Retain Top Talent with Our Seven Employee Retention Tips

26 min to read

22 January 2026

January is historically the month when job applications soar. Employees return to work after the festive break with fresh ambitions, and if you didn’t earn their loyalty before they broke up, they’re likely to be open to new opportunities. During this blog, we'll discuss exactly why you want to keep your people and how to create an employee experience they won't want to walk away from.

In a hurry? Here are the top three takeaways from our blog on how to retain top talent.

1. Retention is a financial and capability imperative, not an HR “nice to have”: Replacing employees is significantly more expensive than retaining them—often 20–200% of salary per leaver, with senior hires costing £20–30k or more when fees, onboarding, and lost productivity are included. In a UK market where hiring is slower but critical skills remain scarce, high turnover directly erodes margins, delivery capability, and institutional knowledge.

2. Employee experience—purpose, recognition, flexibility, and growth—drives loyalty more than pay alone: While competitive pay remains essential, the strongest retention lever is a holistic employee experience. Learning opportunities, career progression, and recognition are consistently linked to higher engagement and lower attrition—especially for Gen Z and high-potential talent.

3. Data-led, personalised retention strategies outperform one-size-fits-all approaches: The most effective retention strategies start with listening to employees through engagement surveys, exit interviews, and workforce data. Turnover patterns often differ by life stage, generation, and role, meaning generic solutions fall short.

Got time to stick around? Let's dice a little deeper.

The UK employment market 2026 is different to previous years. Hiring remains slow post the Autumn 2025 Budget, and the unemployment rate sits above 5%, there are still new jobs listed daily, and the demand for top skills is stronger than ever.

When you use a recruitment agency to find new talent, you can expect to pay between £10,000 and £12,000 in fees each time. Add in the hidden expenses associated with people's time to support onboarding, equipment and training, and that cost could climb to £20-£30,000 every time you bring someone new into your business.

What is employee retention, and why does it matter in the UK?

Employee retention is part of your people strategy, in which you actively plan to keep people from leaving your business. In the UK, where many sectors face labour and skills shortages, retaining talent is critical. Even in industries with larger talent pools, employee retention still matters because it costs the business each time you recruit someone new.

We have two blogs on the topic of labour shortages, which you can read below:

The cost of recruiting new talent remains high, as our opening figures reveal. Aside from the expense, there are other benefits of long-serving employees.

Here are a few:

They know the business’s objectives and practises inside and out, making them more productive.
They’re sources of knowledge, making them great mentors.
They can support with onboarding and training.
They’re an advert for your business.
It shows that you’re offering something they don’t want to give up.

How much does employee turnover cost UK employers?

Employee turnover costs UK employers between 20% and 200% of the recruited employee’s salary, depending on their seniority. That can be anywhere from £20,000 up. Turnover costs vary depending on your turnover rate, so if you’re struggling to retain your people, your bill will be higher.

Want to know your employee turnover rate? Calculate it here.

What are the main causes of employee turnover?

There will always be a level of employee turnover as interests change, employees reach certain life stages, and they seek better pay and new opportunities. High turnover is another matter, and there are some common causes, including poor workplace culture, bad managers, lack of benefits, insufficient reward and recognition, and the need to earn more.

How can HR improve employee retention?

HR can help improve employee retention by first understanding the reasons for high staff turnover, then taking steps to reduce it, helping to retain skills and talent. It comes down to your employee experience and all that it encompasses, which we’ll walk you through next, outlining seven steps to take to strengthen it.

1. Define your employee experience to improve retention rates

When we talk about employee retention, we have to keep changing generational expectations in mind. Research suggests that Gen Z envisage staying with a business for just two years before moving on. Earning the loyalty of the ‘workforce of tomorrow’ is essential so that they can see a future with your business.

If your employee retention rates are a cause for concern, it’s time to take a step back and review what’s happening.

Here are some questions to ask that will help you identify the cause of the problem:

Is there a pattern: Gender, age, or ethnicity?
Do you hold exit interviews? If so, is there a common theme or reason given for leaving?
Are you running regular employee satisfaction surveys? What is the feedback, and are you acting on it?
Are you offering flexibility?
Are there career development opportunities?
Are your employee benefits competitive?
Do you recognise and reward achievements?

The list could go on!

Various factors will impact your poor employee retention rates, and you need to identify them. From there, you can determine what steps you can take to turn things around.

What employees expect from a modern workplace

Employees expect flexibility from the modern workplace. They want an employer whose values align with theirs and who respects the importance of work-life balance, and has an authentic approach to wellbeing.

Our brand-new research, ‘The New Rules of Engagement,’ offers exclusive, fresh insights into how employees are engaging with your business today.

How generational differences affect employee retention

We’ve already suggested that there’s a trend among Gen Z employees where they only see themselves staying with a business for two years. This generation is entering the workforce with the expectation that, after a few years in one role, they’ll be ready to move on to the next challenge.

