10 Benefits of Employee Retention + 4 Retention Strategies

If you’re not investing in employees’ growth, you could be fueling their exit. The benefits of employee retention come from creating a culture where people want to stay and grow.

That means your highest potential and most engaged employees could have one foot out the door. Among employees looking for new roles, 70% prioritize keeping their skills up to date — compared to just 18% of those staying put, according to our 2025 State of Performance Enablement Report. Additionally, 78% of active job seekers always go above and beyond and 79% are very productive.

Although the potential losses are significant, investing in retention efforts is an investment in an engaged and thriving workforce. Find out why retaining your workforce is so important and how you can harness the benefits of employee retention to drive your business forward.

Why is employee retention important?

Your talent strategy is the foundation for business growth. You’ll struggle to succeed and grow without the right people in the right places. That’s why programs like talent management, succession planning, and workforce planning are so critical to success.

Employee turnover can derail your organization’s strategy and growth plans, putting success at risk. As more people leave the company, your talent function goes into triage mode. They focus on plugging in new talent rather than adequately training and developing long-term employees. This response illustrates a reactive approach to retention rather than a long-term proactive strategy. 

It’s hard to overstate the importance of employee retention to your business. Happy, satisfied workers provide a stable foundation for building a talent strategy that elevates your business.

As an HR leader, you have the power to address these issues. You can improve and optimize your offerings—including pay, benefits packages, employee experience, and growth opportunities—to increase employee retention.

10 benefits of employee retention

Employee retention doesn’t just reduce turnover. It builds a stronger, more resilient organization. When employees stay, they bring stability, experience, and deeper engagement, all of which contribute to long-term success. Discover 10 key ways employee retention elevates your business.

Stronger company culture

Higher retention fosters a stronger, more positive culture. High turnover undermines your culture because people are coming and going constantly. There’s more disruption and less cohesion. That can be draining for people who stick around amid a culture of uncertainty and dysfunction.

When an employee stays with your company, by contrast, they’re embracing your mission while adding stability to your culture. Their choice to grow within the company signals their belief in your mission. They’ll have a greater sense of their value and what they’re capable of accomplishing, reinforcing your larger retention strategy.

Higher employee engagement

High retention supports a robust, stable culture, and can also improve employee engagement. When the same team members spend significant time solving problems and overcoming challenges together, they form stronger bonds. Close teams are more likely to be engaged and invested in achieving shared goals. 

And as more people build long-term careers with your company, they become symbols of the culture of growth you’ve created. These workers can experiment with different tasks and roles as they find their place within the business. That kind of internal career mobility increases engagement and drives job satisfaction. 

Improved employee morale

When employees stay with a company, they build deeper relationships, gain confidence in their roles, and feel a stronger sense of belonging. Long-term employees understand the company’s mission, trust their teams, and feel secure in their careers, which reduces stress and creates a more positive work environment. In contrast, frequent turnover disrupts workflows, increases uncertainty, and makes it harder for employees to stay engaged.

A stable workforce also reinforces a culture of recognition and growth, where employees see their contributions valued over time. Instead of feeling like replaceable parts, they feel like integral members of the team.

Retained institutional knowledge

One of the most significant downsides of turnover is the loss of institutional knowledge, which is what workers know about operations, culture, and the industry. Long-tenured workers, in particular, often have a great deal of tacit knowledge that hasn’t been captured in any formal systems. Their sudden departure can create a big drag on your efficiency.

Meanwhile, an experienced team member can share stories, examples, and lessons learned with newer workers or executives, helping everyone place today’s challenges in a historical context. An employee who was a manager during the Great Recession and is now a business leader, for instance, can provide insight into how to handle the next economic downturn. 

Decreased hiring and recruiting costs

High retention rates reduce your organization’s spending on hiring and recruiting. Turnover is expensive: The most conservative estimates of replacing a single salaried employee are at least one-third of their annual income. And when demand for talent is high, replacing an employee can cost more than double their annual salary.

