The Definitive Guide to Employee Retention

Is retention a priority at your organization this year? Then following employee satisfaction trends for your own employees and beyond is a must.

Despite a promising upward trend in Q1 2024, employee happiness hit a new four-year low in May. But we’re not the only ones tracking this downward trend. In July 2024, Gallup reported more than half (51%) of US employees were ‌actively seeking a new job.

The impact of voluntary turnover is severe and far-reaching, and it’s not just about losing out on productivity. It’s about losing institutional knowledge, skill, and overall business momentum.

We recently surveyed 500 US-based HR pros about retention and turnover, and they cited the following as the most damaging effects of turnover for their companies:

1. Loss of productivity and performance (47%)
2. Lower morale among remaining employees (44%)
3. Increased training needs (35%)
4. Loss of key employee skills (28%)
5. Loss of business knowledge (28%)
6. Inadequate leadership pipeline (15%)
7. Lower customer satisfaction (12%)
8. Reduced profits (11%)

According to Gallup, employees harbor the lowest long-term commitment to their organizations since 2015, but there’s hope, too: Gallup also determined that at least 42% of employee turnover is preventable.

That number represents a tremendous opportunity for HR. Alarmingly, however, 10% of the HR admins we surveyed say their company doesn’t actively track any retention-related metrics—and 6% say their company doesn’t invest in retention at all.

We’re here to change that. Read on to learn more about the trends to watch as you develop a retention strategy that can shield you from the organizational blows caused by preventable turnover.

Editor’s Note: Quotes have been lightly edited for clarity. Attribution includes title and location or industry and employee count.

Employee retention benchmarks: How does your company compare?

We asked our respondents to rate themselves on the following retention metrics. How does your company measure up?

Build your strategy around these top 4 retention trends

Inadequate compensation, lack of growth opportunities, and poor leadership drive voluntary resignations

HR pros reported that the top three reasons employees voluntarily left their jobs in the previous year were:

1. Inadequate compensation and benefits (44%)
2. Lack of career growth and development opportunities (41%)
3. Lack of career growth and development opportunities (22%)

Employees are most likely to leave you for the same reason they joined—in pursuit of financial stability. No surprises there, but the reality is that the need for a raise, a promotion, or a more profitable career path is especially acute for most employees today. It’s important to account for those financial incentives as you build your retention strategy (and compensation plan!).

Two-thirds (66%) of Americans reported living paycheck to paycheck in 2024, with more women (72%) struggling to make ends meet than men (60%). Additionally, Millennials, who represent the increasing majority of the workforce, were the most likely of all the generations (73%) to say they were just getting by.

After compensation and development opportunities, the next most important retention consideration is ensuring your management team receives proper training and are effective people leaders.

Just 15% of employees choose to leave a company due to company culture issues, such as:

• Poor work-life balance and flexibility (16%)
• Negative work environment and culture (12%)
• Insufficient resources and support (12%)

But each of these areas is directly affected by an employee’s immediate supervisor. Prioritizing leadership development at your company can go a long way in addressing satisfaction issues attributed to “culture,” as well as more specific issues with management.

20% of companies don't prioritize mental health in the workplace

One in 5 HR pros (20%) say their company does “nothing” to prioritize mental health in the workplace. This is a significant oversight. Not only are burned-out employees less engaged in their work, leading to errors and lower quality output, but they’re also more likely to quit.

Although burnout is caused by any number of workplace stressors, a big one currently is job insecurity, which includes:

1. Uncertainty about company’s financial health (31%)
2. Potential layoffs or downsizing (31%)
3. Anxiety about industry-specific challenges (30%)
4. Lack of stability in job market (21%)
5. Fear of reduced hours or pay cuts (11%)
6. Concerns about automation and job displacement (10%)
7. Concerns about AI (9%)
8. Competition from younger or more experienced workers (6%)

Addressing these concerns is a lot for one team to tackle, but HR doesn’t have to do it all by themselves. Your top leaders can do a lot to mitigate this insecurity through transparency and open communication.

For example, the BambooHR executive team holds monthly company updates for all employees. They report on relevant company performance metrics, including the business’s profitability, and answer pre-submitted employee questions. While these meetings are strictly confidential, offering this transparency is an effective way to address and alleviate many of the above concerns.

Give employees the peace of mind that comes from being kept in the loop, and explore ways to start or expand on company-wide meetings.

Other ways our respondents prioritize mental health for their employees include:

1. Flexible location (remote option) (38%)
2. Flex-time (36%)
3. Increased PTO (30%)
4. Mental health days or workshops (19%)
5. Four 10-hour days (one weekday off) (10%)
6. Email “blackout” time frames (5%)

Hybrid work models face the fewest retention challenges

For 9% of employees, a lack of remote work opportunities is a driver of turnover, while 17% of the HR pros we surveyed also said the shift to remote/hybrid work has had a moderate or significant positive impact on their ability to retain employees.

However, in-person work modes are less sticky. When asked which category of employees were facing the most retention challenges, the majority of our respondents (59%) said “in-person.”

Remote and hybrid employees are much easier to retain in comparison.

This finding is an important addition to the conversation about remote work and return-to-office (RTO) mandates. KPMG International reports that 83% of CEOs expect a full RTO within the next three years, but research continues to show the popularity and benefits of remote and hybrid models.