Life stages often dictate employee retention. Your employees will have different requirements and priorities depending on where they are in life. Those starting families will be looking for more flexibility and family-friendly policies. Those focusing on their careers will seek an employer with a clear progression path and learning opportunities.

Learn more about generational differences in our blog, ‘Bridging the generational divide in the workplace.’

Supporting working families

Discover what support working parents and carers need to help retain top talent.

Download here

2. Use employee data and feedback to reduce staff turnover

Your employees hold the answers to what’s causing high employee turnover and how to prevent it, and our suggested questions above will help you find them.

How to collect honest employee feedback

Accurate and honest feedback often requires confidentiality, so employees feel confident enough to give you the cold, hard truth. A culture of openness helps and should be encouraged, but most employees are more honest in anonymous surveys than in open feedback sessions.

You’re likely to collect a variety of answers, revealing what your people want from your business and how you can deliver the experience that will help to retain them.

Using exit interviews and engagement surveys effectively

There’s a lot to learn from the people who remain with your business, but there’s arguably more to learn from those leaving it. Exit interviews play a crucial role in helping you get to the bottom of staff turnover issues.

HR best practices suggest that exit interviews should be voluntary. Give exiting employees the confidence to participate by ensuring they’re confidential and reassuring them that nothing revealed during the interview will affect their reference.

There may be some resentment towards their manager, so always use a neutral person to conduct the interview. Most importantly, listen. Exit interviews are an opportunity to learn, not defend. The exiting employee has committed to leaving, and you’re there to understand the reasons behind their choice, not to criticise it.

Valuable questions to ask during an exit interview include:

What influenced your decision to leave?
What could we have done differently?
How would you describe the employee experience?
Would you consider returning in future?

Be consistent with the questions you ask, and you’ll start to see a pattern emerge, revealing the issues you need to tackle.

3. How to build a positive employee experience that drives loyalty

Would you work if you didn’t need the money? 51% or people would (Workplace Journal).

These results show just how important work is to people. It gives them so much more than a regular income – it gives their lives purpose, meaning and pride.

The quote above from Alan Waddington of Cirencester Friendly reveals that work is more than a means of paying the bills for a large majority of Brits, particularly the younger generation.

Motivation theories and employee retention

Work isn’t just about financial recompense. To understand what people need from the employee experience you create, it’s helpful to understand what motivates them. In our blog, 'Harness the power of motivation with Maslow, Herzberg, and Pink', we explore Maslow’s Hierarchy of Needs and Herzberg’s Motivation Theory.

Once you understand what drives people, you’ll understand what you need to deliver.

Why purpose matters as much as pay

A strong sense of purpose boosts engagement, motivation and loyalty. Employees with a strong sense of purpose are 5.6 times more likely to be engaged than those without one (Gallup).

70% of people in employment say their sense of purpose comes from their job (People Insight).

Job satisfaction, feeling aligned with a company’s mission, being fulfilled, and the sense that your job has meaning clearly matter, so it’s vital that you bring this into your Employer Brand, Employee Value Proposition (EVP), and the employee experience.

Here are three ways you can build purpose into your employee experience:

Connect everyday work to a clear mission: Ensure employees understand why their work matters, linking individual roles to the wider business mission, so they can see the difference they make.
Give employees ownership and autonomy: Trust and autonomy are vital for helping that sense of purpose grow. Empower employees to make decisions, take responsibility for outcomes, and shape how they work.
Recognise impact, not just output: Values-based, peer-to-peer recognition goes beyond praise for reaching targets and KPIs. Regularly recognise how employees’ work helps colleagues, customers, or the business succeed. Highlighting impact reinforces meaning and strengthens emotional connection to the organisation.

4. Supporting employees through the cost-of-living crisis

From Maslow's research, it’s clear there’s more to being at work than receiving a salary. Although for most of your employees, being at work and earning a wage isn’t a choice -- it’s a necessity. As part of your research, you should assess what financial support could positively impact your workforce’s financial wellbeing.

The cost of living remains high, and there are impactful and affordable ways you can help:

Provide financial education to improve money management.
Add an employee experience platform to your range of perks, giving access to a host of savings on everyday essentials.
Embed a salary sacrifice scheme into your business that could help employees consolidate loans and make tax savings on a new bike or car.
Empower employees to get more for their money by putting a Pluxee Card in their pocket. They could earn up to 15%cashback at participating retailers.

Financial wellbeing benefits that improve retention

In our blog, ‘Unlocking business growth: The 10 benefits of employee retention’, we reveal that 71% of employees review the benefits packages on offer when deciding whether to take on a new opportunity.

If you have a comprehensive benefits package that delivers value to their everyday lives, you’re more likely to retain your people. Other elements matter, too. If the workplace culture is poor or there’s a lack of balance and flexibility, they may opt for a role with a business that offers less, if it is likely to boost their overall wellbeing.

