10 Steps for How to Retain Top Talent in 2024

Your employees can make or break your operation, but it’s never been more difficult to hire top talent and figure out how to retain top talent. Employees have more choices when it comes to work than ever before. It’s more common than ever for employees to bounce around between employers, with some simply striking out on their own and going freelance.

The importance of retaining talent can’t be overstated. The right employees can foster creativity, drive innovation, and make your business more profitable, but it’s no longer enough to offer health insurance a week of vacation, and a steady paycheck. If you want to retain great talent, you’re going to have to have a plan for comprehensive growth and development, you’re going to have to create a compensation structure that aligns with your employees' needs and much more.

Although it seems complicated, when you break the process of retaining top talent down into actionable steps, you really can retain your best workers.

We’ll break down the 10-step process you can follow below, but first, let’s talk about what it means to retain top talent and why it’s important.

What We Mean by “Retain Top Talent”

Retaining top talent starts with hiring dedicated, knowledgeable workers who are willing to learn and grow. You can hire top talent for any position, as their attitude towards personal development and performing at the highest level is what sets them apart.

But your job isn’t done when you hire the right person. Knowing how to retain your best employees involves identifying key performers so you can keep them at your company.

The piece that’s often missing is the fact that those high performers seldom stay in their original roles. You have to allow your employees to evolve with your company, which means utilizing their talent in ways that keep them engaged and interested, regardless of their job title.

Why Is Retaining Top Talent So Important?

Perhaps the most convincing reason why retaining top talent is so important is the fact that not retaining your employees is expensive. It's estimated that replacing a single employee can cost you as much as two times their annual salary.

The price of losing top talent is much more costly because your top performers impact your business in ways that go beyond the money.

By keeping your best workers around, you can:

• Develop their skills
• Promote from within
• Build a better company culture
• Reduce expenses

Develop their skills

Most employees aren’t automatically experts at their role within your company. They have to grow into their role. When you give them the right support, they can develop their skills, and more importantly, you can influence which skills they develop. You can shape and mold your best employees to develop skills that are in alignment with the needs and culture of your business.

Promote from within

When you hire a new person, you never really know what kind of performance you’re going to get until they get settled into their new role and show you what they’re made of.

In contrast, when you promote employees from within, you already know what they’re capable of. You have a better chance of finding the right person for the role, they’re likely to adjust more quickly, and because they already know the basics of your company, they will require less training and a shorter adjustment period.

Build a better company culture

By prioritizing the process of learning how to retain top talent, you’re creating a better company culture. You’re showing your employees that you value their contributions and want to support them in learning and growing with your organization. Employees are more likely to try their best when they work for a company that cares about making sure they stick around.

How to Retain Top Talent: 10 Steps

Retaining top talent isn’t something you should leave up to chance. There’s a process you can follow to increase the chances that your top workers will want to stick around and contribute to your company for years to come.

Although the details are often different, there is a 10-step process you can follow to retain your top talent:

• Recruit smart
• Identify top talent early
• Provide recognition
• Motivate via career pathing and development
• Promote from within
• Use stay interviews
• Focus on work-life balance
• Offer competitive compensation and raises
• Reward tenure
• Critically examine when employees leave

1. Recruit smart

If you want to recruit top talent, you have to go beyond normal hiring practices. One way is to switch from education-based credentials to skills-based credentials. It allows you to open up your talent pool and find workers with hands-on experience, ability, and passion, even if they don't have the right degree.

You also have to consider candidates who not only fit into your company culture, but you have to consider candidates who can add to your company culture. When you take the time to assess what you already have and what you're missing, you can avoid homogenizing your workforce and find workers with innovative, creative perspectives for a more well-rounded team.

2. Identify top talent early

Hopefully, you feel like you’ve hired the best candidate for the job, but you don’t always know that you’ve hired top talent until they have had a chance to get to work. It’s important not to let those people fall through the cracks. You do that with a performance review process.

With a robust performance review process, you can identify those who are outstanding in their roles. It allows you to talk about ways to support their growth based on their past performance so they feel like they can evolve with your company.

3. Provide recognition

Employees want to know how they’re doing, but even more than that, they want to know if they're doing well. Nearly 70% of employees said they would work harder if their efforts were recognized. They're also less likely to start looking for a job elsewhere if they receive regular feedback.

Recognizing your employees could mean compensating them in some way. Writing a thank you note can be effective, as can providing employees with additional avenues for achieving their professional goals.

4. Motivate via career pathing and development

Once you have identified your top performers and have begun recognizing them for their contributions, it’s time to engage in some career pathing and development. That means knowing your employee’s goals and aligning them with your own.

Do they have their sights set on a management position? If so, what kinds of professional development opportunities can you offer, and what kinds of markers can you use to determine if they’re ready for the position?

It’s all about looking toward the future together and helping them get the development opportunities they need to accomplish their goals. When you do, they’re more likely to want to accomplish those goals with your company.

5. Promote from within

We mentioned earlier that promoting from within is a great way to find the right person for open roles within your company, but it’s also a great way to retain your top employees.

Workers want to know there are opportunities for them to move up in the organization. They don’t want to feel like they are stuck in the position they were originally hired for, especially if they feel like they have outgrown it. By promoting from within, you demonstrate to employees that you’re willing to support their career progression, which means they don’t have to look for a new place to work to get the promotion they seek.

