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Employee Retention Policy - A Complete Guide

Thursday, March 16, 2023

Employee Retention Policy - A Complete Guide

With a change of guard in the employment circles where millennials comprise the largest demographic of the workforce, many organizations are experiencing huge employee turnovers. This is because millennials are growth-oriented, and whenever they feel like their efforts are not appreciated in the workplace, they simply leave.

Yet, this phenomenon is widespread in small and medium companies, with many multinational enterprises boasting a high employee retention rate. Big organizations have competitive perks and benefits for their employees, striving to keep that culture.

So, what do you need to do to ensure that you retain most of your workforce? That is where an employee retention policy comes in handy.

What is an employee retention policy?

An employee retention policy is a document that essentially keeps your employees from leaving. The policy contains the company’s guidelines that keep employee satisfaction and employee engagement high, and it outlines the organization's initiatives to encourage employees to stay.

An employee retention policy also guarantees that the employees have a conducive company culture and work environment, seamless communication channels, and good opportunities for career development. You’re also supposed to list all the benefits the employee will get while working for your company.

The idea of creating an employee retention policy is to be open with your employees while also ensuring that their needs are met, and their accomplishments are recognized and appreciated.

Different companies will have different employee retention policies; always make sure that yours is customized around your organization’s vision and needs, with the aim of creating a positive employee experience.

Pros (and cons) of having an employee retention policy

Employee retention policies might look like the one-stop solution to the employee retention problem, but that’s not the case. Like everything else, the policies have pros and cons, they may keep the workers satisfied, but not everyone would be on board with some of the rules therein.

Pros of employee retention policies

  • Employee retention policies encourage employee loyalty and satisfaction, reducing employee turnover. When employees are satisfied and happy with the benefits and working conditions, they are less likely to leave for better places. Essentially, the retention policy helps keep employee morale up, ensuring that their performances don’t diminish, which will, in turn, hurt the company’s profits.
  • Employee retention policies help set and communicate what your employee expectations are.
  • They guide employees on appropriate workplace behavior. With an employee retention policy, the employees are on the same page about acceptable and unacceptable behaviors within the workplace. This may include regulations on the dress code or prohibitions on the use of inappropriate language. The policy helps maintain a professional working environment in the organization.
  • Employee retention policies help make your manager’s work easy, as they know what the employees need for them to be happy. The policy explicitly outlines employee retention strategies tied to the employee’s needs (such as better work-life balance and opportunities for professional development), so the manager’s job is to devise ways to ensure that the needs are met. The managers wouldn't be in the dark about how to keep their employees loyal.

Cons of employee retention policies

  • For an employee retention policy to be effective, you need to know the needs of your employees before you can meet them. This can be difficult to accomplish, especially if the policy contains regulations that don’t affect some employees or departments equally. You don't want to create rifts within the company with biased rules meant to boost employee retention.
  • Depending on the number of rules you have in the employee retention policy, some people may not be on board with it because it hinders their freedom. Some employees love having some sense of freedom at the workplace, and if they feel controlled, they might seek to leave.
  • It’s pretty difficult to please everyone, and some policies might not consider the needs of different departments within the company. Depending on the roles within the company, getting everyone to agree with the rules and regulations can be complicated.

Employee Retention Policy Template


(Here, you describe your company’s culture and what you believe about retaining your employees.)

When developing retention strategies, (‘Name of the Company’)‘s primary goal is to reduce employee turnover. We consider our employees our most valuable asset and intend to work with them for a long time. This policy outlines our efforts to retain employees in our organization.


(Outline why you have the policy.)

This policy tries to manage employees to encourage them to stay with the company.


(Explain the relevance of the policy and who it applies to.)

This policy applies to all existing employees regardless of their position in the organization's hierarchy.

Company Initiatives

(Outline the initiatives taken by the company to ensure employee growth and training.)

To ensure staff retention inside the company, (Name of the Company) implements the following measures.

Conducive Work Environment

(Name of the Company) recognizes that the company premises serve as a second home for its employees. The company will ensure that the employee is at ease in the workplace. Employees will be provided with the necessary hygiene facilities by the company. The company will also plan team-building activities such as a team lunch or a trip.

Development and Training

(Name of the Company) makes sure that workers receive ongoing training to support their development and growth. The organization will pay for any seminars or courses required for work-related reasons. (Name of the Company) encourages its staff to try out novel methods to shake up outdated routines.

Compensation and Perks

Employees are rewarded by (Name of the Company) according to how well they work. These incentives can be classified as bonuses, wage increases, or other gifts that distinctively demonstrate our gratitude for the work the employee has done and the value they have added to our business.


(Name of the Company) believes that effective communication is the key to a happy workplace.

The company is responsible for communicating pay-raise schemes or new job tasks to employees, so they are fully informed.

Sample Key Takeaways

An employee retention policy will go a long way in ensuring you avoid employee turnover. However, some of the critical things you need to consider before rolling out the policy in your organization include the following:

  • Transparency and fairness. The employee retention policy should be transparent, fair, and equal so that some employees don’t feel left out.
  • Be willing to listen. The rules set in the employee retention document are not final, and you need to listen to your employee’s feedback and adjust accordingly.
  • Introduce the employee retention policy slowly and take into consideration employee feedback. The idea is to make your employees happy, so don't punish them if they give you negative feedback.
  • Ensure that the policy aligns with your company’s culture and is suited to your needs.

Employee retention policies can be tricky to maneuver, but when handled carefully, they can bring about a much-needed change in your organization.

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