How to retain employees: Step-by-step guide and 10 efficient strategies for 2025

Ever noticed how some companies seem to keep their best people year after year while others face a revolving door of talent? The difference isn't luck — it's strategy.

Employee retention has become a corporate obsession, and for good reason. The cost of replacing a valuable team member goes far beyond recruitment fees. It's the delayed projects, the disrupted client relationships, and the team morale that takes a hit each time someone walks out the door.

In 2025, the rules of retention have shifted dramatically. Employees aren't just looking for stability; they want meaning, growth, and a workplace that respects them as complete humans with lives beyond their job descriptions. The companies winning the retention game understand this isn't about free snacks or foosball tables. It's about creating an environment where people genuinely want to stay and contribute.

This article skips the fluff and focuses on retention strategies that deliver real results. You'll find practical, step-by-step approaches to keeping your best talent engaged and committed. We're directly linked to companies that transformed their turnover rates from problematic to impressive and distilled their experiences into actionable tactics you can implement without a massive budget or a complete cultural overhaul.

Key takeaways

• Employee retention is essential for business success, reducing turnover costs, preserving productivity, and maintaining company culture.
• Key strategies include competitive compensation, career growth opportunities, flexible benefits, and a positive work culture.
• Recognition, open communication, and work-life balance contribute to employee satisfaction and long-term commitment.
• Investing in well-being programs, personalized benefits, and engagement initiatives improves retention and strengthens employer branding.
• Regularly tracking retention metrics like turnover rate, engagement scores, and exit interview feedback helps refine strategies.
• Forma simplifies employee retention with lifestyle spending accounts, wellness stipends, and customized benefits — <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">schedule a demo today</span>

What is employee retention?

Employee retention refers to an organization's ability to keep its employees over time. It's about preventing employee turnover and maintaining a stable workforce.

Retention strategies aim to address the various reasons employees leave, such as lack of growth opportunities, poor management, or non competitive compensation. By understanding what motivates your employees to stay, you can develop targeted initiatives to improve job satisfaction and reduce turnover.

Employee retention matters because high turnover can be costly. According to Gallup, the cost of replacing an individual employee can range from one-half to two times the employee's annual salary. These costs include hiring, onboarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts.

Why is employee retention important for businesses?

Employee retention isn’t just about keeping turnover low—it’s about building a stable, motivated workforce that drives long-term success. Employee retention matters for several key reasons:

• Reduced turnover costs: Replacing employees is expensive. The Society for Human Resource Management (SHRM) estimates that replacing employees costs 6 to 9 months of their salary. This includes costs associated with hiring, onboarding, training, and lost productivity. Retaining employees helps minimize these expenses.
• Maintained productivity: When employees leave, it disrupts workflows and project timelines. New hires take time to ramp up and reach full productivity. Keeping experienced employees ensures steady output and efficiency.
• Preserved institutional knowledge: Long-term employees possess valuable company-specific knowledge and skills. These are skills specific to your organization, and even the most overqualified candidate may take time to fully catch up. When they depart, that expertise leaves with them. Retaining employees helps maintain this institutional knowledge.
• Enhanced employee engagement: High turnover can dampen morale and engagement among remaining staff. Seeing colleagues constantly leave makes it harder for teams to build cohesion and trust. Focusing on retention fosters a more stable, committed workforce.
• Strengthened customer relationships: Customers and clients value familiarity and consistency. Regularly introducing new faces can weaken these relationships. Retaining employees, especially those in client-facing roles, helps maintain strong customer connections.
• Improved employer branding: Companies known for high turnover may struggle to attract top talent. With platforms like Glassdoor, former employees have a huge platform to voice their concerns, and potential candidates may perceive constant churn as a red flag. Building a reputation as an employer that retains staff can give you a competitive edge in recruitment.

