Losing a skilled employee is a massive setback for any organization. Though the market is brimming with talents waiting to be hired, the organization may run into losses for the investments they have to make in the recruitment and training processes.
Also, there’s no guarantee that the new candidate’s skills will be on par with the previous employee.
This eventually leads to high turnover rates and harms the organization’s successful run. Therefore, every company needs to have an employee retention policy that includes benefits and strategies, which ensure maximum employee satisfaction and retention.
It’s one of the most crucial tasks assigned to the HR who along with the employers or managers play a major role in increasing the employee retention rate of the company.


Employee retention is a process or effort put in by employers to retain their employees for a long time. Employees tend to look out for better opportunities due to lack of appraisals or appreciation.

If you look at all the multi-natural successful companies today, they all have healthy retention rates because of the perks and benefits they offer. Employees are an investment too, and to make sure they bring the best to the company; it’s essential to keep them satisfied be it monetarily or by boosting their morale.

A lot of HRs believe that employee retention begins after the recruitment process or probation, but to point out the certain, the retention program begins during the recruitment process itself.

Hence, companies need to draft an employee retention policy that will benefit them and the employees in the long run. Though most of the companies have an employee retention policy in place, not necessarily all are practicing the norms as they should; therefore, the rate of turnovers is increasing.

Plus, it’s a living document which means it requires occasional updates to keep up with the trends in the industry. An organization that does not adhere to the employee retention policy or with low employee retention rates is running into gallows rather than touching the targets they have for the annual year.

Now that we’ve pointed out how important an employee retention policy is, let’s dive in to know more about the policy and why companies, especially small-scaled industries need to adapt them to cut down superfluous expenditures.


What is Employee Retention Policy?

The employee retention policy is a list of policies and programs drafted by employers to ensure maximum employee satisfaction and retention.

These policies include perks, benefits, investment to train the candidates, to sharpen their skills and improve the employer-employee relationship.

An organization that only focuses on recruitment strategies and not retention techniques run the risk of losing these employees in the long run.

Especially small-scaled organizations that focus more on productivity not realizing that their employees are an investment too. Losing them, especially skilled ones will eventually hamper the qualitative aspects and clientele relationship of the company.

Also, the retention policies are not only about employees but the employers as well. The HRs have to make sure the employers are notified about the upgrade in industry trends, and the managers are clued in about these policies to keep the satisfaction level at par.

If these employee retention policies are not revisited time-to-time or updated as per trends, then they are nothing but ink on a paper.


Why does an organization need Employment Retention Policy?

Though achieving targets and yielding profits is the primary goal, the employees are also important for the organization. They are the backbone; they are the driving force who give in their time, talent and labor to produce estimated sales and returns.

However, at times only compensation may not justify the motivation or appreciation they seek from the employers or their managers.

Also, if the managers are unable to deduce the employee’s state of mind or unhappiness, it could lead to the loss of key talent. Hence, the reason why employee retention policy is essential and here’s why every organization needs it:

  • It decreases high turnover rates – A good retention policy ensures high retention and increases in employee satisfaction graph. This means the employees are less likely to leave your company. Also, it will reduce the high turnovers because there are minimal recruitment requirements and training processes to invest in.


  • It enhances the employer-employee relationship – The HRs ensure the managers are aware of the policies, and they advise them to maintain a cordial relationship with the employees. A good employer-employee relationship can never have setbacks considering a lot of people leave jobs because of bad bosses.


  • It boosts employee’s morale – An employee who feels unappreciated in the company is more likely to seek opportunities elsewhere. So naturally, boosting your employees’ morale becomes a crucial strategy to retain them for a long time.


Do read the top 9 strategies to retain your employees


How does the Employee Retention Policy benefit employees?

Though no employee is going to stay with the organization until the end of time, the prime idea is to retain them as long as they can.

The reason being – A long-termed employee is aware of the organization’s guidelines, knows how it processes, is aware of the touch points and strategies to focus on to produce the targeted output and has built relationships with the clients.

So, losing a key talent is a huge setback for the organization, for it has to go through the recruitment processes all over again as well as invest in time and training to groom the new candidates.

All in all, it an expensive procedure and to avoid these costly turnovers, several organizations are now focusing on benefits and even aligning these employee benefits with the objective of the organization.

A marked shift has been witnessed in the retention strategies too, and Indian organizations are now investing large sums to not only retain but attract new talents as well.

