Sample Essay on Employee Retention

Employee Retention

Different industry sectors exhibit different employee retention characteristics with most organizations known to be experiencing employee retention issues. This is manifested through problems of increased turnover of their key workers due to inability to retain them. The report will discuss and focus on strategies that organization can employ to retain their key employees. These strategies are in the form of policies and procedures that can help to cope with the issues which force staff members to leave an organization. Studies have established that there are hidden costs incurred when there is high employee turnover because low retention causes problems and poses serious workforce issues (Saridakis & Cooper, 2016).

Organizations succeeded to cope with this issue are known to retain approximately 50 percent of the employees annually as they provide a myriad of career opportunities for their workforce, and keep high number of their key staff for continuity. A section of human resource management scholars have elaborated that high retention may also introduce problems of stagnation and de-motivation (Saridakis & Cooper, 2016). This is because some employees may have performed some given task for so long that a manager may not allow them to leave, which may lead to de-motivation. However, the paper will address retention of key employees supported by the assertion that good employees should be retained while poor performers should be allowed to leave.

Importance of Employee Retention

Staff retention is a key concept in human resource management, specifically because organizations are often encouraged to retain employees whose contributions are positive.  Such workers always contribute towards the goals and objectives of an organization to adjust profits and stimulate growth. It is worth noting that retention is important for continuity of any business because it is extremely difficult to develop without consistency. When an organization constantly changes staff members then it is difficult to maintain momentum of operations. This means that retention is a major indicator to return on investment, and therefore strengthening of an organization starts with keeping key employees on board. Besides, high turnover may ultimately crush an organization’s bottom line and what it stands for as many funds will be used during transition.  It is clear that staff retention ensures that an organization has a good team while still protecting its budget.

Moreover, a company that is unable to retain key employees may end up losing great talents and ideas, in most cases it is an uphill task to replace an employee with another of same qualities and skills. Consequently, retention boosts customers’ loyalty and esteem because they often notice when names change on correspondences. Customers often build relationships with staff members, and at the moment when they realize that a particular employee is no longer with the organization, loyalty can be shifted to competitors. Retention also keeps workers at bay, and thus the organization does not have to spend more time dealing with potential employees. Job seekers also notice that an organization is constantly losing employees and replacing them with others, which makes them to constantly ask for positions.

Employee Retention Strategies

Reviewing Budget on Recruitment

The best way for an organization to retain its employees is to review budget allocated to the recruitment where limiting the budget may discourage it from allowing its employees to leave. Studies have established that high staff turnover inflicts negatively on the budget in respect to the cost involved in replacing employees (Saridakis & Cooper, 2016). The costs can substantively be broken down into leaving, replacements, training, and transition of new staff to the organization. In details, leaving costs appertain to payroll and personnel management because when a staff member leaves, certain provisions of employment must be triggered like payment of gratuity among others. Replacement costs comprise costs incurred in recruiting new personnel to the organization including funds spent on interviewing and placement provision fees. On the other hand, replacement covers costs of transition and training of new members to ensure that they are up to speed with operations through acquisition of skills and knowledge.

Scholars affirm that the process of recruitment may hurt a company’s budget and that it is important to consider cost of hiring new member, the rate of turnover witnessed, and productivity (Saridakis & Cooper, 2016). Furthermore, recruitment is characterized by hidden costs such as advertisement fees, employee screening, and interview. This means that an organization must review costs, and if the process is found not to be cost effective then it must avoid high turnover, retaining employees will be the best solution in such a case. Besides, cost of replacing may be double annual salary of an employee because such costs are never declared in accounting systems.

An organization should periodically review and document the cost of acquiring new employees and retention and if they demonstrate success, appropriate decision should be made. Staff needs to constantly review recruitment budget allocations and all the cost associated with the turnover. In most cases, costs may be intangible and not be presented on a company’s statement of accounts. In the long term, a lack of valuable skills may affect revenue and profits. In order to retain employees, an organization should reduce budget allocation on recruitment, which can effectively discourage it from recruiting new workers and retain key staff.


Sound Recruitment Process

The first step of retaining key employees is to recruit the right people with the right qualifications and skills. This can easily be achieved through giving prominence to recruiting and attaching more value to the process, since it is strategic for the organization. Human resource practitioners concur that competitive advantage can be achieved if the organization attract and retain valuable workforce to spear its goals and objectives (Saridakis & Cooper, 2016). Therefore, sound recruitment strategies are pivotal for organizational success and growth both in the short and long term. Studies have established that retention starts from the point when people are recruited by selecting organizational and culturally fit individuals to fill vacant positions (Saridakis & Cooper, 2016).This is the point where management engages good practices and procedures, which allows full assessment and evaluation of candidates whose abilities, skills, and qualifications are in line with goals and requirements of the company.

Importance should be attached on recruitment of the right people for the right job because the economic implication of getting this wrong can be unforgiving to the company. Studies have revealed that a myriad of factors should be taken into consideration during the process and include organizational culture, legal implications, right individuals, time, and budget (Saridakis & Cooper, 2016). In a sound recruitment process, it must be considered how recruited individuals will fit on job and personnel requirements. This ensures that the company maximizes efficiency and boosts retention capability, as part of its continuity the organization can use the process to enhance changes and culture within.