How to retain employees in 10 strategies

Retaining top talent requires a multifaceted approach that addresses key factors that influence an employee's decision to stay. Implement these 10 strategies to boost retention rates and cultivate a loyal, engaged workforce.

1. Offer competitive compensation and benefits

While offering better salaries to retain talent is not a new concept, it’s still one of the most critical steps you have to take to make sure employees are satisfied at your company. To retain top talent, you must provide salaries and benefits that match or exceed what your competitors offer. Regularly research market rates for each role and adjust your compensation accordingly.

Competitive salaries should also be paired with comprehensive health insurance, retirement savings plans like 401(k)s, and additional perks such as flexible spending accounts, paid parental leave, and professional development stipends. Consider offering Lifestyle Spending Accounts that allow employees to choose benefits that best fit their needs.

While fair pay is a major factor in retention, it's not the only consideration. Pair competitive compensation with the other strategies mentioned below to create a well-rounded retention approach.

2. Foster a positive work culture

A positive work culture is the foundation of employee retention. It's about creating an environment where people feel valued, respected, and supported. Here’s how you can improve employee satisfaction around the workspace.

• Create a diverse team: Inclusivity and diversity are key components of a positive work culture. Ensure that all employees feel welcome and accepted, regardless of their background or identity. Provide diversity and inclusion training to help employees understand and appreciate differences.
• Take care of their well-being: Prioritize employee well-being by offering wellness programs and resources. This can include stress management workshops, mental health support, and fitness initiatives. Encourage employees to take breaks, use their vacation time, and maintain a healthy work-life balance.
• Be flexible: Flexible work arrangements, such as remote work options and flexible schedules, can also contribute to a positive work culture. Trusting employees to manage their own time and work location shows that you value their autonomy and work-life balance.

3. Provide growth and development opportunities

Mentorship programs pair employees with experienced colleagues who can provide guidance, support, and insights. These relationships foster knowledge sharing and help employees navigate their career paths within the company.

Coaching and training initiatives are a great first step to equip employees with the skills they need to take on new challenges and advance in their roles. This can include technical training, leadership development programs, or soft skills workshops.

Apart from that, offering internal mobility opportunities shows employees that they have room to grow within the organization. Encourage employees to apply for open positions and provide the necessary support and resources to help them succeed in new roles.

If that isn’t enough, tuition reimbursement and professional development stipends demonstrate your commitment to employee growth. These benefits allow employees to pursue advanced degrees, certifications, or attend industry conferences that expand their knowledge and skills.

4. Recognize and reward employee contributions

Recognizing and rewarding employees for their hard work is a powerful retention tool. When employees feel appreciated, they are more likely to stay with your organization long-term.

• Introduce company-wide recognition: Implement a recognition program that celebrates individual and team achievements. This can include public shout-outs during team meetings, company-wide emails highlighting outstanding performance, or a formal awards program.
• Add rewards to those shout-outs: Bonuses, spot awards, and additional paid time off show employees that their contributions directly impact their compensation and benefits. Non-monetary rewards like handwritten thank-you notes, gift cards, or extra perks like prime parking spots also demonstrate appreciation.
• Promote peer-to-peer recognition: Peer-to-peer recognition, in addition to top-down acknowledgment, is also an amazing way to encourage people to stay. Empower employees to nominate their colleagues for awards or give shout-outs for a job well done. This fosters a culture of appreciation and teamwork.

5. Encourage open communication and feedback

Creating effective communication channels is fundamental to employee retention. When team members feel heard and valued, small concerns get addressed before they become resignation-worthy issues.

Start with regular one-on-one meetings between managers and their direct reports. These conversations provide dedicated space to discuss career goals, performance feedback, and any challenges the employee is experiencing. The consistency of these meetings, not just their content, signals to employees that their growth and concerns merit regular attention.

Company-wide engagement surveys complement these individual conversations by capturing broader patterns and anonymous feedback. The critical step many organizations miss: visibly acting on survey results and communicating the specific changes implemented in response. This completes the feedback loop and proves employee input drives real workplace improvements.

