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The Link Between Employee Engagement And Staff Retention

It’s of the utmost importance that we recognize how employee engagement and staff retention are connected. When employees are not engaged at work, they have little incentive to stay. Even pay increases often cannot keep an employee who is not engaged, especially if they don’t see a promising future that includes satisfying work and a clear development path.

Given this, it’s not surprising that an SHRM/Globoforce Employee Recognition Survey indicated that the top three workforce challenges for HR professionals are retention, engagement, and recruitment. Rather than dealing with the symptoms—turnover and recruitment issues—getting to the root of the problem leads to long-term solutions. Focusing on engagement can help reduce turnover, which also alleviates recruitment issues because there are fewer empty positions to fill.

Why Is Retention Important?

One of the most motivating reasons for businesses to improve retention is the fact that it’s expensive. The cost of turnover includes lost productivity, lost profits, recruitment, training, and more. A Deloitte report found that the average cost to replace an employee is around $7,000. For large organizations with high turnover, this can quickly add up. While this number might seem reasonable, the more shocking number that is less easy to see in a financial report is the cost of lost productivity, which is estimated around $120,000 per employee. Even the loss of one employee can have an impact on the bottom line.

Another reason to focus on retaining valuable employees is the company culture. High-turnover companies have a hard time building the culture they want because there are fewer long-term employees to demonstrate the ideal behaviors. Additionally, when employees see that others frequently leave the organization, it sets a negative tone and prompts them to question why they are staying.

How Engagement Impacts Retention

Gallup’s State of the American Workplace report captures the link between engagement and retention in a nutshell:

“Employees who are engaged are more likely to stay with their organization, reducing overall turnover and the costs associated with it. They feel a stronger bond to their organization’s mission and purpose, making them more effective brand ambassadors. They build stronger relationships with customers, helping their company increase sales and profitability.”

The same report found that only one-third of workers are engaged, which should be a red flag for most organizations. If you’re not confident that the majority of your employees are engaged, this could lead to a costly turnover rate.

How to Improve Employee Engagement

Improving engagement is possible, but it requires a sustained effort. While there is no one-size-fits-all solution that will immediately shift mindsets, organizations should focus on the following three components to improve employee engagement:


Publicly recognize employees for a job well done. When leaders demonstrate that they value an employee’s contribution, it fosters further engagement. Employees also want to stay at a company where they feel valued and appreciated. You can do this by creating a rewards program, hosting monthly or quarterly dinners where employees are recognized for their contributions, or simply thanking your team at the next staff meeting.


Create a culture that encourages, supports, and motivates employees to do their best work. Whether you do this by allowing dogs in the office, having a company-wide ping-pong tournament, or having quarterly team meetings, your culture should remind people why they want to be there. So, while the elements that make up your culture will be as unique as your organization, determining the desired culture will be the responsibility of leadership.


Employees today value education and learning opportunities. They also want to know what opportunities lie ahead. Create clear growth paths and provide the resources that will help people achieve their development goals to keep them engaged as they progress in their careers. This requires more than a single annual review and should include coaching and mentoring to help employees reach their personal career goals.


Retention is a real issue that should be addressed, especially if you already have high turnover rates. Increasing employee engagement can help improve retention and also provide the benefits of better productivity and greater employee satisfaction. Focus on your company culture and take proactive steps to improve engagement, especially among your top talent.


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