Understanding Available Retention Strategies: Are You Prepared for Turnover Rates to Double? (Part 2 of a 3-Part Series)

No matter how long you have been in the HR profession, this might be the onlycomprehensive list of retention strategies you have ever seen.

This is true because retention is not yet a distinct discipline, and because most retention managers and consultants laser-focus on their favored approach.

In order to provide you with a big-picture view of the available strategies, I’ve used my extensive experience and research in retention to compile a comprehensive list. It provides a brief overview of each of the major retention strategies that corporate leaders can employ.

Classifying Strategies Based On Their Primary Retention Lever

Retention strategies are best classified based on the primary lever (or treatment) that the firm uses to motivate employees to stay (the other option is to classify them by the causes of turnover that the strategy is trying to counter). Typical retention levers include pay, benefits, engagement drivers, promotions, and development actions.

Individual levers can be combined into thousands of situation-specific solutions. The following list of strategies has been separated into three broad classifications:laissez-faire, all-employee, and targeted approaches.


Category I: Laissez-faire Approaches

This group contains decentralized, do-nothing retention strategies. The primary success measures impacted by this category are departmental turnover rates and average time-to-fill for positions vacated voluntarily.

1) Individual Managers Own Retention

  • Goals of the strategy – the goal is to get the manager (who knows the employee best) to “own” the retention process and to select the best approach for each unique situation.
  • Prioritization process – it is left up to the individual manager but most do not prioritize.
  • Identifying turnover causes – it relies on employee self reporting and exit interviews.
  • Treatments for countering turnover causes – vary with the individual manager but exclude the use of corporate-controlled approaches like increasing benefits, promotions, and across-the-board salary increases.
  • Benefits / weaknesses of the strategy – giving managers ownership of the retention process means that they will likely pay more attention to it. Unfortunately, managers are not retention experts, so they will likely learn by trial and error. Managers will also frequently rely on their emotions rather than more effective data-based approaches.

2) React with a counteroffer or a retention bonus – this strategy involves waiting until employees announce that they’re leaving and countering any outside offers that can reasonably be matched. Incidentally, if you don’t also fix what is wrong with the job, it is unlikely that a counteroffer or a retention bonus will work long term.

3) Rely on effective recruiting – under this strategy, no formal action is taken to reduce turnover. Instead organizations focus on developing excellent employer branding, recruiting, and talent pool processes that provide talent on demand.

4) Do nothing – this strategy, by far the most common, starts with the assumption that turnover is normal, and involves taking no organized action.

Category II: All-Employee Strategies

This group contains the most commonly used formal strategies. Their popularity is largely driven by ease of implementation. It is assumed that the same-exact causes of turnover are shared by all employees, and that all employees must be treated equally. The primary success measures under this category are average turnover rate and time-to-fill for positions vacated voluntarily.

Yet with rare exception, blanket treatments fail miserably.

Not everyone with a fever has the flu, and treating everyone as if they do will result in some ill people dying.

Blanket treatments are expensive and erroneously propose that employees in general leave for the same reasons, regardless of the employees’ performance rating, job family, or location. In reality, blanket treatments do more harm than good because they send a message to top performers and innovators that their elevated levels of contribution do not matter.

5) Improve employee benefits

  • Goals of the strategy – this popular strategy attempts to tie employees to the company over the long term using “benefit handcuffs” because surveys show that better benefits can be both a powerful retention and recruiting lever.
  • Prioritization process – none unless benefits vary between different job classifications.
  • Identifying turnover causes – it relies on traditional exit interviews to identify whether weaknesses in benefit offerings are driving turnover.
  • Treatments for countering turnover causes – the benefits that are offered vary with the firm but improved health coverage, more time off, educational benefits, better work/life balance, and better on-site amenities (i.e., food, exercise facilities) are common choices.
  • Benefits / weaknesses of the strategy – improving employee benefits can have significant retention impacts on lower-paid employees and those with either medical conditions or large families. Benefits are generally not taxed as income, so employees get more “net” value from them than from salary increases of the same cost. Unfortunately, improving benefits for all employees can be very expensive. Top performers and innovators may be more concerned with on-the-job opportunities than benefits. Also, individuals might stay because of the excellent benefits but could remain less productive because their job situation hasn’t changed at all.

6) Improve training and development

  • Goals of the strategy – to improve retention rates by focusing on providing more learning and employee-development opportunities.
  • Prioritization process – none unless access to training and development opportunities vary between job levels.
  • Identifying turnover causes – it relies on traditional exit interviews to identify which areas of training and development have the highest impact on retention.
  • Treatments for countering turnover causes – these vary with the firm but improved soft skills training, leadership development, job rotation opportunities, and technical skills training that prepare employees for promotion are often choices.
  • Benefits / weaknesses of the strategy – improving employee training, learning, and development can have significant retention impacts on your firm’s top performers because of their keen interest in continuous learning. Training and development, in addition to being a retention lever, also directly helps the firm by improving the capabilities of its employees. On the negative side, training and development activities are expensive and they take time away from the job. Providing training and development to build skills but not following up with sufficient opportunities to use those new skills may actually contribute to increased turnover.

