How to reduce employee turnover in 2025

Employee turnover remains a costly challenge for businesses, impacting productivity, morale, and the bottom line.

As workforce expectations shift and competition for top talent intensifies, retaining employees in 2025 requires more than just competitive salaries — it demands a thoughtful, strategic approach. 

However, there are proven strategies you can implement to reduce turnover and retain your top talent. By understanding the causes of turnover and taking proactive steps, you can build an engaged and stable workforce. 

By proactively addressing the factors that drive turnover, companies can build a loyal, motivated workforce while reducing hiring and training costs. The key is not just to react to turnover but to prevent it with the right policies and programs in place.

Here’s everything you need to know about employee turnover, why it happens, and how to prevent it in your workplace.

Key takeaways

• Employee turnover is costly, impacting profitability, productivity, and morale, making retention a top priority for businesses in 2025.
• Top turnover drivers include lack of flexibility, poor management, limited growth opportunities, and inadequate compensation.
• Offering personalized, flexible benefits (e.g., LSAs, remote work, wellness programs) improves retention and employee satisfaction.
• Investing in career development, recognition programs, and transparent communication fosters engagement and long-term commitment.
• Flexible work arrangements and inclusive company culture attract and retain top talent while boosting productivity.
• Forma helps businesses build customizable benefits programs that enhance retention — <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">schedule a demo today</span> today to see how we can help you retain top talent!

What is employee turnover?

Employee turnover refers to the rate at which employees leave a company and need to be replaced. This can include voluntary departures, such as resignations for new opportunities, and involuntary exits, such as layoffs or terminations. 

High turnover can be costly, leading to increased recruitment, training expenses, and productivity loss. It can also impact team morale and overall business performance. 

High turnover significantly impacts businesses across many areas:

• Profitability: Recruiting and training new hires is expensive, cutting into profits.
• Productivity: Experienced employees leaving take knowledge and skills with them. Getting new hires fully productive takes time.
• Morale: Constantly losing coworkers is disruptive and hurts team morale. Remaining employees may feel stressed and overworked.
• Customer service: Inexperienced new hires may provide lower quality service compared to seasoned employees.

Given the high costs, reducing turnover is a major priority for HR leaders. Building an engaged workforce with satisfied employees who want to stay long-term has become critical. But what causes employees to leave, and how can you prevent unwanted turnover?

Top reasons behind employee churn

To reduce turnover, you first need to understand what's driving it. Exit interviews and employee surveys can provide valuable insights. While each organization is unique, some common themes have emerged:

1. Lack of flexibility: In the post-pandemic world, employees expect more control over when and where they work. Rigid, one-size-fits-all policies are a fast track to the exit door. While there are some that welcome on-site employment, the majority of the popular prefer working from the comfort of their home.
2. Limited growth opportunities: High performers want to learn, develop new skills, and advance their careers. If they don't see a clear path forward, they'll find it elsewhere.
3. Poor management: As the saying goes, people don't quit jobs; they leave bad bosses. Lack of trust, unclear expectations, and infrequent feedback are common complaints.
4. Inadequate compensation: With rising costs of living, employees feeling underpaid will look for better offers. But it's not just about base pay - benefits, bonuses, and equity also matter.
5. Misaligned values: More than ever, people want to work for companies whose purpose and values resonate with their own. Lack of diversity, social responsibility, or ethical practices can be dealbreakers.
6. Burnout: Heavy workloads, 24/7 connectivity, and lack of work-life balance lead to stressed, exhausted employees. Without boundaries and downtime, they'll head for the exits.
7. Feeling undervalued: Everyone wants to feel appreciated for their contributions. Lack of recognition, whether formal or informal, leaves people questioning their worth.

Why reducing employee turnover matters

Reducing employee turnover isn’t just about retaining talent — it’s a strategic investment that strengthens company culture, improves productivity, and lowers operational costs. Here’s why reducing turnover is no longer optional.

