Employee Retention Plan
Retention is now a boardroom concern in many companies, making practical, data-driven guidance essential. A structured retention plan helps organizations lower turnover and improve engagement. A new AIHR guide explains how to build one, clarifying the differences between a retention strategy, a retention plan, and a KERP. It also draws on Gallup and Work Institute data to highlight why people leave and offers sample initiatives with budgets and metrics.
Gallup found that 42% of workers who quit voluntarily believed their manager or the organization could have taken steps to prevent their departure. Meanwhile, 45% of those respondents said no manager or leader had discussed job satisfaction, performance, or future plans with them in the three months before they left. The Work Institute Retention Report classifies 74.69% of all reasons for leaving as preventable, with career development the top factor (19.2%) and work-life balance second (12.4%).
Steps to Put a Retention Plan into Practice
Managers clearly have an outsized impact on engagement. Gallup attributes at least 70% of the variance in employee engagement scores across business units to managers. In fact, employees whose managers hold one meaningful check-in per week are four times more likely to be highly engaged.
AIHR outlines six core steps for building a retention plan:
- identify who specifically needs to be retained;
- diagnose the real factors driving attrition;
- close specific gaps in the employee value proposition (EVP);
- create two plans—one for the organization and one for critical employees;
- get managers on board before launch;
- track the right metrics and adjust the plan.
A typical retention plan includes clear objectives, baseline metrics, specific initiatives with assigned owners and deadlines, and regular review checkpoints.
Retention initiatives can vary widely in cost and measurement. One example is a compensation benchmarking study with a $15,000 budget, measured by keeping pay-related exits below 10% of all departures. Another is manager training on one-on-one meetings, costing $8,000, with the goal of raising the eNPS score for "My manager supports my development" by 10 points. A third initiative involves posting internal openings before external hires, aiming for 30% of positions filled internally within 12 months.
According to the guide, a retention plan is a documented, time-bound action plan covering goals, initiatives, owners, metrics, and review dates. KERP, in contrast, is a legal and financial arrangement used during mergers, acquisitions, or restructurings to retain key executives through retention bonuses. Harvard Business Review notes that sustainable retention depends on integrated systems for hiring, compensation, career growth, and retention that reinforce one another.
Slack applies a "5 Cs" retention model covering compensation, culture, connection, career, and contribution. Adopting such models and initiatives can meaningfully improve retention outcomes and lower turnover across organizations.
Improving employee retention is a critical business goal, as high turnover can lead to major financial losses and lower productivity. Effective retention strategies increase employee satisfaction and build a stronger corporate culture, both of which contribute to company growth. Because managers are central to this process, their active involvement in developing and implementing retention plans is essential. Using the latest data and proven initiatives can significantly reduce attrition risks and ensure team stability.
In light of the challenges companies face in retaining talent, it's crucial to explore effective strategies. A recent report indicates that a staggering 88% of organizations struggle with employee retention, highlighting the urgent need for actionable solutions. To understand more about these pressing issues and discover potential approaches to enhance your retention efforts, check out our article on employee retention challenges.