How to Improve Employee Retention


According to the Society for Human Resource Management, employee retention rates are at an all-time low during the past 50 years. In January 2019, the unemployment rate stood at 4 percent.  According to the Work Institute, an estimated 41 million people voluntarily quit their jobs in 2018, up 8 percent from 2017. 

This means that U.S. workers are quitting their jobs more than ever.

While these numbers are alarming, not all hope is lost. “More than 77 percent of employees who quit could have been retained by employers,” writes the Work Institute using data from more than 234,000 exit interviews.

Given these high turnover trends and costs, many organizations want to improve their employee retention strategies. U.S. employers paid $600 billion in turnover costs in 2018. Each employee departure costs about one-third of that worker’s annual earnings 

Retaining talent can be challenging for another reason. “We now have more jobs than people to do them, which means our labor [shortages] are going to get worse,” said Society of Human Resource Management (SHRM) CEO Johnny C. Taylor Jr. With unemployment under 4 percent, increased confidence, and an over-abundance of jobs, employees are increasingly selective about where they work. They will voluntarily change jobs when a better opportunity presents itself. 

What Employee Populations Are Impacted?

According to Mercer, Millennials accounted for half of the voluntary separations (51%), followed by Generation X (25%) and Baby Boomers (19%). 

Approximately 40% of employees who quit in 2017 did so within 12 months of being hired, according to a study based on data from over 34,000 exit interviews.

About half of workers who departed in their first year left quickly—within the first 90 days. This information tells employers that they need to figure out how to improve their selection, hiring, and onboarding programs. 

Why Are Employees Leaving?

According to the Employee Retention Report, the top specific reasons for employees to leave jobs in 2017 were career development (22.2%), work-life balance (12%), and manager behavior (11.3%).

If you compare this data across other studies, the findings hold true. In a Mercer study, promotion opportunities and career changes were the top reasons most workers (especially members of Generation X and Millennials) quit their jobs. 

These issues consistently push employees to job hop, with compensation cited in only 9% of exit interviews. 

Reason 1: Career Development

Career development: ahern, murphy, and associates

Despite popular opinion, the number one reason employees leave their job is not for better pay and benefits. It is for career growth and development. Employees are frustrated with the lack of growth, development opportunities, and advancement in their jobs.

I did this a handful of times when I was growing my career. It was never about the money and always about the opportunity. I either hit a ceiling at the current company I was with or it wasn’t big enough for upward mobility.

Each time I left an employer, I got a promotion that required more responsibility, more hours, and more work. Granted, those promotions always came with more money but that was not the catalyst that made me leave. 

In my 15 years of HR experience, I can tell you this problem arises when an employee doesn’t see a clear career path. So, they decide they need to go elsewhere to develop their career. Oftentimes, the employee makes this decision without any discussion with their manager.

Potential Remedies

Employers of all sizes need to make career discussions with their employees a priority. The generic “so tell me about your career goals?” discussion at an annual performance review doesn’t cut it. I recommend you check in quarterly with your employees. Ask them how they are doing, what they are working on, and if they need any help from you. Then, ask them about the direction that they would like to take in their career.

This career discussion should be a stand-alone discussion and not coupled with a coaching or performance discussion. 

During these discussions, some employees may know exactly what they want to do. For example, I want to be on the management track and promoted into a management position within 18 months. Others may not know, so you can educate them about potential opportunities in your organization.

Even if these roles don’t exist today, as a leader, you can forecast out 24 months to get an idea of what opportunities may become available. Ask them what roles look appealing to them? Do they have any desire to lead a team in the future? Do they want to become a subject matter expert in their field?

Even if they want to open their own business or change careers altogether, you show them how invested you are when you ask about their career goals. Also, you demonstrate to them that they have the opportunity to learn valuable skills in your organization. Lastly, they have a manager that cares about their professional growth which will help them in the long run. 

Maybe you are a small organization without tons of upward mobility, that’s ok. You can still have career discussions and invest in the development of your employees.

You can offer in-level positions. In-level promotions occur when you give an employee slightly more responsibility or scope. Include this person on special projects or ask them to shadow you when you meet with clients. Develop their career by taking them under your wing and exposing them to people and situations they normally wouldn’t.

