Employee retention at risk: 5 mistakes you should avoid

Why is employee retention so important?

Replacing an experienced employee requires time, money and internal resources. In addition to recruiting and onboarding costs, companies may lose valuable knowledge, established relationships and experience when employees leave.

High turnover can also put additional pressure on the remaining team and make it more difficult to maintain productivity and stability.

Strong employee retention can help companies:

• reduce voluntary employee turnover,
• retain valuable knowledge and expertise,
• lower recruiting and onboarding costs,
• create more stable and productive teams,
• strengthen employee engagement and satisfaction,
• improve their employer brand, and
• support long-term organisational growth.

Especially in areas where qualified professionals are difficult to recruit, retaining existing employees should therefore be considered an essential part of workforce planning.

While it used to be the norm to stay employed with the same company for life, or as long as possible, today a completely different wind is blowing in the job market. Nowadays, employers no longer have an easy time finding and convincing employees. As a result, the number of job openings is on the rise. 

According to a Stepstone study this year, there are currently significantly more vacancies than there were before or during the Corona pandemic. The search for suitable employees is difficult and takes a lot of time; job advertisements are often extended. Due to the increase in job offers and the longer leverage that qualified applicants have, employees are becoming more and more willing to change jobs. 

In times like these, companies should try to retain their employees and prevent termination or backfilling. So time and resources should be invested in employee retention.  

What is employee retention?

[Employee retention refers to an organisation's ability and efforts to keep employees within the company over the long term and reduce voluntary turnover.

Successful employee retention is not based on one single benefit or HR initiative. Instead, it is shaped by the overall employee experience – from leadership and compensation to career opportunities, workplace flexibility, recognition and company culture.

A strong retention strategy therefore starts with one important question:

What makes employees want to stay?

The answer may differ significantly from one employee to another.

The 4 types of employee retention

Most companies know that retention is important. In order to achieve this, it is important to understand what drives retention and where to start. Therefore, a theory of 4 levels of employee retention has been established. It refers to the different levels at which you reach the employee to create a bond between him/her and his/her job.Employee retention is often divided into four different types:

1. Rational employee retention

Rational retention is based primarily on tangible advantages.

These can include:

• competitive salary,
• bonuses,
• employee benefits,
• job security,
• flexible working conditions, and
• career and development opportunities.

Employees evaluate whether their current position offers sufficient advantages compared with alternative opportunities.

2. Emotional employee retention

Emotional retention develops when employees feel personally connected to their job, team and organisation.

Important factors include:

• positive relationships with colleagues,
• good leadership,
• meaningful work,
• recognition,
• trust, and
• identification with the company and its values.

Emotional retention can be particularly valuable because employees do not stay simply because leaving would be inconvenient – they stay because they genuinely enjoy being part of the organisation.

3. Normative employee retention

Normative retention is based on a sense of loyalty or responsibility.

Employees may feel committed to their employer, their manager or their team and may be reluctant to leave colleagues behind.

4. Habitual employee retention

Habitual retention results from familiarity and routine.

Employees may prefer an environment, team and processes they already know rather than taking the risk of changing jobs – even if their current working conditions are not perfect.

However, companies should not rely solely on habit or obligation. Sustainable retention is more likely when employees actively want to stay.

7 effective employee retention strategies

There is no single employee retention strategy that works for every person. Companies should therefore combine different measures and adapt them to the needs of their workforce.

1. Invest in good leadership

Managers have a major influence on employees' everyday experience.

Clear communication, realistic expectations, regular feedback and respectful leadership help build trust. Managers should also recognise good performance and create an environment in which employees feel comfortable raising concerns.

2. Offer development and career opportunities

Employees are more likely to consider leaving if they see no opportunity to develop.

Companies can support retention through:

• professional training,
• mentoring,
• internal career paths,
• new responsibilities,
• leadership development, and
• opportunities to learn new skills.

Employees should be able to see what their next step within the organisation could look like.

3. Provide fair and competitive compensation

Salary is not the only factor that determines whether employees stay, but it should not be underestimated.

Benefits such as flexible working arrangements, team events or additional perks cannot permanently compensate for a salary employees perceive as unfair.

Regular salary reviews and market benchmarks can help employers understand whether their compensation remains competitive.

4. Offer flexibility where possible

For many employees, flexibility has become an important part of an attractive workplace.

Depending on the role and organisation, this may include:

• flexible working hours,
• remote or hybrid work,
• part-time options,
• individual working arrangements, or
• support for different phases of life.

The key is to understand which type of flexibility employees actually value.

5. Make recognition part of everyday work

Employee appreciation should not be limited to annual performance reviews.

Recognition can include simple but meaningful actions: acknowledging good work, involving employees in decisions, providing responsibility and recognising individual contributions.

Employees who feel that their work is noticed and valued are more likely to develop a stronger connection to their organisation.

6. Build a strong company culture

Company values only strengthen retention if employees experience them in their everyday work.

A positive culture is shaped by factors such as:

• trust,
• transparency,
• psychological safety,
• fairness,
• collaboration, and
• credible leadership.

