Guide 15 min read
1. Overview
Recruitment is expensive and time consuming and high staff turnover can damage morale within your workforce as well as productivity and client relationships. Currently in the UK there are skills shortages in many sectors and retaining skilled employees is paramount as well as attracting them to join your business.
The Chartered Institute of Personnel and Development estimates the average cost of filling a vacancy, including labour costs is around £6,000 for more senior positions this figure will increase significantly with estimates of £19,000.
Current data suggests that the typical time to fill a role in the UK is 48 days, this is dependent on varying factors such as skills required, locality. 14% of businesses have increased their focus on retention of their current employees.
Retention is not a one-off activity; this is part of the employee’s lifecycle with your organisation and starts prior to them actually starting.
As this is an extensive subject this guide will give a high-level overview of the areas that you should look at:
- · Organisational Culture
- · Effective Recruitment Practices
- · Development of Your Employees
- · Work Life Balance
- · Reward
Previously pay was the key element that led to employees leaving however this has shifted over the years and working environment is now just, if not more important to employees.
To understand why employees leave it is important that you hold exit interviews and encourage employees to be as open and honest as possible to allow you to make changes where needed. It is important to understand the drivers for leavers.
2. Organisational culture
It is often asked and important to understand whether employees are happy with the relationship with their line manager and colleagues. The management style and quality of workplace relationships are important.
The Role of Organisational Culture in Retention
Organisational culture is one of the strongest influences on why employees stay or leave. It is expressed in two main ways:
- Formal culture
Communicated through official channels such as the company’s mission statement, values, policies, and codes of conduct. This defines the organisation’s stated purpose and expected standards of behaviour. - Informal culture
Often more powerful, this is demonstrated in employee behaviours, social norms, and unwritten rules, essentially “the way we do things around here.” It includes how managers interact with staff, how conflict is handled, and whether people feel respected and included.
A mismatch between the formal culture (what leadership says the organisation stands for) and the informal culture (what employees actually experience) can undermine trust and increase turnover. Conversely, when both are aligned, staff feel engaged, respected, and motivated to stay.
Practical steps to strengthen culture for retention:
- Regularly communicate and reinforce organisational values in everyday decisions.
- Train managers to embody those values in their leadership style.
- Encourage peer-to-peer recognition to reinforce positive behaviours.
- Create opportunities for cross-team collaboration, so culture is shared rather than siloed.
- Act on employee feedback promptly to show that voices are heard.
3. Effective recruitment practices
Early turnover is often a symptom of recruitment issues rather than retention strategies later down the line.
Recruitment and Selection: The First Step in Retention
Retention begins long before an employee’s first day. Recruitment and selection practices directly influence staff turnover, particularly in the critical first six months of employment. High early turnover often signals that the organisation is not attracting or selecting the most suitable candidates.
- Role and culture fit: Hiring decisions should evaluate not only skills and qualifications but also alignment with organisational culture and values.
- Realistic job and people specifications: Be transparent about role expectations, challenges, and progression opportunities to reduce mismatched expectations and the type of behavioural characteristic needed for the role.
- Structured recruitment processes: Standardised interviews, assessments, and scoring systems help ensure fairness and consistency, this also helps illuminate discrimination.
- Line manager training: Since recruitment is often devolved to line managers, they should be trained in best practice interviewing, bias awareness, and legal compliance.
By selecting people who are right for both the role and the organisation, employers reduce the risk of early exits and lay a strong foundation for long-term retention.
4. Development of your employees
Learning and development is one of the most effective ways to retain staff. According to LinkedIn’s 2023 Workplace Learning Report, the most common way organisations aim to improve retention is by “providing learning opportunities.” Employees who feel they are continuously developing are more likely to stay and grow with the organisation, rather than seek advancement elsewhere.
To ensure that investment in learning and development translates into retention benefits, employers should follow a structured approach:
1. Assess organisational and employee needs
- Conduct skills gap analyses.
- Align training with business objectives and employee aspirations.
2. Design meaningful learning opportunities
- Blend formal training (courses, qualifications) with informal learning (mentoring, coaching, knowledge-sharing).
- Incorporate digital platforms and self-paced learning for flexibility.