For companies with an eye on retention, strengthening a hybrid model can accommodate CEO and worker preferences, including workers who prefer to work in-office, while delivering the best of both worlds.

1 in 5 HR pros aren't sure why employees choose to leave

Ten percent of HR pros don’t track any retention-related metrics, but even the HR pros who do still can’t say why their employees voluntarily left their companies.

A surprising 20% of HR professionals admit they aren’t sure what’s driving people out the door—and processes might be the missing piece, as 25% are inconsistent about when or even if they’ll conduct an exit interview for departing employees. Less than half (41%) conduct an exit interview every time an employee leaves.

Even if you’ve lost the chance to retain someone who’s on their way out, making sure you always conduct an exit interview is the surest way to understand why. Equipped with that information, you can make targeted changes that improve your workplace for future employees.

Conducting exit interviews is especially important to your equity initiatives. If you’ve observed that people of color, women, or other marginalized groups are disproportionately leaving your organization, exit interviews will be crucial in uncovering why and making the necessary changes to create a more inclusive workplace.

How to improve employee retention

Company culture issues are one of the lower-reported general drivers of turnover—the top being attributed to the nature of the job and compensation and benefits. This may be because company culture currently takes the lead when we ask HR pros how they invest in retention.

Improving retention takes time, buy-in, and an obsession with data that would rival the way you felt about your middle school crush. Data tells the story you need to know before you can tell a better one. That’s why our number one recommendation for improving employee retention is to start tracking and monitoring all the retention metrics.

Here are our top recommendations for improving retention:

1. Track and monitor employee retention metrics.
2. Use employee satisfaction surveys.
3. Respond to employee feedback with action.
4. Invest in professional development for both leaders and employees.

1. Track and monitor employee retention metrics

The more data points you can collect from a variety of angles, the more specific the answers will be to the following questions:

• Why are people leaving?
• What is voluntary turnover costing us?
• How can we convince people to stay?

Only 11% of our respondents said they were tracking the cost of turnover, but this information will be one of your strongest bullet points as you collect buy-in for the changes that’ll improve your workplace.

No one’s asking you to track these metrics manually (at least, they shouldn’t be!). A smart HRIS will pull this data for you and prepare a clean report full of insights in a matter of clicks. BambooHR even includes benchmarking on turnover, so you can see how your company is performing compared to other companies in your industry.

2. Use employee satisfaction surveys to proactively address retention

HR pros estimate that 15% of their employees feel neutral toward their company, while 7% of employees are actively dissatisfied. Understanding and engaging these employees before they leave can help minimize turnover while creating spillover benefits for your performance management and recruitment goals.

Like exit interviews, employee satisfaction surveys provide crucial data points for solving the retention riddle, but they’re underutilized. Most companies survey employees one or two times a year, but that frequency is more appropriate for maintaining high employee satisfaction than addressing a widespread problem with dissatisfaction.

Unless your employee satisfaction data is already brag-worthy, you may need to bump up your frequency to once a quarter or even once a month in serious cases that require more iterative, targeted interventions. (To encourage participation and candor, it’s vital that you can guarantee employee feedback remains anonymous.)

Of course, you don’t want to bombard your employees with surveys, but if satisfaction is already low, survey participation will also be low, and you need as much data as you can get.

The more data you can collect, including free responses to questions like “What can we do to improve?,” the more information you’ll have to analyze and act on. Over time, as employees see that you’re listening and taking their feedback seriously, you’ll see participation as well as satisfaction start to increase, and then you can taper the frequency.

3. Respond to employee feedback with action

Just 1 in 4 (25%) HR pros say their company is very or extremely effective at listening to employee feedback and taking appropriate action in response. Failing to respond, even to provide transparency into the reasons why a certain action won’t be taken, is the surest way to further lose employee trust and squander all the effort that went into conducting surveys in the first place.

After analyzing the data and feedback, categorize potential actions into groups of big versus small wins and low versus high investment, and then act on something after each survey, so you can measure the impact of your changes in real time.

You may uncover a low-investment, big-win (like conducting a company-wide Zoom-etiquette training or printing out simple instructions for the office coffee maker) that not only proves to employees that you’re listening, but that you care enough to sweat the small stuff if it means making their days easier.

4. Invest in professional development

More than one-third (34%) of HR pros say their company's investment in professional development is below average. Yet companies that make a strategic investment in employee development are twice as likely to retain their people than companies that don’t. They also report 11% greater profitability to boot.

Creating a workplace where employees can expand their professional and personal futures is worth the investment, but how much should you expect to invest per employee?

On average, companies spend close to $900 per employee per year on professional development.

Though investment in professional development per employee tapers as headcount increases, it's important not to lose sight of the value of showing employees you care about their growth as you tackle retention challenges from every angle.

Methodology

The survey was administered by BambooHR using the Qualtrics platform. BambooHR surveyed HR professionals between August and September 2024. We received over 500 responses from HR professionals across a variety of industries, including healthcare, finance, construction, travel and hospitality, nonprofit, and technology.

The survey used a structured questionnaire to ensure a comprehensive and balanced approach to retention topics, and the number of responses varied between 400 and 500 responses per question.