Mentor matching, external training, or coaching may also be an option. Regardless of what you do, you have to do something. In today’s job market with career development being the number one reason employees leave, investing in professional development and training for your employees is not a luxury, it is a necessity. 

Reason 2: Work-life balance

employee retention work from home: ahern, murphy, and associates

Now more than ever, employees value work-life balance. Millennials often choose a flexible work schedule or fewer hours over fancy titles and more money. However, Millennials aren’t the only ones with this preference. Working parents value their time away from work as well. All employees value an employer that is sensitive and understanding to their personal issues. It is nice to not have to remind your boss constantly that you need to pick your kids up at daycare by 5:30 pm or you have to work from home because your kid is sick.

Generation X and Baby Boomers may have to care for an elderly parent or a spouse which requires work flexibility. Granted, there are laws in place like paid family leave that help, but the real need for work-life balance extends beyond that. No one wants to be a slave to their job or feel like they have to be connected 24/7. Even if they have done this for some time without complaining, there will come a time when they burn out and decide to leave. 

Potential Remedies

Flexible work schedules, with more fluid start and end times, are one option. The whole premise of “office hours” came during an era when how much time you spent in the office directly correlated to how valuable you were to the organization. The meaning of value shifted from office time to company growth, corporate culture, employee retention, and leadership.

If office time is no longer the measure for productive employees are at their job, then concepts like working remotely or flexible hours don’t seem so scary. 

Unfortunately, not all organizations have the ability to do this. Some industries like Manufacturing, Consumer Goods, Retail, and Healthcare require set schedules. These industries also have some of the highest turnover rates. But even in these industries, there may be management roles or positions where you can offer more flexibility. By doing so, you send a message that you value your employees, care about their well-being, and are aware that they have priorities outside of work. Also, you demonstrate that you will work with them to provide a better work-life balance.   

Reason 3: Manager behavior

poor management - ahern, murphy, and associates

All employees want a positive and productive relationship with their manager. An employee’s manager is the most important person that they develop a relationship within the entire organization. It can truly make or break their experience. It doesn’t matter if their manager’s boss is an incredible leader because their direct manager impacts their daily lives.  

I have an immediate family member who is smart, talented, hard-working, and incredibly good at her job. She has worked for her employer for over 3 years, likes the company, and genuinely likes the work that she does, but is actively interviewing because of her manager’s behavior. He lacks the leadership skills to motivate his team. It is both demoralizing and exhausting to work for someone who doesn’t listen to you, only criticizes you, and has little emotional intelligence. The nail on the coffin was that she had a baby 8 months ago and her boss did nothing to acknowledge the birth of her child. This is just one of the countless examples of people who make up their minds to leave an otherwise great company solely because of their manager. 

Potential Remedies

Organizations need to have reliable checks and balances to get honest feedback from the employees. In the situation above, this manager is effective at getting results. In the eyes of his boss, he’s doing a good job because his boss doesn’t know how he interacts with his team. His boss doesn’t know his lack of consideration for others, how he puts others down, and his overall lack of leadership.

While I believe employees should go to HR and report this kind of behavior, I am also aware that not everyone feels comfortable doing so. Too often, company politics or ineffective HR departments demotivate employees from doing so. That is why a strong leadership team seeks employee feedback regularly through focus groups, anonymous employee engagement surveys, 360 Reviews and exit interviews. They are more likely to catch poor management behavior before it results in a serious turnover problem. 


In closing, Danny Nelms, the President of the Work Institute, urges employers to take steps to understand the needs of their employees, focusing closely on new hires. Employee feedback should be solicited. Onboarding and other training should be evaluated to better understand where employers are not meeting the expectations of newly hired employees. With less than one-third of organizations having a codified onboarding plan, this is a huge opportunity for most. 

HR and Senior leaders also play a strategic role by improving work flexibility, career-pathing, and learning opportunities. A well-defined career path with guidance on how to achieve goals is important to employees. If an organization isn’t willing to invest in their employees, how can they expect their employees to invest in them?

Development opportunities demonstrate that your organization values continuous learning. In addition, it shows that you want your employees to be on top of industry changes and trends. From coaching sessions, training programs, team lunches, and more,  these opportunities are crucial to an organization’s employee retention efforts.

To learn more about improving employee retention, check out this blog post: HOW TO REDUCE TURNOVER BY IMPROVING COMMUNICATION.

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