• Productivity takes a hit: When experienced employees walk out the door, they take valuable knowledge and skills with them. It can take months for new hires to get fully up to speed.
• Hiring costs add up fast: Recruiting, onboarding, and training new employees is expensive. While the actual cost for onboarding employees as suggested by SHRM is around $4100, some studies estimate the cost doesn’t stop at onboarding. As reported by Indeed, a new hire can potentially cost the company up to $30,000 excluding their salary.
• Morale suffers: Constantly saying goodbye to trusted colleagues is tough on teams. Those left behind may feel overworked and undervalued, leading to more turnover in a vicious cycle.
• Customer relationships are disrupted: Your employees are the face of your brand. Clients and customers build relationships with your people. When they leave, those connections are severed.
• Employer brand takes a beating: High turnover rates can earn you a reputation as a revolving door, making it even harder to attract quality candidates. Sites like Glassdoor have given employees a much-needed platform where they can reflect their opinions on their workplace culture. Unflattering reviews can dissuade top talent from working with your company.

How to reduce employee turnover in 2025

Reducing employee turnover requires a multifaceted approach that prioritizes employee well-being, growth, and engagement. Here are eight proven strategies to boost retention and build a loyal workforce in 2025:

1. Offer personalized, flexible benefits

One of the most effective ways to reduce employee turnover is by offering benefits that truly align with employees’ individual needs. A one-size-fits-all approach no longer works — today’s workforce expects flexibility and personalization in their compensation and perks. Providing a mix of customizable benefits ensures employees feel valued and supported, increasing retention and job satisfaction.

Benefits like Lifestyle Spending Accounts (LSAs) give employees the freedom to use funds on what matters most to them, whether it’s wellness programs, fitness memberships, or professional development. Dependent care benefits help working parents by offsetting childcare costs, reducing stress and improving work-life balance. 

Pet insurance is another growing perk, catering to employees who see their pets as family members. Additionally, offering remote or hybrid work options can significantly impact retention by providing employees with the flexibility to balance work and personal commitments.

By implementing a flexible benefits program through a third-party administrator (TPA), businesses can streamline administration while ensuring employees have access to meaningful perks. These benefits not only attract top talent but also create a workplace where employees feel recognized and supported — key factors in long-term retention. When employees can tailor their benefits to fit their lifestyles, they are far more likely to stay engaged and committed to their organization.

2. Prioritize employee well-being

Employee well-being significantly impacts retention. When workers feel their employer cares about their physical, mental, and financial health, they're more likely to stay.

Comprehensive well-being programs go beyond traditional health insurance. They may include on-site fitness classes or gym membership reimbursement to encourage physical activity. Mindfulness and meditation apps can support mental health, while financial planning tools and workshops help reduce money-related stress.

Employee assistance programs (EAPs) provide confidential counseling and referrals for personal and work-related issues. These services demonstrate your commitment to supporting employees through life's challenges.

Promoting work-life balance is another key aspect of well-being. Encourage employees to take their paid time off and disconnect from work outside of business hours. Model this behavior from the top down to create a culture where taking breaks is not only accepted but encouraged.

Well-being initiatives don't have to break the bank. Many vendors offer affordable, scalable solutions that can be tailored to your workforce's needs. Regularly survey employees to understand which offerings resonate and make adjustments accordingly.

3. Build an inclusive culture

An inclusive workplace where every employee feels valued and heard is a powerful retention tool. Diversity, equity, and inclusion (DEI) training equips managers and employees with the skills to recognize and mitigate bias, communicate effectively across differences, and create a welcoming environment for all.

Employee resource groups (ERGs) provide a space for workers with shared identities or experiences to connect, support each other, and advocate for change. These grassroots networks foster a sense of community and belonging, which is especially important for underrepresented groups.

Actively seeking out and acting on employee feedback demonstrates your commitment to inclusion. Regular surveys, focus groups, and one-on-one conversations give workers a voice in shaping company culture. When you listen and make meaningful changes based on their input, you show that their perspectives matter.