For your highest performers, implement stay interviews — conversations specifically designed to uncover what keeps them engaged and what might tempt them to leave. These proactive discussions often reveal retention insights you'd otherwise only learn during exit interviews, when it's already too late.

Finally, ensure all managers maintain a genuine open-door policy and receive training in active listening techniques. When employees believe their voices matter and their input leads to meaningful change, they develop the sense of organizational ownership that's at the heart of long-term retention.

6. Promote work-life balance

In 2025, work-life balance is a top priority for employees. Burnout and stress lead to disengagement, decreased productivity, and turnover. While flexible work locations are a great way to promote a work-life balance, there are other factors you should consider:

• Make days-off mandatory: It’s super common for employees to have days-off saved up for a vacation they’re never going to take. To make sure they don’t feel burnt out, gently nudge employees to take their vacation time and disconnect from work during their time off. Lead by example and avoid contacting employees outside of work hours unless it's an emergency.
• Offer PTO: Provide paid time off for personal days, sick leave, and family responsibilities. Consider offering unlimited PTO to give employees greater flexibility in managing their time off.
• Days off for dependent care: Support employees with caregiving responsibilities by offering parental leave, eldercare resources, and backup child care options. These benefits show that you understand the challenges of balancing work and family obligations.

7. Invest in employee well-being

Employee well-being encompasses physical, mental, and financial health. Investing in employee well-being programs demonstrates your commitment to your employees' overall health and happiness.

One of the best ways to do this is by offering comprehensive health insurance plans that cover preventive care, mental health services, and prescription medications. Provide wellness programs that encourage healthy habits, such as fitness challenges, stress management workshops, and nutrition education.

Furthermore, you can also provide financial well-being resources, such as retirement planning advice, budgeting tools, and student loan repayment assistance. Financial stress can impact employee productivity and engagement, so offering support in this area can improve overall well-being.

If you’re looking for some easy implementations, create a work environment that promotes physical health by offering ergonomic workstations, standing desks, and access to healthy snacks and beverages. Encourage employees to take breaks and step away from their desks regularly.

8. Foster a sense of purpose and meaning

Employees want to feel that their work matters and contributes to something greater than themselves. Connecting employees to the company's mission and values fosters a sense of purpose and meaning that can improve retention.

Clearly communicate the organization's mission, vision, and values during onboarding and throughout an employee's tenure. Help employees understand how their individual roles and responsibilities align with these guiding principles.

It’s also a good idea to provide opportunities for employees to engage in meaningful work that aligns with their personal values and interests. This can include corporate social responsibility initiatives, volunteer programs, or cross-functional projects that address social or environmental issues.

Celebrate employee contributions that demonstrate the company's values or advance its mission. Highlight these stories in company-wide communications or events to reinforce the importance of purpose-driven work.

9. Encourage employee engagement and involvement

Engaged employees are more likely to stay with their organization long-term. Encourage employee engagement and involvement to foster a sense of ownership and commitment to the company's success.

For starters, it can be a good idea to involve employees in decision-making processes that impact their work or the organization as a whole. Seek their input through surveys, focus groups, or town hall meetings. Implement their suggestions when possible and communicate how their feedback influenced the final decision.

Also, you should also try to create opportunities for cross-functional collaboration and teamwork. Encourage employees to work with colleagues from different departments or locations to break down silos and foster a sense of unity.

Establish employee resource groups (ERGs) that bring together employees with shared interests or backgrounds. These groups can provide support, networking opportunities, and a sense of community within the larger organization.

Other than that, encourage employees to take ownership of their work by setting clear expectations and providing the necessary resources and support to succeed. Trust employees to make decisions and solve problems independently, with guidance and feedback from their managers as needed.

