How to Create an Employee Retention Policy

When you think of a successful organization, what does it need in order to operate? Is it a fancy break room, top-of-the-line technology, or napping pods for a mid-day snooze? Is it a fancy espresso machine in the kitchen, bring-your-pet-to-work days, or comfortable desk chairs? While all of these are fine and dandy, what a company truly needs to be successful is something much simpler: employees!

Finding and hiring quality talent can be challenging, so once you have it, you want to hold onto it. This is called employee retention, and developing a policy to maintain it is critical for your organization. 

What is employee retention? 

Employee retention refers to an organization’s ability to keep its staff. The employee retention rate is an important factor in how well an organization is doing. It’s not a great indicator of success if employees are frequently being let go for underperformance or leaving for other jobs or opportunities. 

The opposite of employee retention is turnover (and we’re not talking about the sweet pie-like pastry). Turnover is when employees leave an organization, typically when they turn in their notice to leave for another job or opportunity (often referred to as voluntary turnover), but also when they are let go for other reasons, such as underperformance (involuntary turnover). 

We have seen this play out with The Great Resignation, which refers to the phenomenon of employees quitting their jobs in droves for a number of reasons. A Pew Research Center survey cites low pay, a lack of opportunities, and feeling disrespected at work as the common reasons that people quit their jobs in 2021. 

And it comes at a cost. Not only does employee turnover mean that an organization is taking a hit on talent and productivity, but there are also costs, time, and energy associated with recruiting, hiring, and training new employees. It’s much more efficient to keep an existing employee than hire a new employee. High turnover also lowers employee morale. Keeping the employees you have is more lucrative and efficient, and high turnover harms your bottom line.

The good news: Employee retention can be improved upon by having a proper policy in place, and creating an effective policy may not be as daunting as you might think.  

What is an employee retention policy? 

An employee retention policy, also called an employee retention plan, refers to the methods and strategies that a business uses to reduce employee turnover. Putting in the effort upfront to create an effective employee retention policy saves time and money in the long run because it helps to reduce staff turnover and the associated costs that come with it. In short: It’s a worthwhile endeavor for your company. 

Think about the type of organization you would like to work for and build your retention policy from there. Consider it an investment in your employees, and thus the success of your organization. 

There are several components to job satisfaction that are important to a worker. Considering these can help you determine how to build an employee retention policy that will keep employees excited to come to work each day and dedicated to the mission of the company. 

Employee retention factors

  • Fair compensation
  • Good relationships with colleagues and supervisors 
  • Opportunities to use their skills and abilities 
  • Respect and trust among staff 
  • Work-life balance
  • Flexible, remote, or hybrid work
  • Feeling heard 

Employee retention strategies 

It’s important to assess why employees may be leaving or why your organization may be struggling to retain talent. Be proactive and get ahead of potential causes of turnover, such as burnout or a perceived lack of opportunities. 

There are several employee retention strategies you can try. Keep these in mind as potential ideas to build into your employee retention policy. 

Strategies for employee retention 

  • Set employees up for success with thorough training and a welcoming atmosphere right off the bat. 
  • Give consistent feedback, highlighting the positive and also how they can improve.
  • Recognize them publicly with recognition and shout-outs. 
  • Create a Kudoboard to celebrate personal milestones like birthdays and weddings. 
  • Conduct surveys to get a sense of employee satisfaction and gather employee feedback or suggestions. 
  • Offer wellness programs and initiatives to help support employees’ health.
  • Keep things fair; offer the same perks or opportunities (i.e. work-from-home options) to everyone. 
  • Check out Elevate by Kudoboard to learn more about effective workplace appreciation.

Developing a policy 

After reflecting on the company’s values and the strategies for employee retention that you think will be effective for maintaining talent, put it in writing. It doesn’t have to be perfect. It just needs to be a clear list or document outlining the methods you will use for employee retention (think about the ideas and strategies we discussed above, but you can also add more that are more customized for your organization). It will likely be seen by managers and human resource personnel (who can also be involved in the development of the policy). It might also change over time, so don’t think of it as a fixed policy. Be open to keeping it fluid. 

What to include in the policy

  • The reasons why this is important for your company (i.e. retaining talent, boosting morale and productivity, etc.) 
  • What you hope to achieve with the policy (i.e. reduced turnover, high employee satisfaction, increased profits, etc.). 
  • How you will measure the success of the policy, such as with regular surveys or meetings. Don’t be afraid to get specific here! 

You can also allow employees to contribute to the development of the retention policy. No one understands their jobs, daily tasks, and goals better than them, and giving them a platform to contribute ideas and make their voices heard can help develop a policy that works for everyone. This could also add to employee retention because they will feel more invested and engaged in the mission of the company. 


Employee retention policies are an important tool for implementing strategies and measuring an organization’s ability to reduce turnover and keep talent. 

Think about the values and goals you have as a company and how you want to create a positive environment for your employees that keeps them motivated to do their best each day. The retention strategy you create should align with the company culture and aim to boost the employee experience. 
You may need to tweak the employee retention policy or experiment with different employee retention strategies to find what works best for your organization, so feel free to revisit the policy as needed. You can also adjust the policy based on particular industry trends, or do what is needed to make the employee retention policy work best for your organization. It should be an ongoing conversation aimed at making your employees feel heard and developing an environment that motivates and inspires everyone.

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