8 retention strategies - get more control over turnover
In the second of a three-part series, Dr John Sullivan compiles a comprehensive list of retention strategies that corporate leaders can employ
No matter how long you have been in the HR profes
sion, this might be the only comprehensive list of
retention strategies you have ever seen. This is true
because retention is not yet a distinct discipline, and because
most retention managers and consultants laser-focus on their
favoured approach.
In order to provide you with a big-picture view of the
available strategies, I’ve used my extensive experience and
research in retention to compile a comprehensive list. It
provides a brief overview of each of the major retention
strategies that corporate leaders can employ.
Classifying strategies based on their primary retention lever
Retention strategies are best classified based on the primary
lever (or treatment) that the firm uses to motivate employ
ees to stay. Typical retention levers include pay, benefits,
engagement drivers, promotions, and development actions.
Individual levers can be combined into thousands of situ
ation-specific solutions. The following list of strategies has
been separated into two broad classifications: laissez-faire
and all-employee.
Category I: Laissez-faire approaches
This group contains decentralised, do-nothing retention strate
gies. The primary success measures affected by this category
are departmental turnover rates and average time-to-fill for
positions vacated voluntarily.
1) Individual managers’ own retention
• Goals of the strategy – the goal is to get the manager (who
knows the employee best) to “own” the retention process
and to select the best approach for each unique situation.
• Identifying turnover causes – it relies on employee self
reporting and exit interviews.
• Benefits/weaknesses of the strategy – giving managers own
ership of the retention process means that they will prob
ably pay more attention to it. Unfortunately, managers are
not retention experts, so they will likely learn by trial and
error. Managers will also frequently rely on their emotions
rather than more effective data-based approaches.
2) React with a counteroffer or a retention bonus – this strat
egy involves waiting until employees announce that they’re
leaving and countering any outside offers that can rea
sonably be matched. Incidentally, if you don’t also fix what
is wrong with the job, it is unlikely that a counteroffer or
a retention bonus will work long term.
3) Rely on effective recruiting – under this strategy, no
formal action is taken to reduce turnover. Instead organ
isations focus on developing excellent employer brand
ing, recruiting, and talent pool processes that provide
talent on demand.
4) Do nothing – this strategy, by far the most common, starts
with the assumption that turnover is normal, and involves
taking no organised action.
Category II: All-employee strategies
This group contains the most commonly used formal strate
gies. Their popularity is largely driven by ease of imple
mentation. It is assumed that the same-exact causes of
turnover are shared by all employees, and that all employ
ees must be treated equally. The primary success measures
under this category are average turnover rate and time-to-
fill for positions vacated voluntarily.
Yet with rare exception, blanket treatments fail miserably.
Not everyone with a fever has the flu, and treating every
one as if they do will result in some ill people dying.
5) Improve employee benefits
• Goals of the strategy – this popular strategy attempts to
tie employees to the company over the long term using
“benefit handcuffs” because surveys show that better ben
efits can be both a powerful retention and recruiting lever.
• Treatments for countering turnover causes – the benefits
that are offered vary with the firm but improved health
coverage, more time off, educational benefits, better
work/life balance, and better on-site amenities (i.e. food,
exercise facilities) are common choices.
• Benefits/weaknesses of the strategy – improving employee
benefits can have significant retention impacts on lower-
paid employees and those with either medical conditions or
large families. Benefits are generally not taxed as income,
so employees get more “net” value from them than from
salary increases of the same cost. Unfortunately, improving
benefits for all employees can be very expensive.
6) Improve training and development
• Goals of the strategy – to improve retention rates by
focusing on providing more learning and employee-
development opportunities.
• Treatments for countering turnover causes – these vary
with the firm but improved soft skills training, leadership
development, job rotation opportunities, and technical
skills training that prepare employees for promotion are
often choices.
• Benefits/weaknesses of the strategy – improving employee
training, learning, and development can have significant
retention impacts on your firm’s top performers because
of their keen interest in continuous learning. Training
and development, in addition to being a retention lever,
also directly helps the firm by improving the capabilities
of its employees. On the negative side, training and devel
opment activities are expensive and they take time away
from the job. Providing training and development to
build skills but not following up with sufficient oppor
tunities to use those new skills may actually contribute
to increased turnover.
7) Increase compensation
• Goals of the strategy – this strategy assumes that the
causes of turnover captured during exit interviews (com
pensation matters most) are valid, so it focuses on
increasing compensation to prevent turnover.
• Treatments for countering turnover causes – these vary
with the firm but options generally include across-the-
board salary increases, cost-of-living adjustments, increas
ing the compensation “percentile” target for the firm,
adding performance bonuses, increasing 401(k) matching
contributions, and offering stock options or stock.
• Benefits/weaknesses of the strategy – improving employee
compensation can have significant retention impacts on
those employees primarily driven by money. Stock
options (because they must be held) may act as a “golden
handcuff” to tie individuals to the firm for a significant
period. Unfortunately, increasing compensation is
extremely expensive and even more so if it’s not tied to
increases in performance. Giving every employee an equiv
alent increase in compensation may anger top performers
and actually increase turnover among the best.
8) Improving employee engagement
• Goals of the strategy – the goal is to improve reten
tion rates by focusing on the factors that increase
employee engagement.
• Treatments for countering turnover causes – offerings
depend on which areas within your engagement survey are
scored low. Most efforts to improve engagement scores
involve increasing communications, building trust and
reinforcing values.
• Benefits/weaknesses of the strategy – engagement surveys
are relatively easy to administer but they are not inex
pensive, if you count the employee’s time in filling them
out. Unfortunately, there is little statistically credible cor
porate data directly connecting improving employee
engagement scores and decreased rates of turnover. Most
engagement processes are anonymous. So a firm cannot
directly connect an individual’s low score with the fact
that they quit or even connect their stated reasons why they
quit and their low-engagement areas.
Dr John Sullivan is a professor and head of the HR program at San Francisco State
University, and is a noted author, speaker and advisor to corporations around the globe.