Inclusive hiring practices ensure that your workforce reflects the diversity of your customer base and the communities you serve. Bias-free job descriptions, diverse interview panels, and objective evaluation criteria help level the playing field for all candidates.

Apart from that, inclusion is good for business. Companies with diverse leadership teams are more likely to outperform their peers financially. Inclusive teams are more innovative, make better decisions, and have lower turnover rates.

4. Invest in career development

Employees are more likely to stay with a company when they see a clear path for growth. Investing in career development not only enhances employee skills but also strengthens loyalty and engagement, reducing turnover. When employees feel stagnant or unsupported in their professional growth, they are more likely to seek opportunities elsewhere.

Offering tuition reimbursement or learning stipends allows employees to pursue further education, certifications, or industry-specific training. Mentorship programs connect employees with experienced leaders, providing guidance and career advancement opportunities. Internal upskilling and reskilling programs help employees develop new competencies, making them feel more valued while preparing them for future roles within the company.

Providing clear career progression pathways, such as leadership training and promotion opportunities, ensures employees see a future with the organization. Even simple initiatives, like quarterly career check-ins, can show employees that their growth is a priority.

By integrating career development into a total rewards strategy, businesses not only build a stronger, more capable workforce but also foster long-term commitment. Employees who feel supported in their professional journey are far more likely to stay, reducing hiring and training costs while driving productivity and innovation.

5. Conduct stay interviews

Stay interviews are a proactive approach to understanding what motivates your employees to stay with your organization. Unlike exit interviews, which happen after someone has already decided to leave, stay interviews are conducted with current employees to gather insights into what they value most about their job and the company.

These one-on-one conversations between managers and their direct reports typically last 30-60 minutes and cover topics such as:

• What do you enjoy most about your job and the company?
• What keeps you here?
• What would make your job more satisfying?
• What could the company do to better support you?

Stay interviews give employees a chance to feel heard and valued. They signal that you're invested in their happiness and success, not just their productivity. When conducted regularly (e.g., quarterly or semi-annually), stay interviews can help you identify potential retention risks early on before they turn into resignations.

After the interviews, the data should be analyzed to identify common themes and trends. Look for patterns across departments, roles, and demographics. Use these insights to inform your retention strategies and make targeted improvements to your employee experience.

For example, if multiple employees mention a lack of learning and development opportunities, you might invest in new training programs or mentorship initiatives. If work-life balance comes up as a pain point, you could explore flexible scheduling options or encourage managers to model healthy boundaries.

The key is to act on the feedback you receive. Employees will quickly lose faith in the process if they don't see any changes or improvements based on their input. Close the loop by communicating what you heard and what actions you're taking as a result.

6. Recognize and reward employees

Employee recognition is a powerful tool for reducing turnover and boosting engagement. When workers feel appreciated for their hard work and contributions, they're more likely to stick around.

Make recognition a regular part of your company culture, not just a once-a-year event. Recognition is most effective when it's timely, specific, and sincere. Don't wait for annual performance reviews to give feedback and praise. Catch people doing things right at the moment, and let them know exactly what you appreciate about their work. Celebrate milestones like work anniversaries, project completions, and personal achievements. Highlight exceptional work in company-wide communications like newsletters or all-hands meetings.

Monetary rewards like spot bonuses, profit-sharing, or gift cards can be impactful, but recognition doesn't always have to come with a price tag. A heartfelt thank-you note, public praise, or additional time off can be just as meaningful.

It’s also a good idea to encourage peer-to-peer recognition in addition to top-down acknowledgment from managers. Social recognition platforms make it easy for coworkers to give each other shout-outs for a job well done. These organic, real-time kudos foster a culture of appreciation and teamwork. 

Tailor your recognition to the individual. Some employees may prefer public praise, while others appreciate a quiet word of thanks. Get to know your team members' preferences and recognize them in ways that resonate.

