Employee turnover is a costly challenge for organizations, impacting productivity, morale, and overall business performance. A new analysis by The Conference Board emphasizes the strong business case for investing in talent retention – not only to reduce turnover costs but also to enhance competitiveness.
“Making employee retention a staple of your talent strategy can provide a competitive edge – preserving institutional knowledge, cultivating a pipeline of future leaders, and increasing employee engagement. Doing so will save organizations a lot of the time and money they currently spend on attracting talent,” said Diana Scott, Leader of the Human Capital Center at The Conference Board.
The analysis, based on multiple surveys and studies, consists of two reports: one on the importance of retention and another on how to achieve it. Additionally, a turnover calculator was developed to help businesses quantify the true cost of turnover. The research identifies four key drivers of retention:
1. Workplace Flexibility
- Companies that enforce on-site work struggle more with retention than those offering flexible policies.
- 45% of employers with mandatory in-office policies report retention challenges, compared to just 15% of those with flexible arrangements.
- Workplace flexibility ranks as the second most valued benefit by employees, just behind a competitive salary.
- A well-structured hybrid strategy requires clear communication about in-office days and collaboration opportunities.
2. Growth and Development
- Employees with growth opportunities are far more likely to stay. Over 50% of workers say they would leave a job if development opportunities were lacking.
- Internal talent marketplaces provide visibility into career growth, enabling internal mobility and helping employees see a long-term future with the organization.
3. Compensation and Benefits
- Competitive compensation packages build loyalty and reduce the likelihood of employees seeking better offers elsewhere.
- Human capital leaders are refining strategies by increasing promotions, internal pay equity, and skill-based raises.
- Pay transparency and tailored benefits (such as health insurance, parental leave, and professional development) foster trust and meet diverse employee needs.
4. Leadership and Culture
- Leadership plays a pivotal role in fostering a culture of care, value, and belonging.
- Key cultural factors include a sense of belonging, feeling valued by leadership, and having a supportive team.
- Organizations can strengthen culture through initiatives such as:
- Onboarding programs that enhance networking and engagement.
- Well-being programs (e.g., sabbaticals after certain years of service).
- Stay interviews to understand employee motivations and concerns.
“While compensation and job security are critical factors in retention, workers today are more focused on respect, meaningful work, career growth, flexibility, and alignment with organizational values. Employers who focus on these areas have happier employees and higher retention,” said Robin Erickson, PhD, Head of Human Capital Research at The Conference Board.
By prioritizing flexibility, development, fair compensation, and strong leadership, organizations can reduce turnover costs, enhance employee satisfaction, and gain a competitive edge in today’s talent market.
