What is Employee Retention?

Definition: Employee retention is a strategy employed by organizations to keep its employees satisfied to avoid unexpected departures. In other words, it is a systematic effort to reduce the number of employees leaving the company.

What Does Employee Retention Mean?

Employee retention is an organizational strategy that aims to enhance work conditions to keep employees pleased. The main reason for this strategy to be implemented is that hiring and training new employees is an expensive and time-consuming activity. Policies are drawn to tackle different angles of the work experience such as salaries, health benefits, insurance benefits, work environment enhancements, growth opportunities or education and training opportunities. These topics are normally considered to develop strategies to increase employee retention.

Nevertheless, these policies are implemented at different levels depending on the assessment obtained from each employee. Companies might reduce the efforts made to retain certain employees with low productivity or attitude issues. On the other hand, employee retention is also a metric. It can be measured as the number of employees retained in a certain period of time. For example, a company can retain 80% of its employees in a calendar year. Or, this can also be interpreted like the company’s employee turnover rate was 20%, meaning that 20% were either fired or left. This can be measured each month, quarter or year.


Home Deco Co. is a company that produces painting solutions for domestic and industrial clients. The company was recently awarded with a Best Place to Work Award. They ended up in the 3rd place of their state as one of the best companies to work for. This award was achieved mostly because of the company’s outstanding employee retention policies. The Human Resources Director was interviewed by a local newspaper about it and he mentioned that a few years ago the company understood that it is much better to develop and train current staff, to help them achieve all their potential, than to hire new people just because someone is temporarily underperforming.

They designed a program called “We believe in you” where employees where supported to pursue their professional goals. This produced higher employee morale within all the company’s staff.