it to prospective employers.

negative online reviews

You should be conscientious about revisiting online job sites on an ongoing basis to ensure that you're staying up to date on the latest round of reviews and feedback that employees have recorded about your company.

Why is this so important?

First, 34 percent of job seekers said they read employer reviews online. Clearly, then, those reviews are going to have significantly sway as to whether candidates' decide to accept your offer — or whether they even interview with your company in the first place. 

Beyond that, negative online reviews can exert a powerfully negative impact on your overall brand, too. So you'll need to read these reviews carefully. And don't just read reviews — look for information that can be used to establish common threads, like workplace disorganization, employees feeling unchallenged or salary levels that aren't competitive. From there, you should be ready to take action. 

These may not be easy fixes, but as the cost of replacing an employee hovers around 21 percent of a specific employee’s actual salary, you want your retention rates to stay as high as possible.

4 people illustration

the costs of replacing an employee are high, with the average being around 21% of their annual salary.

your top performers are leaving

Ordinarily, it would be reasonable to assume top-performing employees are the easiest to retain, right? Think about it: They're engaged, aligned with goals and consistently deliver great work. However, for companies where employee retention has become an entrenched organizational challenge, it's time to think again.

That's one of the reasons that conducting exit interviews can be so valuable. They're your chance to finally get the scoop on why employees are deciding to jump ship. So be sure to ask your departing stars not only why they're leaving, but also what you could have done to retain them.

Next, make a checklist in which you summarize where — and in what ways, precisely — your company is falling short. Here are a few key questions for you to consider. 

  • Is there a clear path for advancement for everyone in your organization?
  • Is performance being adequately rewarded — and does it reflect for differences between high- and low-performing employees?
  • Do employees feel valued by your company?

Remember that, at the end of the day, loyalty goes both ways. Demonstrating to your employees that you value and trust them is critical to building an engaged, loyal workforce — and getting out ahead of potential retention issues.

ship on water illustration

conducting exit interviews is the first step to righting the retention ship.

key takeaways

If even one of the telltale signs discussed in this chapter — high turnover, shrinking employee tenure, negative online reviews, top performers leaving — is in evidence at your company right now, alarm bells should be going off. The good news, fortunately, is that it's probably not too late: You can make changes today that will allow you to more effectively retain employees going forward. But you have to act fast. 

In the following chapters, we'll explore these changes in greater detail, beginning with a discussion of some of the ways retention can be tied back to ROI and bottom-line value. Mastering this information should help you make the business case internally in support of strategic initiatives specifically addressing employee retention — which is the subject we'll turn to now. 

chapter 3

linking employee retention to ROI

In this chapter, we'll explore some of the ways employee retention ties back directly to the bottom-line health of your business. In the course of that discussion, what's more, we'll begin to equip you with tools and frameworks for understanding employee retention — and making the business case that addressing it should be an urgent priority at your own company.

Needless to say, given the myriad ways that failed retention strategies can check the growth of your company, this one's going to be a doozy. 

business are literally losing billions annually

Just how pricey are retention-related challenges for businesses overall? Stop and think about it for a moment. Try to come up with a ballpark figure. Ready? 

One study found that the net impact of employee turnover and retention ultimately costs businesses as much as $11 billion dollars annually. That's right — billion with a "b."

In other words, if employees are leaving your company in droves, or even if they're simply not sticking around long enough to deliver the most value, then you need to start rethinking your employee retention strategy. And you need to do so ASAP.

network illustration

organizations with high turnover and low retention are losing $11B a year.

the steep cost of squandering talent 

Across jobs, how much do you think it costs, on average, to replace a departing employee? While estimates vary, the answer is almost certainly higher than you think — generally about one fifth of that employee’s annual salary. And less conservative estimates put the figure higher still, in some cases as high as 21 percent of an employee's salary or higher.

So whatever the exact number is at your company, we assure you it ain't pretty. 

On top of direct financial outlays, there are other, less obvious ramifications associated with poor employee retention, each with hidden costs. For example, even one departing person can have a "butterfly effect" across your entire organization, inducing others to jump ship in turn. And when you factor in a host of other, not-so-easily quantifiable side effects — like lower morale and reduced productivity — it becomes clear that implementing a best-in-class employee retention program is an urgent business priority. 

your younger employees will be the first to leave

Providing employees with access to opportunities where they can continue to grow and develop is a crucial component of any successful retention strategy (as we'll discuss further in chapter five). Indeed, Randstad's research shows that employees 25 and under believe professional development to be the biggest driver of engagement, while those aged 35 to 44 rate it number two.

