Employee retention (also: staff retention, retention management) refers to all measures aimed at retaining employees in the company long-term. Strong retention reduces turnover, secures know-how, and lowers recruiting costs. The most important levers are the right selection from the start, emotional commitment through appreciation, development opportunities, and a positive corporate culture.

What is Employee Retention?

Employee retention describes the degree of cohesion between employees and the company. It encompasses all strategic and operational measures aimed at retaining qualified professionals in the medium to long term. Also referred to as staff retention or retention management, employee retention is a central task of HR management.

The goal is to create an emotional and structural connection between employees and employers. Employees should identify with the company, feel valued, and want to stay out of intrinsic motivation – not because they have to.

Employee retention is more than just "keeping employees." High retention also leads to greater commitment, lower absenteeism, and a stronger employer brand. The focus is particularly on high performers, experts, and qualified professionals whose retention is indispensable for the company's competencies and performance.

Why is Employee Retention Important?

Employee retention has become a critical success factor in times of skilled labor shortages. The numbers speak clearly: According to the Gallup State of the Global Workplace Report 2023, only 17% of employees feel strongly connected to their company, while 83% feel little to no emotional attachment. 40% of respondents are actively looking for a new job.

Benefits for Companies

Strong employee retention brings measurable advantages:

• ‍Cost reduction: On average, replacing a professional costs 90-200% of an annual salary. These costs arise from recruiting, onboarding, training, and productivity loss during the transition period.‍
• Knowledge retention: Long-serving employees carry valuable knowledge about processes, customers, and company-specific matters. This implicit knowledge can hardly be documented and is lost through turnover.‍
• Productivity: Satisfied, committed employees are more motivated, willing to perform, and less frequently ill. According to the HR Report 2023, 53% of respondents cite work-life balance as the most important factor for their company commitment.‍
• Employer brand: High employee retention strengthens employer branding. Satisfied employees become company ambassadors and actively recommend it.‍
• Team stability: Low turnover promotes stable team structures, better collaboration, and a positive corporate culture.

Costs of High Turnover

The flip side of low employee retention is immense turnover costs:

• Direct costs: Job postings, recruiter fees, assessment procedures, contract processing
• Onboarding costs: Training, education, IT equipment, mentor time
• Productivity loss: New employees need 6-12 months to become fully productive
• Knowledge loss: Process knowledge, customer contacts, best practices are lost
• Team dynamics: Frequent changes burden existing teams and lead to increased workload

According to Gallup, low employee retention also leads to increased sick days: Employees without emotional attachment are absent more frequently and for longer periods.

The 4 Levels of Employee Retention

Employee retention works on different levels. The scientifically based model distinguishes four types of commitment that differ in their motivation and effect:

Emotional Commitment

Emotional commitment (also: affective commitment) is the strongest form of employee retention. It arises when employees identify with the company's values, mission, and culture. They stay because they want to – not because they have to.

Emotional commitment arises through:

• Meaningful work and clear company values
• Appreciation from managers and colleagues
• Positive relationships in the team
• Trust and transparency in company leadership
• Opportunity for participation and co-creation

This form of commitment leads to the highest motivation, engagement, and willingness to perform. Employees with emotional commitment go the "extra mile," are less frequently ill, and actively recommend the company.

Rational/Calculative Commitment

With rational commitment, employees weigh pros and cons: salary, career opportunities, working hours, location, benefits. They stay because the overall equation works out – a change wouldn't be worth it (yet).

Factors of rational commitment:

• Competitive salary and bonus systems
• Company pension schemes and long-term incentives
• Career opportunities and advancement possibilities
• Flexible work models (home office, part-time)
• Geographic location and accessibility

This commitment is less stable than emotional commitment. As soon as a better offer comes along, the rational consideration can tip in favor of a change.

Normative Commitment

Normative commitment is based on moral obligations and a sense of duty towards the company. Employees stay because they feel obligated to the company – for example, out of gratitude, loyalty, or personal values.

Triggers can be:

• Company investments in further education or advancement
• Support during difficult life phases (e.g., parental leave, illness)
• Long tenure and grown relationships
• Cultural or family background (e.g., family business)

Normative commitment is strong but can also lead to internal conflict when employees actually want to change but feel obligated to stay.

Habitual Commitment

Habitual commitment (also: behavioral commitment) arises through habit and routine. Employees stay because they have become accustomed to processes, colleagues, and daily work. The effort of a change seems too high.

This form of commitment is the weakest, as it can easily be broken through external impulses (e.g., headhunter approach, dissatisfaction). It is more a side effect of long tenure than the result of targeted measures.

The 6 Pillars of Employee Retention

The 6 pillars of employee retention are a proven model for systematically working on employee commitment. Each pillar addresses an important aspect of the employee experience:

Job Satisfaction

Employees should feel comfortable in their workplace. A pleasant work environment increases motivation, willingness to perform, and reduces sick leave.

