Employee retention isn’t just a “nice to have”, it’s a key performance driver.
Losing staff is expensive, disruptive, and often avoidable. Studies show that the cost of replacing an employee can range from 50% to 200% of their annual salary (Gallup, 2022, The True Cost of Employee Turnover), depending on the role. High turnover also negatively impacts team morale, reduces productivity, and erodes profitability.
So, what does it take to build a workplace people want to stay in?
At Advantage Business, we’ve worked with hundreds of NZ businesses on workforce management challenges. Here’s a practical look at what drives retention and the strategies you can start applying in your own business today.
Start with Strategic Hiring and Onboarding
Retention begins before day one. Hiring the right people and setting them up for success is essential.
- Hire for fit, not just skill. Ensure candidates align with your business culture and values.
- Improve onboarding. A structured onboarding process has been shown to improve retention by over 80% in the first year. Help new employees feel confident, supported, and connected from the get-go. (SHRM, Onboarding Statistics Report).
Offer Competitive Pay and Benefits
One of the top reasons employees leave is inadequate compensation. To keep great people, you need to offer more than the bare minimum.
- Review your pay structure regularly to stay competitive in your industry and region.
- Offer benefits people actually want. Things like flexible hours, wellbeing support, or extra leave can make a big difference.
- Recognise contribution. Bonuses, incentives, and public acknowledgement all help people feel valued.
Invest in Your Managers
People don’t leave jobs. They leave managers.
Leadership quality has a huge impact on employee satisfaction and performance. Train your managers to:
- Communicate clearly and transparently
- Give regular, constructive feedback
- Recognise signs of burnout or disengagement
- Support autonomy and growth, not just task completion
Poor leadership is one of the most cited reasons for leaving in exit interviews. Fixing this can pay off quickly.
Create Growth Pathways
When people can’t see a future with you, they’ll look for it elsewhere.
- Provide opportunities for learning and upskilling.
- Create clear internal career pathways.
- Offer mentorship or buddy systems to foster development and connection.
Retention improves when people feel they’re progressing in their careers.
Prioritise Culture, Flexibility & Wellbeing
Workplace culture is often the invisible glue that holds teams together or pushes them apart.
- Build a culture of trust and inclusion. Everyone should feel safe, heard, and respected.
- Offer flexible working where possible. Options like hybrid work, reduced hours, or well-being days show you trust and care about your people.
- Continuously gather feedback. Regular pulse surveys and open channels for input help identify friction before it becomes turnover.
Offboarding: An Important Step to Prioritise
It’s easy to focus on onboarding, but offboarding is equally important.
Use exit interviews to find out why employees are really leaving and what you could do better going forward. It’s about insight.
Common reasons for departure include:
- Feeling overworked or unsupported
- Inadequate compensation
- Lack of growth opportunities
- Poor work-life balance
- Unclear expectations or toxic culture
Understanding these drivers helps you prevent the next departure.
What You Can Do Next
Improving employee retention doesn’t mean offering free lunches or Friday beers. It means building a business where people feel safe, seen, and supported in their growth.
Start by:
- Reviewing your compensation and flexibility policies
- Gathering honest feedback through surveys or exit interviews
- Training your managers to lead, not just manage
- Focusing on culture as a continuous investment
Need help designing a people strategy that works? Advantage Business can help you build the systems and culture to retain top talent and foster stronger teams.
Want more guidance or advice in this area? Talk to one of the Advantage Business experts today.