The war on talent – Retaining valuable employees

Nowadays, the ability of a company to retain talented employees seems to be challenging. From a company’s perspective, retention is an interesting concept to invest time in as it can decrease dysfunctional turnover, meaning strong performers leaving the company voluntarily. Turnover comes together with high costs and the hassle of a new recruitment process that needs to be started. Furthermore, keeping the right employees enables the organization to get a competitive advantage. The ability to retain valuable employees comes together with finding out what actually motives employees. Research shows that both intrinsically satisfying and extrinsically factors are involved in creating a work environment in which an employee is motivated (Heathfield, n.d). Therefore, both these factors will be explored. Financial incentives, non-financial incentives, company culture and recruitment & selection are factors that could positively influence an employee’s motivation and consequently its decision to stay at a company.

Financial incentives
A current trend seen in HR lately is a desire to promote equal pay, especially done by public sector unions and women (Gilmore & Williams, 2013). Even though this might seem a fair approach towards payment, in terms of motivation and retention this might not be the most successful one. On the contrary, financial incentives linked to performance of the individual employee is more and more often implemented by companies. Financial incentives help to get a good overview of an employee’s performance, as this way of payment will be monitored carefully and is not difficult to carry out for a company. However, research shows that a payment of 10-15% is necessary in order to motivate employees, (Harter & Smidt, 2002) implying that a strategy with lower payment will not be successful. Overall, if the company sets up a clear form of measurement for individual employees it seems that financial incentives can help in the retention of employees, if the amount is high enough.

Non-financial incentives
Non- financial incentives, such as development and recognition, should not be forgotten as intrinsic motivation of employees. Roberts (2014) stated that employees value personal development higher than career progression. However, the word ‘personal’ should be looked at carefully, suggesting that this means something else to every employee. Providing employees with the opportunity to learn and to develop could improve their intrinsic motivation to work for a company and therefore their decision to stay. In addition, the opportunity for employees to develop increased the loyalty of the employee towards the company (Roberts, 2014).  Recognition could be another non-financial incentive, for example rewarding an employee of the month. Recognition is an important factor in terms of motivation.  Furthermore, it can be a competitive advantage over other companies, as it is more difficult to match than financial incentives.

Company culture
Evaluating the company’s culture and communication could be a strategy in retention. Clear communication and transparency could be beneficial in terms of the motivation of an employee because it he could feel more part of the company and recognized more. Employees want to feel like they contribute to the company and to be taken seriously. This requires a specific management style, which is focused on appreciation of the employee’s work and mutual respect. These factors could improve the relationship between managers and employees. Research shows that employees hired in firms emphasizing on interpersonal relationship stayed 14 months longer than in companies that emphasised on work tasks (Sheridan, 1992). Furthermore, managers should monitor the employee´s motivation and satisfaction to continuously work on retention. To sum up, in order for the employee to be motivated and satisfied at the job, it is important to be recognised and respected. A company culture and management style focused on these aspects is required for this strategy.

Recruitment and selection
A retention strategy which might not be usual is analysing the recruitment & selection process of the company. Retention of employees could start from the beginning of employment, when looking for a good match with the right employee. According to Morgeson (2013), recruiting via employee referrals usually leads to new hires with lowest turnover rate. In addition, recording recruiting methods and sources can help in the long term to analyse which employees decide to leave the company. Another aspect in recruitment is providing a realistic job description and a description of the company culture in order to match expectations. When the job matches the employees’ expectations there is less reason to be dissatisfied. Overall, recruitment as retention strategy contributes to the idea that the focus of retention should not so much be on retaining employees a while after the employment, or when several employees left already but starting to find out what motivates employees right during the recruitment & selection process.

To conclude, after looking at several strategies it is clear that there is not one strategy for every company or a quick solution. In order to be successful in retaining employees, the motivation of an individual employee should be considered from the moment an employee enters the company and continued during the employment. Organizations should not put their main focus on retention of employees, but they should consider the fact of recruiting the right talent in the first place and finding out their motivation at the start of their deployment. It seems like combining financial, non-financial incentives combined with a pleasant company culture and good communication could motivate employees. However, focus should be on the individual employee, as everyone has a different motivation to work.


Reference list
Foot, M. & Hook, C. (2001). Introducing Human Resource Management. Essex, UK: Pearson Education.

Gilmore, S. & Williams, S. (2013). Human Resource Management. Oxford, UK: Oxford University Press.

Heathfield, M. (n.d.). What is employee motivation? Retrieved on 29-10-2015 from:

Morgeson, F. (2013). Reducing Turnover Through Hiring – Improve Employee Retention Through Recruitment, Selection and Onboarding. Retrieved on 30-10-2015 from:

Roberts, H. (2014). Development is key to staff retention, according to research. Retrieved on 29-10-2015. Retrieved from

Sheridan, J. (1992). Organizational Culture and Employee Retention. The Academy of Management Journal, 35,1036-1056