Measures:

• Professionally equipped workplaces (equipment, technology)
• Ergonomic office furniture and healthy work environment
• Pleasant atmosphere (light, noise, room climate)
• Social spaces (kitchen, lounge, retreat areas)
• Opportunity for concentrated work (quiet zones, individual offices)

Personnel Development

Development opportunities are now one of the most important retention factors. Employees don't want to stagnate but want to develop professionally and personally.

Measures:

• Structured training offerings (internal and external)
• Individual career planning and development conversations
• Mentoring and coaching programs
• Job rotation and project work for new experiences
• Transparent promotion opportunities and advancement criteria
• Learning budget per employee (e.g., €1,500 per year)

Health & Wellbeing

A healthy workforce is more productive, motivated, and less frequently ill. Corporate health management directly contributes to employee retention.

Measures:

• Flexible working hours and trust-based working time
• Home office and remote work options
• Sports offerings (gym subsidy, company sports)
• Health checks and prevention programs
• Mental health support (Employee Assistance Programs)
• Ergonomics consulting and height-adjustable desks

Employer Branding

A strong employer brand works internally and externally. Employees want to be proud to be part of the company.

Measures:

• Clear company values and lived culture
• Authentic presence on social media and career pages
• Employee testimonials and success stories
• Awards as "Great Place to Work" or "Top Employer"
• Positive reviews on Glassdoor, Indeed & Co.
• Employer branding campaigns with real employees

Compensation & Benefits

Salary alone is no longer enough, but it remains an important hygiene factor. Benefits can create emotional bonds and show appreciation.

Measures:

• Competitive salary (conduct market comparison regularly)
• Transparent bonus systems and performance-based compensation
• Company pension schemes and capital-forming benefits
• Company car, bike leasing, or mobility budget
• Meal allowance, childcare subsidy, health budget
• Sabbatical options or lifetime working time accounts

Leadership & Culture

The relationship with the direct manager is the strongest single factor for employee retention. "People leave managers, not companies" – this saying hits the nail on the head.

Measures:

• Regular, appreciative feedback
• Transparent, fair communication
• Participative decision-making (involving employees)
• Error culture: Learning instead of punishment
• Leadership development (leadership training)
• Structured employee conversations (quarterly)

Practical Measures for Employee Retention

Theory is important – but how do you implement employee retention concretely? Here are proven measures for different time horizons:

Quick Wins (Immediate Measures)

These measures can be implemented quickly and show direct impact:

Show appreciation:

• Personal thank you for good performance (verbal and written)
• Make successes visible in the team (team meetings, intranet)
• Honor birthdays, anniversaries, and milestones

Institutionalize feedback:

• Introduce monthly or quarterly 1:1 conversations
• Enable feedback in both directions (also to managers)
• Conduct employee surveys and share results transparently

Increase flexibility:

• Flexibilize home office regulations
• Trust-based working time instead of time clock
• Reduce core working hours

Strengthen team spirit:

• Regular team events (quarterly)
• Joint lunches or after-work meetings
• Slack channels for informal exchange

Long-term Strategies

Sustainable employee retention requires structural measures:

Optimize onboarding:

• Structured onboarding program (60-90 days)
• Buddy system: Experienced colleagues as contact persons
• Regular check-ins in the first 6 months
• Pre-boarding: Keep contact before the first working day

Establish career planning:

• Annual development conversations with clear goals
• Show transparent career paths (technical and leadership-related)
• Create individual development plans
• Succession planning for key positions

Monitor retention risks:

• Systematically evaluate exit interviews
• Analyze turnover rate by teams, departments, managers
• Recognize early warning signals (e.g., declining performance, withdrawal)
• Proactively approach at-risk employees

Shape corporate culture:

• Not just define values, but live them (managers as role models)
• Establish feedback and error culture
• Promote diversity and inclusion
• Create transparency in decisions

The Right Selection from the Start

An often underestimated lever for employee retention lies already in recruiting: Those who fit the job, the team, and the corporate culture well from the beginning stay longer. The right selection reduces mismatches – and thus one of the most common causes of early turnover.

Cultural fit as a retention factor: Companies that already pay attention to the fit between candidates and corporate culture during recruiting benefit from higher emotional commitment. Objective talent assessment can support this: Through scientifically validated assessments, it can be measured whether candidates fit the team values and what strengths they bring.

Practical examples show the impact: Companies like Callways rely on objective talent assessment and report significantly better conversations and higher accuracy. CEO Achim Reinhardt emphasizes: "Without Aivy, we would have 2-3 times as much work and recruit worse." Strength-based selection leads to better team integration – a central factor for long-term retention.

Strength-based onboarding: If you already know your candidates' strengths during the selection process, you can deploy them specifically in suitable roles. Employees who can apply their strengths daily are more satisfied and stay longer. The digital platform Aivy offers scientifically validated assessments that provide objective insights for strength-based recruiting.

Learn more about objective talent assessment and strength-based recruiting

Measuring Employee Retention: KPIs & Metrics

What you can't measure, you can't improve. These HR metrics help you quantify employee retention:

Turnover rate: The most important metric. It indicates how many employees leave the company per year.

