Three out of four organisations have no explicit strategy or budget for employee retention and they don’t understand the real reasons why employees leave. Director of great{with}talent, Ron Eldridge, discuss’ the real statistics and staff retention strategies.

Employee Retention Strategies

The old adage that ‘people are an organisation’s greatest asset’ has been called into question by a research report which finds that 75 per cent of UK organisations do not have employee retention strategies or budgets.

Although human resources practitioners pay lip service to staff retention, they still spend a far greater amount of time and money on recruitment and selection. The organisational emphasis, it seems, is on getting people in, rather than on ensuring that they stay. This is all the more surprising when evidence shows that lowering employee turnover can reduce unnecessary recruitment costs and improve the morale, motivation and performance of existing employees.

Assessing Staff Turnover Rates

According to the Employee Retention Survey 2008*, 93% of organisations have implemented retention initiatives in the previous year. Yet nearly half (47%) still admit that they have a problem retaining staff and two-thirds (65%) say they want to reduce their employee turnover.

There were 44% of organisations with a staff turnover rate higher than 15% per year, with one in ten exceeding 30% per year. In organisations with over 500 employees, more than a third (36%) had an employee turnover rate exceeding 20%. While 81% of organisations believe staff turnover has a detrimental impact on their effectiveness.

It is worth stating that not all staff turnover is negative. An indifferent employee can have a damaging impact on performance, staff morale and customer satisfaction, so it is better for all concerned if that person leaves.

However the issue becomes a problem for organisations if employees with key skills or potential are leaving. Particularly when you consider that the average cost to replace an employee is between £7,750 – £11,000, with additional ‘costs’ such as lost opportunity time. Even a one per cent reduction in staff turnover would cut these costs significantly, as well as increasing overall organisational effectiveness.

Learn about great{with}talent’s Exit Process Cost Calculator.

The HR/Employee Discrepancy

A key issue for organisations, raised by the survey, is that the received wisdom of human resources practitioners clashes with reality when it comes to understanding why employees leave.

HR practitioners presume that people leave because of ‘lack of promotion opportunities’ (61%), ‘inadequate pay’ (49%) and ‘poor relationship with manager’ (26%). But our anonymous exit data, collected from 5,000 leavers, across different industry sectors, paints a different picture. Although ‘promotion prospects’ and ‘pay’ are indeed drivers for leavers, they are not as important as HR practitioners perceive.

Employees say other factors that drive them out – which are less appreciated by HR practitioners – are ‘uninteresting work and boredom’ (25%), ‘lack of training and development opportunities’ (25%), ‘lack of teamwork and cooperation’ (19%) and ‘promises not kept by management’ (17%).

It appears that HR practitioners believe that people leave their line manager, not their organisation. They regard ‘poor line management’ as the third highest contributor to employee turnover but only 13% of leavers actually cite this as a reason for going.

Our data shows that ‘relationships with colleagues’ is a more important factor. Effective staff retention initiatives should therefore be built around the friendships and sense of belonging that make jobs satisfying for so many people.

Read Six Tips for Enhancing Employee Commitment.

The Value of Exit Data

According to the survey, the answer to why human resources practitioners do not fully understand the reasons that employees leave is because they don’t collect honest and reliable exit data.

For the most part, approaches towards collecting exit data are haphazard and non-strategic. HR practitioners tend to rely on hearsay or opinion, rather than a systematic analysis of reliable information. Yet there is no reason why exit procedures should not have the same level of standardisation, objectivity and analysis as the selection process.

The survey shows that 57% of organisations use traditional face-to-face exit interviews as their main source of data to find out why people leave. Only half of these then aggregate the data, to reveal exit patterns and only 4% collect anonymous exit data.

It seems that the exit interview is treated as more of a check-box process than a strategic opportunity. It is questionable whether traditional exit interviews provide honest information, as a leaving employee may choose to avoid confrontation to maintain a good reference.

Putting Initiatives in Place

The employee retention initiatives which organisations claim to have implemented over the past year include ‘improving employee communication and involvement’ (66%), ‘improving the induction process’ (56%) and ‘increasing learning and development opportunities’ (47%).

Clearly, organisations that provide challenging work and opportunities for training and development are more likely to experience a lower rate of staff turnover. But surprisingly, only 7% of organisations attempt to redesign jobs to make them more satisfying. Particularly with monotonous or inflexible jobs, this can have a big impact on employee retention and well-being.

View: What is Employee Engagement?


HR practitioners must take staff retention as seriously as they take recruitment and integrate it into their overall HR strategy. Unless more organisations monitor staff turnover, understand who is leaving and why, and implement targeted interventions. Otherwise, employee retention will continue to slip through the cracks.

* Developed from a survey of HR practitioners in 316 organisations. Employee Retention Survey 2008 examines the impact of staff turnover on organisational performance, HR attitudes towards employee retention, the interventions and approaches adopted and the use of exit interviews.

Contact great{with}talent and find out more about their TalentEngage employee engagement surveys.

(First published HR Grapevine. Main image from CIPD)