If your high-retention workforce also has high internal mobility, you can fill many highly skilled positions internally. You can redirect the recruiting budget toward hiring lower-skilled or entry-level talent and training them. The cost of replacing a lower-tiered employee will be significantly lower than replacing someone at the management or executive level. 

Reduced training costs

Employee turnover usually means you have to recruit, hire, and train their replacement, which can be costly. A stable workforce requires less spending on hiring and training. Instead, you can invest in strategic education and upskilling to help people grow within the company.

High-retention cultures usually feature internal mobility, which can also lower costs associated with training and development. Because internal candidates already have high levels of institutional knowledge (such as understanding your mission, vision, and values), you can focus training investment on the specifics of the job role.

Increased revenue

Retaining employees doesn’t just save on costs; it can also improve your revenue. The buildup of institutional knowledge over time makes it easier for long-term employees to navigate the culture and perfect their tasks and processes. Teams that stay together learn to work more efficiently, enabling better business performance and improving your bottom line.

Improved customer experience

The benefits of retention go beyond internal operations. Clients and customers will notice a difference, too. Long-term employees in client-facing roles build strong relationships, while experienced front-line employees provide more knowledgeable and tailored customer service. 

And when these people are happy, engaged, and passionate about what they do, they’ll be more invested in designing a better customer experience. This improves how customers and clients perceive your organization and can also lead to more revenue.

Increased employee loyalty

Staying in a workplace where they feel valued and supported builds employee trust. That trust often prompts them to advocate for the organization, look for opportunities to contribute beyond their job descriptions, and remain engaged even through challenges.

Loyalty also grows when employees experience consistent leadership, career development, and a culture that prioritizes their well-being. Over time, their connection to the company shifts from a paycheck to a personal investment, where they take pride in their contributions and feel a genuine stake in the organization’s future. 

Better brand reputation

A company known for retaining its employees builds a reputation as a great place to work. When employees stay, they share positive experiences with peers, potential hires, and even customers, strengthening your employer brand. High retention signals stability, strong leadership, and a culture that values its people, making it easier to attract top talent.What causes high employee turnover?

High turnover has a number of causes, but identifying them is key to developing employee retention best practices that work. Understanding these drivers is the first step to building a retention strategy that keeps top talent invested in your company’s future.

Low pay and benefits

One of the top reasons someone leaves a job is because they feel underpaid and undervalued. And since more companies are posting salary ranges for their jobs, it’s easier than ever for workers to see where they have higher earning potential and where their pay stub will look better. 

Benefits are a big factor in turnover, too. The cost of health care and prescription medications continues to rise in the U.S., and benefits that help keep those costs under control are in high demand. Other benefits, such as pet insurance, dependent care coverage, or more flexible stipends, are also appealing to many people.

Monitor pay and benefits trends in comparable businesses in your industry to maintain competitive offerings. Survey your employees regularly to stay on top of which benefits they value most.

Lack of opportunities for advancement

Competitive compensation and benefits are essential for retention, but they aren’t enough to keep your best talent engaged. They’ll also be looking for opportunities to advance and earn. Without a clear path to growth inside your organization, workers are more likely to seek opportunities for advancement outside your organization. 

A transparent job structure and org chart can help people see their opportunities for advancement or lateral career moves. Talent engagement software can further support career growth by providing visibility into potential pathways and development opportunities. Train managers to have regular conversations with their team members to assess their interests and to help match them to specific training programs or other options for mobility.

Feeling disrespected or undervalued at work

People need to feel that their mental and emotional needs are being met at work, too. If they don’t feel that their contributions matter, or that their managers and peers will value their opinions, people are much more likely to leave. 

Consistent, meaningful employee recognition helps team members feel valued for their work. “Through recognition, you build a relationship,” says Betterworks Chief Operating Officer, Andrea Lagan. “You are trying to find a way to connect to that person as a human, and what motivates them and inspires them.” Celebrate innovation, problem-solving, and continuous improvement at every level. When employees see that their efforts make a real impact, they’re more likely to stay engaged and committed to your organization.

How to calculate your employee retention rate

Employee retention rates reveal a lot about how your people feel about the workplace and the compensation, benefits, experience, and opportunities you offer.

