This guide, based on survey data from over 500 U.S.-based HR professionals, outlines the latest trends, challenges, and strategies for improving employee retention. With voluntary turnover at a high, organizations must focus on employee satisfaction, compensation, leadership, and workplace well-being to retain top talent.
Key Findings & Trends in Employee Retention
1. Declining Employee Satisfaction & Increasing Turnover
- Employee happiness reached a four-year low in May 2024 (based on BambooHR’s Employee Happiness Index).
- A Gallup survey from July 2024 found that 51% of U.S. employees were actively job-seeking.
- More than 42% of turnover is preventable, indicating companies have significant room for improvement.
2. The Business Impact of Employee Turnover
HR professionals cited the following negative effects of turnover:
- Loss of productivity and performance (47%)
- Lower morale among remaining employees (44%)
- Increased training needs (35%)
- Loss of key employee skills & institutional knowledge (28%)
- Inadequate leadership pipeline (15%)
- Lower customer satisfaction & reduced profits (12% & 11%, respectively)
Many companies do not prioritize tracking turnover costs, despite its severe financial impact.
Top Reasons for Employee Turnover
HR professionals identified the following as the primary drivers of voluntary resignations:
1. Inadequate Compensation (Financial Instability)
- 66% of Americans lived paycheck to paycheck in 2024.
- 73% of Millennials, the dominant workforce generation, reported financial struggles.
- Competitive salary adjustments and benefits packages are crucial for retention.
2. Lack of Growth & Career Development
- Employees seek promotions, skill-building opportunities, and upward mobility.
- Companies investing in professional development have twice the retention rate and 11% greater profitability.
3. Poor Leadership & Management
- Employees often leave due to ineffective managers rather than company-wide culture.
- Companies should focus on leadership training programs to improve management effectiveness.
4. Work-Life Balance & Culture Issues (Lesser but Relevant Factors)
- 16% leave due to poor work-life balance & flexibility.
- 12% cite negative work environments.
- 12% feel unsupported with insufficient resources.
Four Key Strategies to Improve Retention in 2025
1. Tracking & Monitoring Retention Metrics
- 10% of HR professionals said their company does not track retention-related data.
- Only 11% measure the financial cost of turnover, missing a crucial business case for change.
- Organizations should track:
- Employee tenure vs. industry averages.
- Retention rates of top talent.
- Morale and engagement trends.
2. Employee Feedback & Satisfaction Surveys
- Employee surveys should be more frequent than the traditional 1-2 times per year.
- If turnover issues exist, surveys should be quarterly or even monthly.
- Surveys must guarantee anonymity to encourage honest feedback.
- Collecting qualitative data (e.g., “What can we do to improve?”) is essential.
3. Acting on Employee Feedback
- Only 25% of HR pros say their company effectively listens to employees.
- Implementing small, quick wins (e.g., improving workplace resources, addressing management concerns) builds trust.
- Exit interviews should be mandatory:
- 20% of HR professionals don’t know why employees leave.
- Only 41% conduct exit interviews consistently.
- Exit interviews help identify systemic issues like diversity and inclusion gaps.
4. Investing in Professional Development
- 34% of HR pros said their company’s investment in training and development is below average.
- Companies that invest in development are twice as likely to retain employees.
- Annual per-employee investment in training:
- Small Companies: $1,420
- Midsize Companies: $751
- Large Companies: $481
Workplace Flexibility & Mental Health Initiatives
Hybrid work models face the fewest retention challenges:
- 59% of in-office workers experience retention issues.
- Only 9% of employees leave due to remote work limitations.
Mental health is an underprioritized issue:
- 20% of companies do nothing to support mental well-being.
- HR initiatives that improve retention include:
- Flexible remote options (38%)
- Flexible work hours (36%)
- Increased PTO (30%)
- Mental health days/workshops (19%)
Key Takeaways for Retention Success
- Prioritize fair and competitive compensation.
- Create clear career development paths & invest in leadership training.
- Regularly track retention data & conduct exit interviews.
- Use frequent employee satisfaction surveys and act on feedback.
- Offer hybrid work models & mental health resources to improve well-being.