In this guide, we'll discuss staff retention, employee retention strategies, as well as how to lower employee turnover and attract top talent.
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What is Employee Retention?
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HR management outsourcing is when a team of experts manage your HR by looking after your contracts, policies, and procedures.
These are the HR essentials every business needs. Without them, your staff could bring successful claims against you, you could lose thousands in legal fines, and even face prosecution. Never underestimate the benefits of HR support for a small business.
We have years of experience in providing HR for SMEs and HR management outsourcing. Contact us to see how we can support you, including HR advice for small businesses - as well as medium and large companies.
Good human resource management is having round the clock support when you need it the most.
Whenever there’s a staff challenge or an important legal update, you just pick up the phone and get the help you need – no matter the time or place.
The main benefits of HR outsourcing are:
- Cost saving: Reduces the expenses for such things are hiring, training and employing an in-house HR team.
- Time saving: Saves time for staff members away from HR tasks.
- Improves expertise and compliance: Provides ongoing advice and support to ensure complete and total compliance.
- Reduces risk: Reduces the risk of any payroll and compliance failures.
Outsourcing HR is cheaper than hiring internal staff and saves you money overall when it comes to your HR service. Plus, you avoid making mistakes that could cost you heavily in claims and legal fines down the line. Every business should consider HR support as a way to avoid claims.
Peninsula is one of the leading HR outsourcing services in the UK, and by working with us you get access to our HR advisory service. Contact us for your outsourced SME HR today.
The key functions of HR outsourcing services are:
- Payroll and benefits: Helps a business to manage employee wages, tax processing, and employee enrolment.
- Recruitment and onboarding: Helps with job descriptions, sourcing new candidates, interviewing, and ensuring a smooth onboarding process.
- Compliance with employment law: Helps to ensure compliance with ever-changing employment legislation.
- Employee relations: Helps to manage grievance and disciplinary procedures, and any ongoing support that's required.
- HR admin: Helps to handle and manage daily tasks, such as employee records, sorting employment contracts, and processing any leave requests.
- Training and development: Helps to create and deliver staff training programs to improve employees' skills.
Employers have mixed opinions when it comes to rehiring former employees. Maybe you love that a well-liked employee wishes to return. Or maybe you'd rather not have to work with a certain individual again.
Internal recruitment may be the best option for your company. Not only does it save time and money, it can also increase employee engagement and job satisfaction
From 2025, the UK government announced they would provide a total of 45,000 temporary worker visas. They’re set to come under the new ‘Seasonal Worker visa’ format.
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Ideally, your staff will want to continue their employment with you for a long time. If not, you may need to review your employee retention.
Having a high rate of employee retention provides several benefits to your company. Such as, increasing employee satisfaction, productivity and morale.
If your company has low employee retention, it could indicate problems within your workplace - such as poor work life balance. Moreover, staff frequently leaving may encourage others to follow suit.
In this guide, we'll discuss staff retention, employee retention strategies, as well as how to lower employee turnover and attract top talent.
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Employee retention refers to a company's ability to retain employees and prevent them from leaving. It includes involuntary turnover - such as , and voluntary turnover - e.g. redundancy.
Signs of a high retention rate are:
Positive work environment.
Strong and increased employee morale.
Effective management.
Signs of a low retention rate are:
Ongoing issues with company culture.
Lack of career development opportunities.
Decrease in overall productivity.
Is employee retention the same as employee turnover?
The difference between employee retention and is that retention refers to employees staying in a business. Turnover refers to when employees leave a business.
A high turnover means lots of employees leave over a specific time period. Low staff turnover implies the opposite.
Why does employee retention matter?
Employee retention matters because it suggests what could improve in your workplace. For example, if several employees quit in succession you might see a pattern emerging.
This is especially true if they work in the same department, or have similar duties. Consequently, you'll be able to establish the reasons why these employees have left. And can come up with a plan of action to combat the problem.
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Employee retention is vitally important to your company for a number of reasons such as increasing employee engagement. Others include:
Increases and maintains productivity: Having low employee retention can disrupt workplace, which means a decline in employee productivity.
Reduces businesses costs: Having to regularly replace employees will prove to be expensive due to both onboarding and training up new starters.
Strengths employee morale: Have a constant and stable workforce will help to increase and strengthen the overall work environment, leading to an increased in morale and job satisfaction.
Increases your business reputation: Having a higher employee retention rate will help to increase the reputation of your business as a desirable place to work.
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There are several reasons why employees decide to leave a business. Ensure you are aware of them all so you know what your workplace does and doesn't offer. Reasons might include:
Poor facilities
Poor facilities are another reason why employees might leave a role.
For example, your workplace might not have a large enough break room. Employees may look for another place to work that does offer this if they feel it impacts their satisfaction. As a result, these factors could lower employee retention.
Unhealthy work life balance
If your employees have an unhealthy work life balance, it might encourage them to look for a job elsewhere. When employees establish a boundary between their personal and professional lives, it helps them to unwind after work. They can come back refreshed with a better sense of focus.
If they have an unhealthy work life balance (because of the pressure of their role), it will be harder for them to establish boundaries. Their job may become overwhelming and affect their personal life, as well as their relationships. Consequently, it could cause them to leave your business and increase employee turnover.
Inadequate salary
Another reason why you might experience low employee retention is if staff are unhappy with pay. Dissatisfaction with pay can cause employees to withdraw from their roles, as they might not feel valued for their work.