All employee rate calculations, like employee retention and employee churn rates, begin by setting a time frame (usually a year). To calculate retention, take the total number of employees at the beginning of that time frame, then subtract the number of employees who have left since then. This calculation produces the number of employees remaining at the end of the time period. Divide the resulting number by the original employee total, then multiply by 100 to find your retention rate.

For example, say a business has 500 people, but 15 employees leave during the year. Divide the number of remaining employees (485) by the total number (500) and multiply by 100, which shows a 97% retention rate.

4 employee retention strategies that really work

If your employee retention rate isn’t where you would like it to be, you need a plan for reducing turnover and retaining top talent. Consider these four employee retention strategies.

Develop mentorship programs

People are more likely to stay with your company when they see a path toward their career goals. But creating visibility doesn’t guarantee that workers will feel supported enough to make career moves. For some people, achieving internal mobility can be a real challenge. For example, biases built into your promotion system may be holding back team members from historically underrepresented groups.

That’s why many employers are investing in mentorship programs. When employees have executive support for their career moves, they’ll feel more empowered to express where they want to go and what they want to learn. Develop an infrastructure for pairing interested workers with managers or business leaders in the roles they aspire to.

Invest in your employees’ careers

People want to know that you’re invested in them and their potential, and they want to see opportunities to grow with you. Yet only 63% of employees report having access to information about career advancement within their company, according to our 2025 State of Performance Enablement Report.

It’s up to you to provide internal opportunities for learning and growth, and to train managers to help team members make the right career moves. Someone may want to move from engineering to sales. Making such a move requires investment in continuing education. Making that commitment signals your belief in their potential and goes a long way toward fueling workforce loyalty.

Enable better performance

In economic downturns, your company’s margin for error regarding performance is smaller. An effective performance management solution, like Betterworks, can ensure that your team members are aligned around the same goals. A great performance management program can also help support higher retention. “Having all of those tools at your fingertips is a huge transformation for HR,” says Paul Agustin, senior director of solutions engineering at Betterworks. “It’s helping impact employee retention as well as helping drive better development within your employee workforce.”

Invite team members to help set their own goals based on business priorities. Enabling them to align their goals with those of the business will enable better performance. These workers will realize a greater sense of purpose and autonomy, which can lead to higher engagement. 

Training managers to manage by objectives (rather than micromanaging) can also create a more empowering experience. Team members have the freedom to accomplish their work when, where, and how they work best. Enabling employees to contribute their best in daily work creates a more enriching, fulfilling day-to-day experience. “Focusing on performance is always a lever that you can push to drive employee retention, to drive productivity, and to help take any performer and turn them into a top performer,” says Ashley Litzenberger, Betterworks’ senior director of product, brand, and content marketing.

While these benefits help your workforce, they generate outsized returns for the business by supporting higher retention and your overall talent strategy. A high-retention workforce that empowers better performance helps your organization thrive during boom times and stay resilient during downturns.

Take a positive approach to AI integration

Integrating AI into your workflows holds immense potential for driving retention, but only if employees see AI as an enabler, not a threat. Nearly half (49%) of employees who are enthusiastic about AI also worry it will replace them, our State of Performance Enablement research found. And those who believe AI will cause downsizing — your most AI-savvy — are also those who are actively seeking new work. 

Some of the most future-oriented employees — those using AI daily — are prioritizing skill development at higher rates than their peers. Their motivation comes from both opportunity and fear of obsolescence, meaning that organizations that fail to provide upskilling pathways risk losing top talent. Rather than letting AI become a source of uncertainty, position it as a tool that enhances employee capabilities, improves career growth, and creates new opportunities.

Take advantage of the benefits of employee retention 

By harnessing employee retention benefits, you’ll develop and empower the workforce to take your business to the next level. High retention reduces lost knowledge, hiring expenses, and missed revenue opportunities. It amplifies workers’ contributions, allowing you to make the most of the talent you have. And retention drives better performance and improved business outcomes over the long term while delighting your clients and customers.

Want to learn more? Discover nine ways to improve employee retention.