Financial wellbeing benefits do improve retention, but they don’t sit in isolation from the employee experience.

5. Why employee recognition and rewards improve retention

Herzberg’s theories on motivation put recognition at the top. Recognition is such a vital element within the employee experience that we dedicated a blog to the subject – ‘Let's boost the employee experience with recognition’.

66% of employees would leave their current role if they consistently felt unrecognised.

Maslow ranks recognition second-highest in his hierarchy of needs because recognition and rewards build esteem, strengthening that sense of purpose and loyalty.

Recognition vs pay: what matters most?

Recognition doesn’t always come with financial reward. We’ve given you 11 examples of non-financial rewards for employees, and your employees will appreciate them all.

Of course, financial rewards also play a role, and some people would always opt for extra money over a day off.

Recognition is vital for esteem, motivation and engagement, but when the cost of living remains so high, can we really say it matters more than a decent salary?

Money worries and financial anxiety are impacting employees’ day-to-day lives. 62% say they’re less productive because of financial stress. Download our Money Mastery research for more on employee financial wellbeing.

Stats show that employees would leave a business if they felt unappreciated and if they found a more lucrative financial package. It’s not a case of either-or – one or the other – both are equally vital to improving employee retention, especially for top talent.

Examples of effective reward and recognition strategies

We have several blogs we should point you to for examples of effective reward and recognition strategies:

To sum up what makes a reward and recognition strategy effective, ensure to stick to the principles below:

Be consistent
Be inclusive
Recognise values and behaviours as well as targets
Integrate peer-to-peer recognition and manager-led rewards.

6. Learning and development strategies to retain top talent

Herzberg's studies also show that achievement and advancement are motivators. His psychological research, backed up by recent surveys, reveals that companies that spent above the national average of £300 per employee on training and development were twice as likely to report that their employees were satisfied.

Career progression as a retention tool

LinkedIn’s Workplace Learning Report 2024 reveals some interesting stats:

7 in 10 employees say learning opportunities make them feel more loyal.
8 in 10 say that learning opportunities give them a sense of purpose.

The report concludes that:

Companies that encourage employees to explore and stretch into different internal roles reap higher retention rates, a more agile pool of workforce skills, and employees with deeper cross-functional knowledge.

We’ve already discussed the role of purpose in creating an employee experience that helps retain top talent. Investing in employee upskilling is good for productivity and retention.

How training investment impacts employee satisfaction

37% of employees who rated their employer as lacking in learning and development (L&D) said it negatively impacted their job satisfaction, and 37% are considering leaving because of it (HR Director).

Continuous learning and development enhance our sense of self-worth and esteem, as both Maslow's and Herzberg’s theories suggest. It also shows your employees that you’re investing in their future and that you understand their value to the business – the kind of non-financial show of appreciation that helps retain top talent.

7. How Pluxee UK helps businesses retain top talent

As we’ve proved during this blog, the quality of your employee experience helps you retain top talent, and we've been helping employers like you improve yours for over 20 years through our inclusive range of financial, mental, and physical wellbeing benefits.

Our partnership with the University of Salford is one example of the impact we can make: since 2022, we’ve helped them reduce employee turnover by 2.7%.

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Discover how we helped the University of Salford reduce employee turnover and more!

Read it here

How do employee benefits improve retention?

Employee benefits improve retention because they add value to employees’ lives – financially, mentally, and physically. They show them that their wellbeing matters to you, and that earns you their loyalty.

Remember, 71% of employees review the benefits on offer before making a career move, so providing perks they can’t do without is one way to reduce staff turnover.

What financial wellbeing benefits help retain employees?

On average, employees are saving up to £1,200 per year through our discounts Marketplace and cashback from using our Pluxee Card.

The value of these benefits can exceed a 3% pay increase, making it more affordable and sustainable to offer to your people.

Learn why these two perks are so popular among employers and employees:

To wrap up

We’ve explored why employee retention matters and the steps you can take to make a positive change. Change starts with you. Assess where you are and make data-driven decisions to boost your employee experience.

Once you know where you are, we can help you get where you want to be.

Employee Retention FAQs

How long do employees typically stay with UK employers? Older research suggested that employees stay in their roles for an average of 4.5 years, but more recent research has found that this has dropped to just over 2 years. The average varies considerably per industry.

What is a good employee retention rate? An employee retention rate between 85%-90% is healthy. Anything above 90% is strong.

Are employee benefits more effective than pay rises? They can be. Employees still need pay increases, especially when the cost of living keeps rising. We would never recommend ditching the increase in favour of benefits. Instead, maximise the total value of your offering through employee benefits.

How can small businesses improve employee retention? Small businesses can improve employee retention by focusing on their employee experience and building a strong EVP.

Sources:

LinkedIn - Workplace Learning Report 2024