The ultimate guide to employee engagement and retention strategies

HR leaders know employee engagement is critical to every organization’s success. But it’s not always easy to strike the right balance between the empathy that employees want and driving productivity. When you can pinpoint what makes your employees tick, your organization can establish a new employee social contract that encourages loyalty and performance.

When people are satisfied and feel proud to work for their employers, that translates to higher productivity and longer tenure: McKinsey research found that 70% of employees say their sense of purpose is defined by their work. And when employees aren’t engaged, it can spread throughout the workforce like a disease. It’s critical to pull back the curtain on employee engagement often to see what’s going on behind the scenes.

Imagine it’s a Tuesday evening. You’ve just finished work and you’re headed out with friends. Over appetizers someone inevitably asks, “How was work?”

You already know how you answer these questions when your best friend, partner, or neighbor asks. But do you know how your employees answer?

Of course, the employer-employee dynamic is much more complex than this. But it does beg the question: How much time do you or other leaders in your organization spend examining employee engagement and planning retention strategies? Because you can bet your employees are paying close attention.

This guide will help you take an honest look at your existing employee engagement practices and focus on key activities that build trust and drive high performance. 

1. Assess how well your organization’s current engagement strategy is working

The first step to optimizing your engagement planning process is crucial: understanding the current state of engagement and retention at your organization. Your goal is to uncover:

• How well your current engagement and retention strategy is working
• How well your HR tech stack is supporting your strategy
• Whether or not you have access to the right data to measure progress against KPIs
• Whether or not you can act on the information and data you measure

You need to take an honest look at your engagement strategy now in order to make meaningful improvements. You should also start identifying what resources are available for growing engagement and who the key players will be in your new re-engagement campaign.

Here are a few key steps to help you understand what employee engagement activities to continue, change, and implement.  

Survey your employees and managers more effectively

While you likely already survey the people in your organization, are you gaining all of the possible insight into your employees’ experience from this activity? If you’re surveying just once a year, as is the custom for many organizations, you may be too late to act on employee engagement challenges. Creating a more continuous, dynamic survey process could help you identify flight risk employees earlier.

You can add open-ended questions into your surveys for longer, free-form employee responses. Effective use of engagement surveys also goes beyond survey structure to what you do with the data. For example, you can dive deeper into specifics employee subgroups or departments that your annual surveys show are less engaged. For more in-depth tools on survey building, explore our extensive guide to employee engagement surveys.

Another key group to consider that may be neglected in your current engagement strategy is managers. In our 2023 Pulse of Talent study of 8,800 global workers, we found that 92% of senior leaders and 89% of middle managers experienced burnout in the last year. Managers play a significant role in driving employee engagement for their direct reports. According to Gallup, 70% of the variance in the level of team engagement is determined solely by the manager. Yet many organizations fail to focus attention on understanding the needs of this group.

Creating an agile process for surveying employees requires tools that allow you to quickly build custom surveys and easily send them to employee subsets on desktop and mobile devices. With a reliable survey system in place, you can more easily analyze the data you collect. Look for ways to segment data and draw deeper results you can act on. If specific groups have lower productivity or engagement, you can dig into the individual survey responses to find out what’s going wrong. Equipped with the survey information in hand, you can then inform your employee engagement and retention strategies with hard data.

Identify what’s working so you can scale it

Assessing current performance on employee engagement doesn’t mean you’re only going to uncover negative things. Every organization has things they’re doing well. Identify what’s going well and scale those activities. Your organization has dozens of teams, each with their own leader creating a culture for employees. But not every leader will be equally effective, so it’s vital to identify good leaders and ones who may be negatively impacting the employee experience. For example, if certain leaders are respecting their people and driving better performance through a safe, positive work environment, figure out how to replicate their success across the organization.

Gallup found that, in fact, “95% of people who are thriving at work report being treated with respect all day and 87% report smiling and laughing a lot.” By incorporating respect into your renewed engagement strategy, you have a chance to grow what’s going well throughout your organization.

2. Transparency leads to psychological safety

When you send out organization-wide surveys, do you share the results back with the employees? Are you showing them your new strategy for re-engagement? Do employees have a channel for offering suggestions and ideas for improvement apart from surveys?

Having a company culture that extends information to every employee, everywhere helps create a democracy of knowledge that can drastically shape the employee experience. And when you’re more transparent with your employees and they feel like they know what’s going on behind the curtain, you encourage greater psychological safety.

Better internal communication

Your boundless workforce needs to feel connected to information and each other. Technology can help you foster a safe space through transparent communication, so take a look at your current information systems. Parental leave policies, payroll calendars, IT support—all this information and more should be accessible to employees in order for them to stay engaged with the organization as a whole. A great option is a customizable engagement platform, which allows you to create a personalized experience and get the right message to the right people at the right time.

Internal communication also goes both ways. Employees want access to critical information. But they also want to talk with their employer and offer their feedback. Now, this doesn’t have to be a formal suggestion box posted outside the office door. You can gather employee ideas in more subtle and productive ways. For example, you can host a company-wide hackathon where teams from around the organization collaborate on ideas that will push the business forward. In the process, you can hear what problems employees want to solve and give them the space to propose their solutions.