Moreover, an organization can effectively retain its key employees by using appropriate recruitment sources. There is wide range of sources that can be used in the process each yielding different results. For instance, employee referral can yield more results compared to advertisements placed on newspapers or electronic media. Personnel recruiters should thoroughly evaluate all sources to find out one that can be effective in recruiting specific individuals for positions in an organization. Besides, recruiters should also possess right skills and exhibit experience to make sure that the right people can find their way into the company. Studies have confirmed that insufficient evaluation of potential employee’s background and performance can put the entire process into jeopardy (Saridakis & Cooper, 2016). This may lead to staff turnover in the future because of an employee’s inability to effectively perform organizational tasks and duties. Altogether, reviewing and monitoring recruitment procedures can effectively reduce the number of staff members leaving an organization. Therefore, the best practices will lead to the right candidates being selected who are likely not to leave the company in near future.

Appropriate Reward Systems and Motivation

Reward systems form part of great pillars within strategic human resource management because it is critical in ensuring commitment to work, promoting competency, and ensuring that human capital is cost effective. Rewarding employees is a way of motivating them, which boosts self-esteem and promotes self-worth. On the contrary, it may not ensure equal recognition due to inadequate information that may not recognize other staff members. A rewarding system that treats employees equally may see the same compensation packages given to both productive and non-productive staff members. Psychologists postulate that incentives can be used to motivate employees, for instance, in the form of rewards when they meet set goals and objectives (Phillips, J., Phillips, P., & Smith, 2016). Besides, theorists presume that individual workers believe that they are entitled to fair and equitable return based on contributions made by them (Phillips, J., Phillips, P., & Smith, 2016). This means that employees tend to put appropriate effort to achieve fair compensation packages. Motivating them eliminates close supervision and transforms them to be self-managed, responsible, and committed. Employees who are properly rewarded for their efforts tend to stay in the organization for long, which reduces turnover.

Ensuring Job Satisfaction

Saridakis & Cooper (2016) assert that an effective way of retaining employees is by improving their job satisfaction. It can be achieved through improved work conditions, commensurate, adequate salaries, and improved communication within the organization. Studies have acknowledged that employees satisfied with their job will have no reason to seek alternative employment (Phillips, J., Phillips, P., & Smith, 2016). Notably, management can ensure that talented and vital staff members derive job satisfaction by ensuring that they are autonomous in the job responsibilities. Moreover, they should be allowed to be a part of major decisions made in the organization and in specific areas of expertise. Significantly, appropriate training may impart new skills, knowledge, and in the process discourage them from leaving.

Conducting Research on why Employees are leaving

Retaining employees in an organization requires thorough examination and analysis on why they are leaving. Phillips J., Phillips, P., & Smith (2016) elaborate that this approach can highlight on the areas that are needed to be reviewed and addressed to prevent employees’ turnover in future. Studies have affirmed that voluntary turnover is always dependent on an organization and individual. Mostly, average performers stay longer compared to poor and good ones. Reasons behind leaving can only be discovered through the research. Management needs to invest and support such programs as they are useful in acting as revelations. Thorough analysis of findings from the research may point out to the actions that are needed to be taken or areas that need improvement. However, the process will only be effective if respondents provide reliable and honest responses.

Restructuring Work Functions

Rigidity of business functions and activities subjects employees to hostile working environment where they cannot feel to be protected. This has been the reason for formation of trade unions that are on the forefront in championing for fair wages, working hours, health, and security among other benefits. Human resource managers should effectively replace trade unions by constantly intervening on employees’ complains and needs. Rigid work condition is one of the reasons why most workers cannot effectively be retained in an organization. Due to this factor coupled with the changes witnessed in workforce management and development, management may constantly face withdrawal of workers from business operations. It is important for this department to address and favorably transform work activities by ensuring commitment and appointment to enhance performance and productivity.

Significantly, it is worth pointing out that human resource practitioners can formulate friendly employment policies and practices that encourage employees to continue working in an organization. Potentially, this can prevent or discourage them from leaving in search of favorable organizations with good working environment. Moreover, psychological contract that has been witnessed in many organizations is needed to be changed. Formerly, contracts were violated leading to inability to retain key employees. In modern times, organizations do not offer permanent employment. Employment opportunities are mobile, with promotions being elusive for most workers. To effectively retain key staff members, organization culture that allows personal growth should be encouraged.


Retaining Graduates

Today, many organizations engage new graduates in programs such as management trainees. This provides a path for mutual career development by allowing them to decide their own career paths. It is increasingly important for an organization to recognize impacts of new graduates on its performance. This warrants designing and formulating retention plans that are based on the outcomes of labor turnover. However, economic uncertainties and political hostilities jeopardize retention strategies for graduates. A company can reap benefits in the long run if it manages to retain new workers. When recruiting new staff, it is crucial to determine those individuals who are passionate in working in a particular company. This is because most of them tend to leave as soon as they acquire the necessary experience and qualifications.


Retaining key and productive employees is critical in ensuring long-term success of any organization as it provides a pathway for continuity in business functions and operations. However, this comes with several challenges that include adversative selection process, turnover costs, and knowledge gap that exists between employees. As pointed out above, retention is characterized by a lot of hidden costs that create major problems for the process. As addressed earlier, well-structured reward systems, increased job satisfaction, restructured work functions can be vital in addressing challenges surrounding employee retention. If they are implemented successfully, an organization will have well-motivated employees who will ensure long-term success and growth.


Phillips, J. J., Phillips, P. P., & Smith, K. (2016). Accountability in human resource

            management: Connecting HR to business results. Abingdon, Oxon: Routledge.

Saridakis, G., & Cooper, C. L. (2016). Research handbook on employee turnover. Cheltenham,

UK: Northampton, MA: Edward Elgar Publishing.