These folks are hungry. They're new (or relatively new) to the job market. And they possess the commitment, drive and tech-forward digital competencies you need to drive your business forward, today as well as tomorrow. But if your younger employees aren't engaged, you're going to lose them — fast.

career ladder upwards illustration

professional development was the biggest driver of engagement for younger employees.

key takeaways

Businesses today are leaking literal billions in unnecessary financial outlays each year as a result of failed retention strategies. And to make matters worse, they're losing their best young talent, to boot. 

It doesn't have to be this way — as we'll explore in greater detail in chapter five. For now, let's look at some retention benchmarks that can help you understand how your company's current approach stacks up, and where there might be room for improvement.

chapter 4


In this chapter, we'll trot out the numbers that matter most when it comes to employee retention. These benchmarks, which draw on Randstad's deep domain expertise and diverse experience with clients across industries, should help give you insights into the current state of employee retention efforts at your company, as well as where you should focus on making improvements. 

Let's see how you stack up.


How long should folks be sticking around at your company? Ultimately, of course, a lot of that depends on the role and industry, but here are some useful benchmarks from a recent report

  • management: 6.3 years
  • architecture and engineering: 5.5 years
  • business and financial operations: 4.6 years
  • computer and mathematical occupations: 4.4 years
  • legal: 5.5 years

If the numbers at your organization aren't lining up with these figures, it's a clear sign that you have an employee retention problem — and need to take action immediately. That might sound rough, but if you take steps today to proactively address the issue, you'll find that you stand to deliver considerable value to your company over the long term.

clock illustration

an average employee tenure of about 5 years is considered healthy, though it varies depending on industry and function.

exit interviews

Exit interviews are a core component of any effective employee retention strategy. It's your way of understanding why people are leaving, and making adjustments to keep it from happening in the future. How else do you expect to develop an informed retention strategy? 

Yet, for a variety of reasons, many companies today report that these interviews often don't take place — even when there are processes in place to ensure that they do. For example, at companies that conduct exit interviews, research shows that, on average, the actual response rate is somewhere between 30 and 35 percent. In other words, only one in three employees ultimately winds up participating in an exit interview.

Whatever the number is at your company, it needs to be substantially above this baseline average. And if, on the other hand, you aren't currently conducting exit interviews — well, you have your work cut out for you, but that's an obvious starting place for you to make improvements.

three people illustration

only one in three employees participates in an exit interview — focus on improving your response rate for the best results.


The percentage of U.S. employees who are actively engaged increased in the past year — the number now stands at 34 percent, according to the latest Gallup annual engagement survey. That's the highest level of engagement since Gallup began reporting on it in 2000.

At the same time, that's hardly cause for celebration — only slightly over a third of all employees are engaged, after all. No less troubling is the fact that 16.5 percent of all employees are classified as "actively disengaged." Meanwhile, the majority of workers (53%) remain "not engaged," according to Gallup. 

The bottom line is that engagement and retention are closely correlated. So whatever approach you're currently taking to measure engagement at your organization, if the majority of employees are not engaged, you're in for trouble.

34percent_pie chart

only 34% of employees today report being engaged in their jobs.

key takeaways 

Think hard about these benchmarks in the context of your own organization. By uncovering potential focus areas for improvement, they should give you a baseline for implementing a more effective retention strategy. From there, obviously, you'll need to be diligent about tracking its impact on performance — and do so on an ongoing basis, making adjustments as necessary.

In the end, the solution might not be obvious or easy, but it just might save your company's top talent. And as we discussed in chapter three, it will translate to substantial cost savings.

In the next and final chapter, we'll outline how you can do exactly that. 

chapter 5

next steps

By now, of course, you've probably internalized the fact that retention is a challenge that needs to be tackled head-on and fast. It's not simply an intractable byproduct of modern working life, but rather a problem with discrete causes you can fix.

Ready to take matters into your own hands — and see measurable impact? Here are five actionable strategies to help put you on the path to success. 

adjust salaries

While this might seem like a no-brainer — after all, people are naturally going to jump ship if there are higher-paying opportunities for similar work at other companies — it's nonetheless a smart place to start. 

If you're not sure how your compensation packages stack up compared to competitors, we've got you covered. Check out our latest nationwide salary guide, which features detailed breakdowns of pay ranges for virtually every role and industry. We've also got this handy salary calculator to help you out. Once you've familiarized yourself with the numbers, it's probably time to make some necessary adjustments at your organization, too.

Finally, you should bear in mind, too, that compensation affects different employees differently. In particular, it often becomes much more important as workers advance in their careers — junior employees, for instance, might be willing to accept lower-paying roles if that entailed gaining valuable experience, whereas more senior professionals very often will not.

calculator illustration

consult an online salary calculator to ensure your pay rates are competitive for your industry and market.

get proactive about employer branding 

From a high level, employer branding is the most effective way to move the needle when it comes to retention challenges — indeed, your efforts in this department can pay dividends, not only today but for a long time to come. So how should you get started?