Clearer performance management processes

What does your performance management process look like? Regular feedback is key to a clearer and more effective performance management process. Employees want opportunities to grow professionally and contribute meaningfully to the organization’s goals. Employees who don’t get meaningful feedback or lack a clear career path can easily become disengaged.

The key to good performance management lies in transparency. Organizations should set clear goals that tie employees’ contributions to the greater growth and success of the organization. Performance management should be fair and objective, orienting employees toward developing skills and behaviors that will drive value for their own careers and for the organization.

Greater pay transparency

A new trend is emerging: Younger generations are discussing their salaries more openly. Bankrate’s US-based survey found that 42% of Gen Z and 40% of millennial workers shared their salary with either a coworker or another professional contact. This stands in stark contrast to the only 31% of Gen X and 19% of baby boomer workers who did the same.

Pay transparency is increasingly relevant as the Great Resignation created issues with pay fairness. Organizations desperate to fill critical open roles during a challenging labor market often ended up paying new hires more – around 9% more according to a 2022 study by Capterra. This imbalance, though caused by shortages in the labor market, doesn’t mean employees aren’t finding discrepancies between their salaries. The Capterra study showed nearly half of employees knew that new hires were making more.

Look for ways to increase fairness inside your organization through a renewed compensation strategy. People are building pay transparency between one another, and it’s time for your organization to do the same.

3. Key focus areas for retention

In Dayforce's 2023 Pulse of Talent, we found that 70% of respondents were a flight risk, either actively looking for new jobs (21%) or open to the right opportunity (49%). Of those who were actively seeking new roles, the top reason was better compensation, with nearly half (49%) selecting it. A desire for more flexibility (32%), burnout (32%), and lack of growth opportunities (31%) were also top answers.

Organizations looking to lower turnover and boost engagement can use these factors as a retention checklist, in addition to the more nuanced insights from their internal surveys.

Goal #1: Satisfy compensation while staying within budget

In the long run, it can be challenging to navigate growing employee expectations when budget realities don't allow for continuously increases to base salary pay in response to labor shortages, inflation, and other market factors. If you set a long-term goal of offering competitive pay to retain top talent, these factors will make it significantly more difficult to hit your mark. If you can’t compete on base salary, a great way to round out your total compensation is by making sure the benefits you offer are the ones that really matter to employees.

The right technology can help you build a better benefits portfolio. When you can assess and measure the distribution of different benefits plans across the company, you can see which plans are actually popular and which aren’t getting used. If employees aren’t using certain benefits, it might be an opportunity to reprioritize your offerings. It might cost less to optimize your benefits than offer the highest base salary.

Goal #2: Increase flexibility in every aspect of the employee experience

Another balancing act leaders face is between offering flexibility and  managing ever-changing compliance. Employees are increasingly seeking new types of flexibility, such as hybrid workweeks that blend remote and in-office days is increasingly the norm. But how else can you be flexible with how your employees work?

Why not try more creative avenues like a four-day workweek? Start with a trial run in a single region or department and see how it affects productivity over time. You might find that an extra day of weekend rest boosts weekday output.

Even if your organization can’t provide remote work arrangements or four-day workweeks, there are ways to increase scheduling flexibility and fairness for your people. Apps can give workers more control over their schedules, with the ability to easily track work time, request time off, and swap shifts with other employees. The right technology will also help simplify the work of scheduling for managers.

Goal #3: Address burnout before it costs you productivity and people

Your employees are working hard, and there are those at your organization who’ve been working too hard for too long. Regardless of the specific reasons for an employee feeling burnt out—boss troubles, work-life balance, ever-growing workload—their burnout comes at a cost.

Burnout at your organization can contribute to lower productivity and disengagement, which can ultimately lead to turnover. So, make sure you add burnout solutions to your retention checklist. A few ideas to help your burnout issue include:

• Promote equitable workloads and work-life balance
• Avoid overloading top performing employees
• Recognize success in personalized ways
• Build in time for rest in the workday
• Encourage employees to use their time off balances

Organizations with winning employee engagement and retention strategies are putting employee wellbeing into action from the start.  

Goal #4: Invest in career development for your people and the future

Career development is an important part of your engagement strategy and your long-term planning. In your retention checklist, dive deeper into how you can align career development initiatives with your future business needs and your workers’ personal career goals.

For example, if you anticipate needing a larger or more highly skilled software development team as technology needs become more complex, you should look for courses to specifically train your current developers. That way, you are building the next generation on in-demand skills, right in-house, so your workforce is upskilled and pre-trained for the future business needs.

At the same time, it’s beneficial to understand what your people want for their own careers and help them achieve their goals. The right technology can help you offer personalized learning and development plans that put employees on their desired paths and increase internal talent mobility at the same time.

Bonus goal: Diversity, equity, and inclusion

Our 2023 Pulse of Talent survey asked employees to what degree they agree with this statement: A lack of diversity among a company’s leadership would stop me from pursuing leadership roles within that organization. Of our respondents, over half of those who identified as part of a minority or underrepresented group agreed or strongly agreed that a lack of leadership diversity would stop them from pursuing leadership roles within that organization.