10. Offer unique and personalized benefits

Right now, standard benefits packages rarely inspire loyalty. The most effective retention strategies recognize that a 28-year-old software developer, a 45-year-old marketing director with teenagers, and a 60-year-old finance specialist all value different things from their employer.

Begin by actually asking your employees what matters to them through targeted surveys and small focus groups. These conversations often reveal surprising insights—perhaps your team values mental health support more than retirement matching, or would trade some vacation days for student loan assistance. This direct input helps you allocate your benefits budget toward what your specific workforce truly values.

The concept of flexible benefits has transformed from a nice-to-have into a retention necessity. Consider implementing Lifestyle Spending Accounts that give employees discretionary funds to use across categories like wellness, professional development, home office equipment, or even pet insurance. This approach acknowledges that employees at different life stages have varying priorities.

For working parents, family-friendly benefits like generous parental leave, adoption assistance, and childcare subsidies can be the deciding factor between staying or leaving. When employees don't have to choose between career advancement and family responsibilities, their loyalty deepens significantly.

Throughout this process, gather regular feedback, especially from newer team members who offer fresh perspectives on your benefits offerings. Their input helps you continuously refine your approach, ensuring your benefits strategy evolves alongside changing workforce expectations and remains a powerful retention tool.

How to implement employee strategies and their difficulty for HR

Wondering how difficult it really is to implement the strategies listed above? Here’s a quick summary of when to implement these strategies and the administrative burdens associated with them.

Why employee retain deserves your undivided attention in 2025

Employee retention isn’t just an HR concern — it’s a business imperative. In 2025, companies that fail to prioritize retention will face rising hiring costs, productivity losses, and a weakened company culture. 

With employees having more flexibility and career opportunities than ever before, businesses must create environments where people choose to stay, not just for the paycheck, but for meaningful work, growth opportunities, and personalized benefits. High turnover disrupts teams, slows progress, and drains resources, making retention one of the smartest investments a company can make.

A strong retention strategy isn’t about one-size-fits-all solutions. Employees stay when they feel recognized, supported, and aligned with company values. That means offering competitive compensation, flexible benefits, career development programs, and a positive workplace experience. Companies that invest in these areas don’t just keep employees longer — they build a motivated, engaged workforce that drives business success.

Forma makes retention easier. Our flexible benefits platform allows businesses to offer personalized Lifestyle Spending Accounts (LSAs), professional development funds, wellness stipends, and more, ensuring employees receive meaningful incentives tailored to their needs. 

We handle the administration, compliance, and communication, so HR teams can focus on strategy, not paperwork. 

Join companies like Honda, lululemon, and Tripadvisor in creating a better workplace with Forma. <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Schedule a demo today</span> and see how we can help.

How to retain employees: Frequently asked questions

What are the key factors that influence employee retention?

Retention depends on several factors:

• Compensation and benefits: Competitive salaries and comprehensive benefits are fundamental.
• Work culture: A positive, inclusive environment encourages long-term commitment.
• Growth opportunities: Clear paths for career advancement foster employee loyalty.
• Recognition: Regular acknowledgment of achievements boosts morale.
• Work-life balance: Flexible work options support employee satisfaction.
• Employee well-being: Wellness programs contribute to overall job satisfaction.

How can HR teams measure the success of their employee retention efforts?

HR teams should track various metrics to assess retention strategies:

• Turnover rate: Frequent departures indicate potential issues.
• Employee engagement scores: High scores suggest a motivated workforce.
• Job satisfaction surveys: Feedback reveals areas for improvement.
• Exit interview data: Understanding why employees leave informs future strategies.

What role do managers play in employee retention?

Managers significantly impact retention through their daily interactions:

• Support: Providing resources and guidance helps employees succeed.
• Recognition: Acknowledging efforts motivates team members.
• Growth opportunities: Encouraging development supports career advancement.
• Open communication: Regular check-ins and feedback build trust.
• Addressing concerns: Promptly resolving issues maintains a positive environment.