7) Increase compensation

  • Goals of the strategy – this strategy assumes that the causes of turnover captured during exit interviews (compensation matters most) are valid, so it focuses on increasing compensation in order to prevent turnover.
  • Prioritization process – no prioritization unless the increases in compensation are tied to job levels or individual performance.
  • Identifying turnover causes – it relies on traditional exit interviews to identify the weaknesses in the compensation process that are driving individuals to accept outside offers.
  • Treatments for countering turnover causes – these vary with the firm but options generally include across-the-board salary increases, cost-of-living adjustments, increasing the compensation “percentile” target for the firm, adding performance bonuses, increasing 401(k) matching contributions, and offering stock options or stock.
  • Benefits / weaknesses of the strategy – improving employee compensation can have significant retention impacts on those employees primarily driven by money. Stock options (because they must be held) may act as a “golden handcuff” to tie individuals to the firm for a significant period. Unfortunately, increasing compensation is extremely expensive and even more so if it’s not tied to increases in performance. Giving every employee an equivalent increase in compensation may actually anger top performers and thus actually increase turnover among the best.

8) Improving employee engagement

  • Goals of the strategy – the goal is to improve retention rates by focusing on the factors that increase employee engagement.
  • Prioritization process – none.
  • Identifying turnover causes – it does not connect exit interviews with engagement measures. It relies exclusively on employee engagement surveys and then it assumes that low engagement will eventually drive turnover.
  • Treatments for countering turnover causes – offerings depend on which areas within your engagement survey are scored low. Most efforts to improve engagement scores involve increasing communications, building trust and reinforcing values.
  • Benefits / weaknesses of the strategy – engagement surveys are relatively easy to administer but they are not inexpensive, if you count the employee’s time in filling them out. Unfortunately, there is little statistically credible corporate data directly connecting improving employee engagement scores and decreased rates of turnover. Most engagement processes are anonymous. So a firm cannot directly connect an individual’s low score with the fact that they quit (or even connect their stated reasons why they quit and their low-engagement areas).

9) Speeding up career progression

  • Goals of the strategy – this strategy attempts to improve retention rates by focusing on providing more enhanced career progression (lateral movement) and more opportunities for promotion.
  • Prioritization process – none, unless efforts to speed up movement are targeted at particular job families.
  • Identifying turnover causes – it relies on traditional exit interviews to identify whether the speed of career progression or promotion impacts retention.
  • Treatments for countering turnover causes – common offerings include improving the internal movement process to speed up lateral transfers and global assignments. Many also give preference and emphasize internal promotions over external hiring. Offering additional short-term projects for growth, developing new job titles, and creating new career tracks to speed up promotion rates are also frequently used.
  • Benefits/weaknesses of the strategy – improving the speed of career progression can have significant retention impacts, especially on top performers who no longer need to leave the firm in order to get promoted. In addition, increasing internal movement and promotion rates further helps the firm by developing more leaders. Unfortunately, creating new career tracks and promoting more individuals significantly raises your salary costs and can also make an organization “top heavy” over time.

Less Frequently Used All-Employee Strategies to Consider

10) Employer branding – this powerful but more difficult-to-implement strategy emphasizes building your external image by encouraging individuals and the media to say good things about what it’s like to work at your firm. The underlying premise is that employees will want to stay at a firm that is perceived as a great place to work. The visibility of factors contributing to an organization winning an award or being recognized as a well-managed firm often influences internal perception as much as it does external perception.

11) Blocking strategy – this strategy, rather than focusing on overcoming the causes of turnover, emphasizes putting up recruiting barriers and blocking external recruiters from even contacting your employees.

12) Communications focus – this approach emphasizes improving internal communications, opening up access to information, and improving transparency so that everyone feels like they are an owner of the firm. Information would be provided early on during onboarding, during the performance appraisal process, and periodically throughout their employment.

13) Casino approach – this approach was championed by Google and emphasizes making the physical work environment so attractive that it by itself becomes a retention tool. The approach is modeled after what casinos do to keep customers inside from thinking about the outside world. It can also serve as an attraction tool as employees talk to their colleagues at other firms about the free food, the gym, shuttle bus, and on-site events.

14) Fixing bad managers strategy – this approach focuses on the most common cause of turnover: bad managers. It emphasizes the politically charged task of identifying and fixing weak managers through employee surveys. It has been employed by benchmark firms like Dell and FedEx.

Next week in part 3, look for Category 3 to learn about the most effective retention strategies, which are targeted at specific individuals and deliver a differentiated or personalized solution. Here was part 1 from last week.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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