There should be as little discrepancy as possible between the employer brand communicated externally and the workplace employees experience internally.

7. Conduct regular stay interviews

Many organisations ask employees why they are leaving during an exit interview.

By then, however, it may already be too late.

Stay interviews allow managers to speak with employees before they consider leaving.

Useful questions include:

• What do you currently enjoy most about your job?
• What makes you want to stay?
• What frustrates you?
• What would you like to change?
• Which development opportunities would you like to have?
• Is there anything that could make you consider leaving?

Regular conversations can help employers identify retention risks early and respond before dissatisfaction develops into a resignation.

At Schulmeister, we know that happy employees are more productive and better employees. Employees who stay with a company largely out of habit or obligation may have performance and motivation deficits. Therefore, it is worthwhile to activate the emotional level in the process of employee retention.  

To reach employees on the emotional level and thus to bind them to the company, one should make sure that they are happy in their job. In this article, we show you what measures can be taken to achieve this and what makes people happy at work -> 8 ways to really motivate employees.  

For all the efforts companies put in to strengthen employee loyalty in their team, mistakes also happen again and again. Here are 5 no-go's that can have a counterproductive effect on your employees’ loyalty: 

Watch out: 5 common mistakes to avoid

Even well-intentioned retention initiatives can fail. These five mistakes can undermine employee loyalty and increase the risk of turnover.

1. Using the same retention measures for everyone

One of the most common mistakes is assuming that all employees value the same benefits.

Flexible working hours might be extremely valuable to one employee, while another may prioritise professional development, salary progression or additional responsibility.

Rather than introducing benefits purely because they are popular, employers should regularly ask employees what they actually need.

Employee surveys, one-to-one meetings and stay interviews can provide valuable insights.

2. Making promises you cannot keep

Few things damage trust faster than promises that are repeatedly postponed or never fulfilled.

This might involve:

• a promised promotion,
• a salary increase,
• additional responsibilities,
• training opportunities, or
• changes to working conditions.

Employers should therefore avoid making commitments unless they are realistic.

Transparent communication is usually better than raising expectations the company cannot meet.

3. Underestimating the importance of salary

Money alone rarely creates long-term employee loyalty.

However, inadequate or unfair compensation can become a strong reason to leave.

Employees increasingly have access to salary information and can compare opportunities across employers. Companies should therefore ensure that salaries remain competitive and that differences in compensation can be explained transparently.

Benefits are valuable additions – but they should not replace fair pay.

4. Tolerating poor leadership

Employees' relationships with their managers have a significant impact on their overall workplace experience.

Poor communication, lack of recognition, micromanagement, unfair treatment or unclear expectations can undermine even otherwise attractive working conditions.

Companies should therefore treat leadership quality as a central element of their employee retention strategy.

This includes carefully selecting managers, providing leadership training and taking employee feedback about leadership seriously.

5. Fake online reviews  

When it comes to recruiting new employees, the opinions and reports of existing employees are a good tool for presenting a company to the outside world. Reviews on Kununu, for example, which is an international variant of the Glassdoor.com platform, have an influence on the decision to apply for an employer or not->Read more here.  

But beware: Packaged employee reviews that an employer writes himself are quickly recognised! As a company, you should instead use the "Comment as an employer" option to respond to bad (or even good) reviews. This creates a more authentic and honest image of the employer. You should also not explicitly instruct your employees to leave positive reviews, as this can also quickly backfire and cause resentment among employees. Instead, you should ensure great working conditions and a pleasant working atmosphere so that your employees will leave positive - and above all honest - reviews of their own accord. 

How can employee retention be measured?

Employee retention should not only be discussed – it should also be monitored.

Useful HR metrics include:

Employee retention rate

The employee retention rate shows the percentage of employees who remain with the company during a defined period.

Voluntary turnover rate

This measures how many employees actively choose to leave the organisation.

Average employee tenure

Changes in average tenure can provide additional insight into workforce stability.

Early turnover

Companies should pay particular attention to employees who leave during their first six or twelve months.

High early turnover can indicate problems with hiring decisions, expectations, onboarding or company culture.

Employee survey results

Regular surveys can help identify trends in areas such as:

• engagement,
• leadership,
• workload,
• development,
• compensation,
• workplace culture, and
• intention to stay.

Stay and exit interview insights

Quantitative metrics explain what is happening. Employee conversations can help explain why.

Combining both types of information gives HR teams and managers a much clearer picture of potential retention risks.

Conclusion: Employee retention starts with understanding your employees

Successful employee retention is not about adding as many benefits as possible.

It is about understanding what employees value, what motivates them and what might ultimately cause them to leave.

Competitive compensation, good leadership, development opportunities and attractive working conditions provide an important foundation. But sustainable retention also depends on trust, recognition and regular communication.

Companies that listen to their employees and address potential problems early have a much better chance of retaining valuable professionals over the long term.

Would you like to retain your current employees while also strengthening your team with the right new talent?