Needless to say, successful employer branding strategies ultimately vary, reflecting vicissitudes of industry, workforces — and so many other factors. So while we can't be unduly prescriptive, you can generally improve your employer brand through the following four-pronged approach. 

  • Use regular surveys to understand employees' outlook and morale. From there, you'll need to actively incorporate whatever feedback you receive into your employee retention plan.
  • Proactively communicate with unhappy employees. Why are they discouraged? Where are processes breaking down? And what can you do to help? Mutually beneficial solutions are probably a lot easier to identify than you might think.
  • Evangelize a workplace culture where everyone feels that they are welcome and valued — which means opinions and input from all employees should be valued, too.
  • Identify and begin to measure the metrics that matter. Whether you're looking at overall retention over time or zeroing in on retention for specific functions and roles, only by implementing metrics will you be able to objectively understand how effectively you're retaining employees — and where you need to make improvements.

Hopefully, these tips should be enough to help you get started. What's more, if you're looking for additional insights into employer branding and next steps for your company, click here for proprietary intelligence from Randstad. There, you'll find resources, benchmarks, tools and more — it's everything you need to comprehensively overhaul your company's lackluster approach to employer branding. 

improve your employer brand by:
  • regularly surveying employees regarding outlook and morale
  • being proactive about addressing concerns of unhappy employees
  • create a welcoming workplace that values employee opinions and input
  • start tracking metrics to identify areas of improvement

Now that we're clear on that, let's talk about why it's important. 

allow employees to customize their own benefits

At first glance, this suggestion might sound radical. And perhaps it is — but we wouldn't be suggesting it if the numbers didn't back us up.

According to one study, in fact, a full 72 percent of employees believe their loyalty to their current employers would increase were they given the chance to personally select their benefits. That's nearly three out of four employees. 

In other words, simply giving everyone the same benefits — even if you believe those benefits are best in class — may not be the best approach. Certainly, it may not be enough to prevent your most valuable employees from quitting.

Instead, consider experimenting with a more personalized approach to perks and benefits.  Doing so may require investing time and resources in the near term, but you stand to reap huge bottom-line advantages over the long haul. 

72percent_pie chart 72% of employees said that being able to customize their own benefits would improve their loyalty toward their employers.

map out professional growth charts for all employees

Knowing a company offers growth opportunities allows employees to envision — and plan for — a longer tenure. It also brings with it an indelible, but no less crucial, sense of professional security.

What's more, the prospect of advancement helps teams focus on bigger-picture objectives. And it may even help employees deal with the inevitable ups and downs associated with their jobs.

But when opportunities are limited, on the other hand, high achievers and mid-career employees will often proactively look elsewhere for advancement. For instance, one large-scale study found that 87 percent of employees believe that companies with strong internal mobility programs in place are better able to attract and retain employees. 

So it's essential for you to make sure everyone on your team clearly understands the pathway to growth, promotion and opportunity — before it's too late.

87percent_piechart 87% of employees believe that companies with strong internal mobility programs stand a greater chance of attracting and retaining talent.

team up with a strategic partner

Leading companies today are increasingly reliant on strategic partners to enhance some of their core enterprise capabilities. Whether that means relying on independent facilitators that can conduct focus groups and training sessions, or partnering with a staffing firm that can deliver in-depth analysis, improvements and insights, the cost of doing so often pays for itself.  

How? What's the value entailed by such a relationship, exactly? 

For one, staffing partners can enable you to more effectively gauge employee morale and engagement — for example, through sentiment ratings and other advanced tools to enhance the exit interview process. 

More than any one specific tool, however, strategic partners can broadly empower enterprises today, providing deep domain expertise together with recruiting best practices and an in-depth knowledge of industry trends. Plus, by taking an approach that combines human judgement with the latest and most sophisticated technologies, they can repair your talent processes from end to end — and deliver substantial ROI for your company.

needle and thread illustration strategic staffing partners can leverage their deep domain expertise to develop tailored retention solutions for your business.

final takeaways 

Looking to find even more guidance and actionable insights around employee retention in the meantime? Head on over to Randstad's employee retention learning center. There, you'll find all of the business intelligence you need to start spearheading organizational changes now, before it's too late.

You should also bear in mind that, when it's time to take the lead on employee retention, you don't have to go it alone. Click here to learn how the right strategic partner can help solve your retention woes — that way, you can stay laser-focused on moving your business forward.

home-icon 1 2 3 4 5