When it comes down to it, you need strong, diverse leaders who set the stage for continued DEI growth. So start examining your DEI strategy and find ways to revamp your recruiting processes, cultural values, and more. Keeping talented and diverse future leaders at your organization may depend on it.

4. Optimize for engagement across the entire employee lifecycle

Every employee wants to feel satisfied at their job. Today’s employers need to find the right balance between their employee expectations for fulfilling work and the realities of running a business. Whether they’re a few days or a few decades in, you have the opportunity to make them feel seen with your new engagement and retention strategy.

Stage 1: Attracting and recruiting top talent

Employee engagement starts at the beginning of the employee lifecycle: attraction and recruitment. If you want to retain employees for a long time, think about how you’ll attract the right people that will want to stay with your organization. That’s where building a strong employer brand that exhibits positive engagement and development opportunities comes in handy.

During the recruiting process, check for things like alignment with company values during interviews. And look at length of tenure at past organizations—knowing why someone left a previous position can help you gauge their fit at your own.

Stage 2: Onboarding new hires

When you’re interacting with a new hire, you set the precedent for company culture, workplace expectations, and the employee experience. As new recruits move through the onboarding process, you have the unique opportunity to educate, nurture, and inspire while they’re highly engaged. The more you can set a precedent of positivity and intention in the employer-employee relationship, the easier it will be to retain new hires for the long run.

Stage 3: Developing and retaining your employees

It can’t be stressed enough: employees want development opportunities. If your people feel stuck at their job, they might leave your organization rather than applying to other internal teams.

Research from Gallup found that “48% of American workers would switch to a new job if offered skills training opportunities.” That’s a red flag for long-term retention. Give some much-needed attention to how you’re upskilling and reskilling employees. Employees are eager to learn and grow, and that drive for personal career growth is an excellent opportunity. Harness your employees’ energy through development in order to encourage years-long retention.

Stage 4: Offboarding and retiring exiting employees

From recruitment to retirement, you have a chance to meet your employee’s needs every step of the way, doing all you can to ensure long-term retention. Whether offboarding employees are exiting for new job opportunities or retiring into the next chapter of their life, you can still engage these workers. Think about how alumni from your organization can help support your employee brand and refer talent – or even serve as a future talent pool.

Don’t forget about boomerang employees

Don’t forget that the employee lifecycle isn’t always continuous. Sometimes, you might have boomerang employees who leave the organization and return at some point later. Re-recruiting boomerang employees is a vital piece of the puzzle, as they produce turnover rates consistently lower than industry averages for all employees.  

As you build your new strategy, give special attention to onboarding tactics, work anniversary recognition, and retirement packages. If you wow new hires from the start, recognize them at major annual anniversaries, and encourage them to stay with enticing retirement options, you inspire loyalty to broaden your retention strategy.

5. Don’t neglect your day-to-day experience

The tools that employees and leaders use every day can impact employee engagement and contribute to an overall positive or negative employee experience. From software to tech setups to HR requests—your day-to-day experience at work directly connects to employee sentiment. When you simplify and streamline repetitive tasks, you can refocus your whole workforce on the most important and meaningful work. 

A modern-day workforce needs modern-day tools

In today’s world of work, employees are using more and more technology to get the job done. Whether it’s a remote worker typing away at a company laptop from their couch or a line worker on the production floor welding parts together, the employer-employee relationship is very much defined by the tools the former gives the latter.

Imagine walking into work every day knowing that it’ll take you at least 15 minutes to boot up on your outdated desktop computer. Or maybe every time you want to make a simple PTO request, you have to endlessly toggle between shift schedules, email calendars, and time-off request platforms. Every inconvenience and small frustration builds, day after day—in short, it can drive you a little bit crazy.

Sure, some tools have their quirks, and you need the annoying yet secure multi-step authentication logins. But there are some aspects of employees’ day-to-day experience that could be easily fixed, removing unnecessary friction from their lives.

Take stock of the tools you provide. Employees are using multiple applications on laptops and phones to complete daily tasks and communicate with one another. If your workforce technology wastes employees’ time or creates barriers to doing their best work, look for a new software solution. Solving small issues like these will undoubtedly reverse the negative impact employees typically experience every day.

6. Continuous improvement and adaptation

No strategy should be stagnant—your organizational situation will change over time, and your strategies must adapt. Things like new business priorities, uncertain economic futures, and scaling of business size will change how you build an impactful employee experience.

The balancing act between empathy and productivity, flexibility and compliance, and employee expectations and budget realities are constant. If you want your organization to succeed, especially in matters of employee retention and engagement, you must focus on key activities that build trust and drive high performance. This means using data to keep up with changing employee expectations and evolving work conditions. And the right workforce systems will be flexible, too, working with you to continuously improve your employee experience and nurture a positive, healthy work environment.

This post was originally published on May 30, 2023 and was updated on May 24, 2024 for recency and to include new perspectives on the topic.