3. Provide access and inclusivity
- Ensure all employees have access to development opportunities, not just high performers.
- Offer flexible formats to accommodate different learning styles and schedules.
4. Support application of learning
- Encourage managers to give employees opportunities to apply new skills in real projects.
- Recognise and reward skill development.
5. Evaluate and refine
- Measure the impact of learning and development on engagement, performance, and retention.
- Gather employee feedback to improve future programmes.
By embedding continuous learning into workplace culture, organisations not only upskill their workforce but also strengthen loyalty, job satisfaction, and long-term retention.
5. Work-life balance
Work–life balance is a major driver of retention in the UK, especially post-pandemic, with hybrid and flexible work now seen as a baseline expectation rather than a perk.
Work–life balance is consistently one of the top reasons employees stay or leave a job in the UK. Research by Chartered Institute of Personnel Development (CIPD) and Office of National Statistics (ONS) shows that employees value flexibility, wellbeing support, and family-friendly practices as highly as salary when considering whether to remain with an employer.
A poor balance leads to burnout, disengagement, and higher turnover, whereas organisations that support balance see greater loyalty and productivity.
Key factors for UK employers:
- Flexible working rights: Since April 2024, UK employees have the right to request flexible working from day one. Offering hybrid, remote, compressed hours, or part-time options strengthens retention.
- Wellbeing initiatives: Programmes such as Employee Assistance Programmes (EAPs), counselling, and wellbeing workshops help employees manage stress.
- Encouraging leave: A culture that supports taking annual leave and discourages presenteeism is essential.
- Family-friendly policies: Enhanced maternity, paternity, adoption, and carer’s leave provisions make employees less likely to seek alternative employers.
- Clear boundaries: Encouraging employees not to work outside contracted hours and respecting personal time builds trust and loyalty.
Impact on retention:
- Employees who feel their employer respects their personal life are more engaged and less likely to leave.
- Work–life balance improves employer reputation, making it easier to attract and retain top talent in competitive UK labour markets.
- It can reduce absenteeism and presenteeism, boosting overall productivity.
6. Reward
Reward is one of the strongest retention levers in the UK, but it’s broader than just pay. It covers the full reward package: financial, non-financial, and recognition based.
Reward plays a critical role in influencing whether employees stay or leave. Here in the UK, where cost-of-living pressures remain high, competitive pay is essential, but it is not the only factor. Employees increasingly value a total reward approach this a mix of financial, developmental, and cultural benefits.
1. Financial reward
- Pay and bonuses: Benchmark salaries against industry averages (using CIPD, ONS, or sector-specific surveys) to remain competitive. Falling behind the market is a leading cause of turnover.
- Pension contributions: Offering contributions above the statutory minimum can differentiate an employer.
- Incentives: Performance-based bonuses, profit-sharing, and commission schemes encourage both retention and productivity.
2. Non-financial reward
- Learning and development: Opportunities for professional growth are often viewed as part of the reward package.
- Work-life balance: Flexible working, enhanced leave entitlements, and wellbeing benefits add significant perceived value.
- Perks and benefits: Healthcare, cycle-to-work schemes, gym memberships, or employee discounts enhance the total package.
3. Recognition and appreciation
- Formal recognition: Schemes such as “employee of the month” awards, long-service awards, or recognition platforms.
- Informal recognition: Regular verbal praise, thank-you notes, or team shout-outs build engagement at little cost.
Impact on retention:
- Employees who feel fairly rewarded are more engaged, motivated, and loyal.
- Transparent reward systems build trust and reduce perceptions of unfairness, which often drive resignations.
- A well-structured reward strategy enhances employer branding, helping attract and retain top talent in competitive UK labour markets.
7. Summary
Staff retention depends on a mix of recruiting the right people, competitive pay, career development, work-life balance, good management, and a strong culture. Employers who invest in these areas will not only reduce turnover but also improve engagement, productivity, and employer reputation.
All information contained in this guide is accurate as of the date created and is provided for general guidance only. UK Employment Law, Compliance and Best Practice are subject to change. Business Gateway accepts no responsibility for actions taken based on this content. Always consult legal or professional advice before making employment related decisions