Formula: (Number of departures / Average number of employees) × 100

Benchmark: Under 10% is considered good, over 20% critical (industry-dependent)

Employee Net Promoter Score (eNPS): Measures the likelihood that employees would recommend the company as an employer.

Question: "On a scale of 0-10: How likely would you recommend our company as an employer?"

Evaluation: Promoters (9-10) minus Detractors (0-6) = eNPS (-100 to +100)

Average tenure: The longer employees stay, the higher the retention. Analyze by age groups, departments, and managers.

Retention rate after onboarding: How many new employees are still there after 6, 12, and 24 months? High early turnover indicates problems in onboarding or selection.

Engagement score: Tools like Gallup Q12 or Culture Amp measure emotional commitment through regular pulse surveys.

Exit interview analyses: Why do employees leave? Categorize reasons for resignation and identify patterns.

Frequently Asked Questions About Employee Retention

What is employee retention?

Employee retention refers to all measures to retain employees in the company long-term. Also known as staff retention or retention management, it aims to build an emotional and structural bond with the company. The goal: Employees should want to stay out of intrinsic motivation, not out of compulsion.

Why is employee retention important?

Employee retention reduces turnover and recruiting costs. It secures know-how and experience in the company, strengthens the employer brand, and increases productivity and employee satisfaction. In times of skilled labor shortages, it is often cheaper and more effective to retain existing employees than to search for new ones.

What are the 6 pillars of employee retention?

The 6 pillars are: (1) Job satisfaction – a pleasant work environment, (2) Personnel development – training and career opportunities, (3) Health & wellbeing – work-life balance and corporate health management, (4) Employer branding – a strong employer brand, (5) Compensation & benefits – salary and additional services, (6) Leadership & culture – appreciation and feedback from managers.

What is emotional employee retention?

Emotional employee retention arises through identification with company values. Employees feel connected to the company because they experience work as meaningful, receive appreciation, and have positive relationships in the team. They stay because they want to – not because they have to. This is the strongest form of commitment because it is intrinsically motivated.

How can you measure employee retention?

Employee retention can be measured through several metrics: Turnover rate (proportion of resignations per year), Employee Net Promoter Score (eNPS), employee satisfaction surveys (e.g., Gallup Q12), average retention time and tenure, and exit interview analyses. These KPIs help identify trends and control measures specifically.

What measures exist for employee retention?

Proven measures are: Flexible work models (home office, part-time), training offerings and career planning, appreciation from managers (feedback, recognition), attractive benefits (company car, gym, childcare), health management (sports offerings, mental health), team events and social activities, and structured onboarding programs.

What does high turnover cost?

High turnover costs on average 90-200% of an annual salary per departure. Direct costs arise from recruiting, onboarding, and training. Indirect costs include knowledge loss, productivity loss, and disrupted team dynamics. Additional costs include overtime, substitute arrangements, and missed business opportunities.

How does employee retention begin already in recruiting?

Employee retention begins with the right selection: Those who fit the job, team, and corporate culture well stay longer. Cultural fit – alignment with company values – is a strong retention factor. Strength-based recruiting ensures that employees are deployed in suitable roles. Objective talent assessment reduces mismatches, one of the most common causes of early turnover.

Conclusion: Employee Retention as a Strategic Success Factor

Employee retention is not a "nice-to-have" but a strategic competitive advantage. In times of skilled labor shortages, the ability to retain talent determines business success. The good news: Employee retention can be specifically controlled – through the 6 pillars, by measuring KPIs, and through a culture of appreciation.

The most important insights:

Emotional commitment is stronger than rational commitment. Salary alone doesn't retain employees. Meaningful work, appreciation, and development opportunities are now the decisive factors.

Employee retention begins in recruiting. The right selection from the start – based on cultural fit and strength-based matching – lays the foundation for long-term retention.

Managers are the key. The relationship with the direct manager often decides between staying or leaving. Investments in leadership development pay off directly.

Measure and control. Without metrics, no improvement. Use turnover rate, eNPS, and exit interviews to turn the right screws specifically.

Employee retention is not a one-time project but a continuous process. Companies that consistently invest in employee retention benefit from higher productivity, lower costs, and a strong employer brand.

Sources

• Gallup Inc. (2023): State of the Global Workplace Report 2023. https://www.gallup.com/workplace/engagement.aspx
• Hays AG, Institute for Employment and Employability (IBE) (2023): HR Report 2023: Focus on Employee Retention. https://www.hays.de/personaldienstleistung-aktuell/studie/hr-report
• Wolf, Gunther (2018): Employee Retention (2nd Edition). Haufe Verlag. https://www.haufe.de
• HR WORKS GmbH (2023): Employee Retention: Definition, Measures & Benefits. https://www.hrworks.de/lexikon/mitarbeiterbindung/
• Career Bible (2025): Employee Retention: 6 Pillars + Effective Measures. https://karrierebibel.de/mitarbeiterbindung/