Here are the key points that the policy touches to increase the rate of employee satisfaction –

  • Employee Recognition – Undefined roles and designations only lead to confusion and disappointments. Hence, HR’s advise employees to define their KRA’s not only to add clarity to their job descriptions but to make them realize that the employers are aware of their inputs in the organization’s growth. Besides this, the HR’s also advises managers to motivate the employees and guide them into new collaborations if need be.
  • Employee Benefits Strategies – Benefits and perks are one of the many reasons that affect employee satisfaction. There’s no hard and fast rule that there should be multiple benefits and perks to make your employees happy. Sticking to the basic ones that make their life easier and more meaningful outside the closed quarters of their cabins and work desks should seal the deal—for example, health insurance, discounts, recreational center memberships, in-house lunch services, etc.
  • Employee Appreciation Programs – Successful organizations are those who invest in employee engagement programs to ensure the employees are happy with their jobs. HRs are organizing more engagement-based activities, celebrating birthdays, annual parties, success parties, and sending out appreciation cards to boost morale. A happier employee means a successful organization.
  • Employee Inputs & Feedback – Other than staying updated on the trends, what’s matters is listening to your employees. They are on the field; they know the situation; they know where the organization is lacking or what strategies can be implemented to make working conditions better. Taking feedback and holding one-to-one meetings with employees not only enhances the employer-employee relationship but helps the HR’s or managers get an insight to concoct potential retention strategies.

Now that you know why an organization needs retention policies and how an employee can benefit from them, it is also necessary to design the employee retention policy accurately and keep it as employee-oriented as possible, while keeping the objectives of the business in mind.


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Employee Retention Policy Sample

An employee retention policy is different for all organizations. It depends on what the employees of the companies are seeking. As stated earlier, knowing what your employee wants, in order to deliver his best for the company is of utmost importance.

Listening to your employee, appreciating the employees and making them feel a part of the company are some of the points to be focused on while aligning them with the objective of the business.

In a way, the policies should not only ensure satisfaction but also motivate the employee to perform better than their previous outputs. There are several employee retention policy samples out there to guide your drafting process. Whether you are opting for something simple, fancy or creative, the following points must be focused on:

  • Objective – Define the objective of drafting the employee retention policy for the organization. Mention the aspects that need attention to attain this objective.
  • Strategies – Explain the strategies (benefits and perks) you are planning to implement to achieve the objective.
  • Outcome – Define the outcomes and what other gains that the organization is expecting by introducing this objective and implementing the strategies.
  • Measurement – How will the qualitative and quantitative outcomes of this objective be measured? Will, there be surveys sent out, will there be one-on-one meeting etc. to ensure the goal was met? All the methods and measures should be accurately defined in the plan.


Why invest in retention policies rather than recruitment strategies?

In India, the attrition rates are regrettably high, especially in the IT sectors. As per reports published in Economic Times in 2019, top IT firms like Wipro, Infosys, Cognizant are facing high turnover rates due to young and junior level employees opting to switch jobs after learning the trade of the market.

Thus, most of these companies are updating their retention policies or switching to a better employee retention policy sample as well as investing more in retention techniques rather than only focusing on recruitment strategies.

For example, Wipro is going all out to retain key talents by offering a retention bonus of 1 lakh. They are also promoting them to managerial and client-facing roles to learn new skills and get market exposure.

Though spending on employee benefits sounds like a costly expenditure, it’s not as expensive as the turnover rates and recruitment processes that organizations end up spending on.

Also, not necessarily the new candidate will be as good as your existing or previous employee. Spending on employee benefits is no less a than gamble too, but that again depends on the employee retention policy sample that the organization has drafted to increase employee satisfaction.

Let’s not forget employees are an investment. If an organization invests in them, it will eventually lead to an increase in the organization’s growth, whereas investing in recruitment strategies, no matter how good they are or how good a candidate the HR may hire, the expensive training processes and time spent does not guarantee profitable turnovers.

Hence, every organization must opt to shift their focus on upgrading the retention policies rather than only investing in recruitment strategies.


Drawbacks of Employment Retention Policy

Employee Retention Policy has its setbacks too. Considering the whole process is no less than a gamble, the stakes are high since the organization is investing in the employees in the long run.

It’s a testing time for HRs to point out skilled and under-skilled employees in the organization. And playing bets on the wrong card may result in a huge setback for the company.

However, that does not mean that only key talents are to be vouched for retention; there may be employees who are skilled but being less productive due to lack of motivation or appreciation.

Though not all employees are going to stay in the company for a long time, it’s important for the HR to scoop out skilled employees, because investing in them will help the organization in the long run.

To conclude on a fair note, employment retention policy may have its setbacks, but it’s a huge advantage for all organizations who are seeking a plan to reduce high turnover rates, attrition rates and to increase employee retention. The happier the employees are, the less likely they will leave.

Hence designing an accurate retention policy that adheres to employee needs, meets the objective of the organization and increases productivity is the need of the hour for every organization in India today.