It’s hard to believe we’re about to be halfway through the 2020s and about five years out from a global pandemic that permanently altered the workplace. The continued rise of hybrid and fully-remote working is clearly here to stay, and that means HR strategies have had to adapt to this new paradigm.
I can’t say enough how important retention is for your workforce’s overall productivity. Not only because it takes time to train new hires, but you’re also subtly training your current employees to learn how to work with the new hires. Every new addition to a team is a new element to work with, and ultimately, this affects productivity—which may not ever return to the levels you reached before you lost that critical employee.
Figuring out how to improve workplace retention in this new era should be a critical component of your overall HR and business strategy. My upcoming book explores a plethora of strategies I’ve seen used across a variety of teams to keep good employees engaged and productive. It’s full of practical HR advice and real-world case studies detailing the vital link between retention and productivity.
But let’s start with a broad overview of why employee retention is critical and detail some practical actions you can take to boost employee retention and thrive in 2025.
Why Employee Retention is Critical
If your business wants to stay competitive in the new year, you’ll absolutely need to prioritize retention. The skills gap in key industries is well-documented, especially so for high-value sectors like healthcare, IT, and engineering.
ManPower actually conducted a survey and found that 69% of US organizations said they were having trouble hiring people with the right skills for particular roles. This directly impacts productivity. It’s worth noting that the McKinsey Global Institute estimates around $2.5 trillion could be lost in global productivity due to the skills gap.
Put simply, if you have people with skills, you need to improve employee retention to keep your organization at the top of its game.
The Cost of Low Retention Rates
Running a business or large organization teaches you that everything has a cost. Whether it’s inventory, payroll, employee benefits, or training programs, everything impacts your bottom line, perhaps none more so than low retention rates.
The fact is, every time you lose an employee, it can cost six to nine months of their average salary to replace them. Sometimes, this is even 1.5 to 2 times the employee’s annual salary.
There are costs associated with advertising an opening, interviewing candidates, training that new hire, and there’s even a chance in this tight labor market that the talent you find will demand a higher salary than the employee you lost.
On the other hand, formulating solid retention strategies for HR can have a big impact on your organization’s success. Zappos, the online shoe store, is known for its company culture and high retention rates. As a front-facing customer-oriented company, this has directly led to more positive customer relations, which, in turn, has led to repeat purchases and overall company success.
Likewise, Southwest Airlines is known for its high retention. In their industry, efficiency is key, and long-term employees become more efficient over time as they improve their implementation of procedures and processes.
The Retention-Productivity Connection
From happy customers to efficiency and the retaining of specialized knowledge, whatever your industry, improved retention naturally leads to greater workplace productivity. Imagine losing an important employee in the middle of a project only to have to put that project on hold until the vacant role is filled once again. And even after a suitable candidate has been found, it could take them months to get up to speed and match the productivity of the employee you lost.
But what about the HR strategies of the companies with high retention rates? How can your retention and productivity goals align?
I like to follow a general framework of feedback, career progression, and work-life balance to boost employee retention and keep your productivity up.
Improving Retention Practically
I’ve found that understanding your employees’ needs is a crucial step. HR teams that implement check-ins and workplace satisfaction surveys, as well as recognize efforts and successes on the job, promote a positive company culture. This generates a feedback loop that keeps HR professionals informed about employee sentiment and keeps your best talent on board.
Aside from surveys or recognition, retention improvement programs should also include professional development opportunities. Not every great employee is going to stick around forever, but they are more likely to remain in their roles longer if they feel they have career progression while part of your organization. No one wants to feel like their career is in a rut with no path to improvement.
Furthermore, work-life balance is a much bigger concern among employees today than it has been in the past. Companies looking to improve employee retention should prioritize workplace flexibility and mental health initiatives.
Employees who have the option of working from home a few days a week are often more productive over the long run. Before, they might take a sick day if they needed to visit the doctor for a check-up, but they may choose to forego using the time off if they can work from home after their appointment.
Furthermore, having ways for your employees to reach out with concerns about mental health or stress helps them feel valued as a person and more than just a mere worker. If they feel like their lives and health matter to the company, they’ll be more inclined to stay in their jobs.
Preparing Your Workplace for 2025
As we turn the corner into 2025, this is an optimal time for your business to evaluate your HR retention strategies and discuss where changes can be made. If you truly want to boost employee retention in the new year, I suggest a few tools and techniques as a great place to start.
- Employee survey tools Software like CultureAmp, TINYPulse, and SurveyMonkey can keep your HR team in the loop with how their employees are feeling.
- Stay interviews These are interviews specifically designed to gauge how an employee feels about the company and find out why they’re staying.
- Reward programs: Everyone likes to feel noticed and rewarded for their work. Having some reward program in place, whether monetary or non-monetary, can have a marked impact on employee engagement and retention.
Get Ready to Transform Your Retention Approach
If your business is going to succeed in the next year, next decade, and beyond, you need to ensure your HR strategies include a well-founded retention framework that’s aligned with your productivity goals. As discussed in this article, the link between the two is undeniable.
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But if it’s even deeper insights into how you can make impactful changes in 2025 that you’re looking for, stay on the lookout for my forthcoming book, “The Retention-Productivity Link,” which details practical advice on boosting employee retention and productivity directly from my own experiences.