For example, if your business doesn't provide competitive compensation, staff may find similar roles with competitive pay. If they do, it could encourage other employees to look for a position elsewhere, especially if they find more compelling job opportunities. Ensure you conduct industry research to find out what competitors are offering.
What are the consequences of low employee retention?
Low employee retention can have a significant impact on your company - and even other employees. Let's take a look at the consequences your workplace could experience because of a low employee retention rate.
Time consuming recruitment process
One consequence of low employee retention is that you will inevitably spend a lot of time constantly recruiting - which can have a negative impact on your business. For example, if employees are consistently leaving, you'll have to find other individuals to replace them.
This means you'll have to initiate your recruitment procedure again and again. If you have a HR department, it mightn't be an issue. But, if you control your own business's recruitment, it may be time-consuming and take you away from your workplace priorities. Subsequently, your business might suffer.
Lower morale
Employee morale may decrease as a result of low employee retention. Because it will be harder for staff to form long-lasting workplace relationships. This can decrease employee satisfaction because staff will see more employees (and likely, friends) leaving the workplace constantly.
This could give them the impression that they should leave, as they might find more compelling job opportunities elsewhere. And that the workplace isn't adequate enough for them to thrive.
Reduced productivity
Failure to retain employees might decrease overall productivity at your company. If your staff have low job satisfaction because of the standard of your workplace, it could cause them to withdraw from work. And they might choose to 'coast' through their responsibilities.
For example, a staff member has low job satisfaction and is unhappy in their current role. They find it pointless to excel at work because they don't feel valued. Or that tasks are too difficult. As a result, they don't complete their tasks properly, or to a decent standard. This then results in low workplace productivity.
What is an employee retention strategy?
An employee retention strategy is a plan that advises ways a business can lower employee turnover and increase retention. It includes ideas on how to increase employee engagement and morale.
Businesses might ask their HR departments to conduct employee retention strategies, or implement it themselves. It's best to look at some examples of employee retention strategies if you wish to implement one in your business.
Examples of effective employee retention strategies
You may already be aware of some effective employee retention strategies (also known as employee retention programs). Whilst you might have already implemented these strategies, there may be room for improvement. These include:
Thorough onboarding process
One example of an effective employee retention strategy is a thorough onboarding process. A thorough onboarding process should provide new employees with everything they need to succeed. And details of any benefits, such as private health insurance.
Whether it's equipment, access to facilities, or , you should ensure you have planned everything properly. Because a poor first impression can linger throughout staff's employment and may cause them to leave.
Personal development plans
Another way you can encourage employee retention is through career development. You could do this by creating . A professional development plan includes targets that employees need to hit in order to move up the career ladder.
For example, one employee's plan might note that in a year and a half they should be able to complete certain tasks, or acquire certain skills. If they do, they'll be in a better position for you to promote them. This will give them targets and make them motivated to succeed, as it results in their career development.
Exit interviews
You could also conduct an when a staff member finds a new job to improve your retention rates. You can ask someone from human resource management to conduct this, or host it yourself.
It might sound odd, but maintaining a relationship with a departing employee can be beneficial. And an exit interview is a good starting point. It's a chance for the employee to detail their reasons for leaving. This gives you an idea of what you could change to improve the employee experience.
It will also make staff feel like valued workers, as you are seeking out their feedback and making changes based on it. Consequently, it could encourage them to consider your company if another opportunity arrives in the future.
How to increase employee retention
Now you're aware of the reasons why employees might be leaving your company, you can try to resolve them. There are several ways you can increase employee retention. These are:
Promote from within
One way to retain employees is to use internal recruitment. When you internally recruit, you hire current employees for open vacancies within your business - instead of hiring a new employee. Not only does it save time - and money on training costs - it might also encourage employee retention.
This is because experienced employees are already aware of your company culture and have a rapport with their existing team. Not to mention, if you lay out a clear career path for them - which encourages leadership development, you might encourage them to continue their employment with you for longer.
Implement flexible working or remote work
Another way you can increase employee retention is by implementing or remote work. Both include an employee being more in control of where they work and when. Flexible schedules and remote work help to promote a healthy balance, as they encourage staff to establish a boundary between work and home life.
A good work life balance means staff will have more time to relax and unwind after work. They will be in a better mindset to do their role, and become more motivated employees. Not to mention, they'll likely want to stay with your business because of this promotion of wellbeing.
Encourage employee wellbeing
If you promote employee wellbeing in your work environment you might also be able to retain employees. Wellbeing is having an overall positive outlook on life - with little to no issues affecting your mental health, personal life, or work.
If you encourage employees to take care of their wellbeing, it might produce happier staff. You could do so by promoting a healthy work life balance with flexible working, providing free fruit, or offering mental health days. Remember the best employees are happy ones, and it's your duty to care for them.
Get expert advice on employee retention from Peninsula
You should ensure your business does everything it can to retain the best employees. This includes reevaluating your current recruitment procedure, considering employee retention rates, and hiring internally.
If your business has low employee retention, it could have negative consequences for your company. Such as lowering employee morale, excessive time spent recruiting, and even reputational damage. The latter of which could even dissuade top talent from applying to your company.
Peninsula offers expert advice on employee retention. Our teams offer 24/7 HR advice which is available 365 days a year. We take care of everything when you work with our HR experts.
Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.
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