The best way to get the most out of your employee rewards is to align your recognition with your company's core values. When you celebrate employees who embody your mission and purpose, you reinforce the behaviors and attitudes that drive success. This clarity and consistency boosts engagement and retention.

7. Embrace flexible work arrangements

Flexible work is an expectation, not a perk. Employees seek the freedom to work where and when they are most productive — be it at home, the office, or a coffee shop. Offering remote or hybrid options demonstrates trust and boosts productivity, engagement, and retention by enabling better work-life balance. Employees can handle personal responsibilities, like appointments or family commitments, without stress.

Flexible work expands talent pools beyond geographic limitations, attracting top talent globally and increasing diversity. However, clear guidelines and expectations are essential. Teams should define communication norms, identify meetings requiring in-person attendance, and establish success metrics.

Companies that want to go for the hybrid model, investing in collaboration tools, such as video conferencing software, project management platforms, and instant messaging apps, is crucial. Provide training to ensure effective use and alignment across teams. Remote team-building activities like virtual happy hours, trivia nights, or coffee chats foster connection. Managers should schedule regular one-on-one check-ins with remote team members to maintain relationships.

Leaders play a key role in modeling flexibility and promoting work-life balance. Encourage employees to set boundaries and take time off as needed. Regularly evaluate and adapt flexible work policies based on employee feedback to address evolving needs.

8. Communicate transparently

Transparent communication is a vital tool for employee retention. By keeping employees informed about company goals, challenges, and changes, organizations build trust and foster engagement. When employees understand how their work contributes to broader objectives, they feel more connected to the organization.

Transparency should be a consistent practice, not a one-time event. To share updates, use various channels, such as all-hands meetings, newsletters, and team huddles. Leaders at all levels should engage in open and honest conversations with their teams.

It’s also vital to acknowledge challenges or setbacks without sugarcoating. Share plans to address issues and invite employee input. Involving employees in problem-solving demonstrates their value and strengthens commitment.

Transparency includes being open about decisions affecting employees, such as changes to benefits or organizational structures. As managers and team leads, it’s important to provide advance notice, clear reasoning, and opportunities for questions and feedback. 

While some information may need to remain confidential for legal or competitive reasons, be upfront about these limitations and explain why. Transparency modeled by leaders sets a precedent for the entire organization. Managers should regularly connect with team members to build trust and rapport.

What is the most effective way to reduce employee turnover?

The most effective way to reduce employee turnover is by offering flexible, personalized benefits that meet the diverse needs of today’s workforce. Employees want more than just a paycheck — they seek work-life balance, financial security, and opportunities for growth. 

Providing benefits like lifestyle spending accounts (LSAs), remote work options, dependent care support, and wellness programs ensures employees feel valued and supported, leading to higher engagement and long-term retention. A well-structured benefits program not only enhances job satisfaction but also reduces hiring and training costs, making it a strategic investment for any organization.

Forma makes it easy to build and manage a flexible benefits program that keeps employees engaged and reduces turnover. Our platform allows businesses to offer customizable benefits while handling compliance, claims processing, and administration — all in one place. 

Trusted by companies like Honda, lululemon, and Tripadvisor, Forma helps organizations streamline their total rewards strategy and deliver real value to employees. 

<span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Schedule a demo today</span>to see how Forma can transform your benefits program and help you retain top talent.

How to reduce employee turnover: Frequently asked questions

What is a good employee turnover rate?

Generally, a turnover rate between 10% and 20% is considered healthy, but it can vary by industry and company size.

How much does employee turnover cost companies?

Turnover can cost companies between 50% and 200% of an employee's salary when considering recruitment, training, and lost productivity.

What are the top reasons employees leave jobs in 2025?

Lack of flexibility, limited career advancement, inadequate compensation, and poor management are common reasons employees seek new opportunities.

How can HR technology help reduce turnover?

HR technology streamlines processes, provides insights into employee satisfaction, and offers platforms for flexible benefits and career development, which can enhance retention efforts.