6. Use stay interviews

Exit interviews are a great way to discover reasons why top talent chooses to leave your organization, but by then, it’s already too late. Get more proactive with your approach by conducting stay interviews.

Stay interviews are among the most creative ways to retain employees because they require you to have conversations with your high-performing employees about what they like and don't like about their current roles. It’s a way to uncover aspects of their job that are unsatisfying and make changes before they feel like they have to go elsewhere to fix the problem.

Not only that, but stay interviews promote a teamwork mindset and build employee loyalty, which are also great ways to retain top talent.

7. Focus on work-life balance

Workers demand more from their employers than ever before, and part of what they demand is a better work-life balance. If you want to keep them around, you have to prioritize work-life balance and mean it.

How you do it is up to you, but make sure you involve your employees in the decision-making process. For example, do they want more opportunities to work from home? Do they want flexible starting hours? Do they need more time off?

Then, encourage them to use the benefits you have in place. Employees should feel free to take a mental health day or stay home and work with a sick child without fear of being reprimanded, outcast, or judged negatively for it.

8. Offer competitive compensation and raises

There are a lot of pieces that have to fit together in the quest to learn how to retain leaders, but at the end of the day, your employees go to work to get paid. You could be doing everything on this list right, but if they don’t feel like they’re being compensated properly, they’re going to start shopping around for another job.

Know the value of every position in your company, and pay your employees what they’re worth. Reward them for a job well done with a bonus or a raise, and consider giving consistent, predictable raises every year so employees aren’t left wondering if their paycheck is going to keep pace with inflation.

9. Reward tenure

If you want workers to stay with your company, you have to show them that you take rewarding tenure seriously.

Pay is the best way to communicate the value you place on having experienced members on your team. Consistent raises at predictable intervals ensure your tenured employees feel valued. Making sure they are paid more than incoming employees in similar roles ensures frustrated employees don’t look for work elsewhere because they feel they are being paid unfairly.

Tenure can also be rewarded with personalized items, thank-you notes, and meaningful gatherings. Just make sure milestones are achievable. The average person stays at the same place of employment for a little over four years before moving on. Waiting for a fifth anniversary won't cut it. Start tenure celebrations at just two or three years instead.

10. Critically examine when employees leave

No matter how great your retention strategy, you will always have employees who leave the company. It doesn’t matter whether they’re leaving on good terms or bad; they have important things to say about what could be done better. If you listen, you can make adjustments before other employees leave the company for the same reason.

An exit interview can uncover why a great employee decides to leave your company. An anonymous survey can also be an option, especially if you want to know what employees think, as they’re more likely to be honest when their responses are anonymous.

Then, make sure you act on the information you uncover. If they felt burnt out, it might be time to address symptoms of burnout with other team members. If they feel stuck in their role, it's time to revisit your growth and development strategies. Treat their feedback as a way for your company to grow and evolve so others don’t leave for the same reason.

What Is the Cost of Not Retaining Top Talent?

Retaining top talent is an investment that takes a lot of time. When there are so many other things on your plate, it’s easy to let it fall to the bottom of your to-do list.

Keeping your best employees isn’t something that should stay at the bottom of your to-do list for long. If you don’t make an effort to retain the talent at your organization, you could suffer some serious consequences:

• Greater expenses
• Lower employee morale
• Lack of cohesion
• Inability to achieve strategic goals

Greater expenses

If you don’t make an effort to learn how to retain top talent, or you simply don’t implement strategies that you know will keep your best employees around, they won’t stay.

Having a high turnover rate means your business is going to become a revolving door, and the more positions you have to rehire for, the more money you’re going to spend. That’s money that could have been spent on professional development, raises, or additional benefits for your existing employees instead.

Lower employee morale

It doesn’t look good if your company has a high turnover rate. It’s a sign that something is very wrong, which can make hiring great talent in the first place a huge challenge. Not to mention, teams can’t function well if they’re always working with new members all the time.

Other employees will start noticing what they dislike about their positions, and they’ll get tired of the inability to work in teams with people they know and trust. They will eventually start looking for another job too.

Lack of cohesion

It is very difficult to maintain a cohesive work environment if people are moving in and out all the time. Teams are always being rearranged with new members being added, schedules can get out of whack, and responsibilities have to be shuffled around when someone leaves.

That can create a chaotic, unpredictable atmosphere that’s uncomfortable to work in, for management as well as employees. It isn’t uncommon for workers who experience a lack of cohesion to experience burnout, and those who do are over two and a half times more likely to start looking for another job, making the problem even worse.

Inability to achieve strategic goals

It isn’t uncommon for companies that are dealing with high turnover rates to stagnate. It takes a lot of time to redistribute the existing employee’s workload while simultaneously trying to find a new candidate to fill the role. It can take weeks or even months to complete the process, which is weeks or months you’re not focusing on your goals.

Use Performance Management to Retain Top Talent

If you aren’t using performance management to retain top talent, you should be. It’s a simple and easy way to deploy many of the steps on our list and keep track of important data that enables you to continue honing your process.

Using performance management software like PerformYard enables you to:

• Customize different kinds of reviews that allow you to identify the top performers on your team
• Give feedback and offer guidance, giving you the ability to support your employees’ development
• Keep track of data that enables you to make informed compensation and promotion decisions
• Catalog all reviews, including stay and exit interviews, so you can identify patterns in responses

How to Retain Top Talent? It’s a Comprehensive Process

There is no one-size-fits-all approach to figuring out how to retain top talent. Instead, it’s about developing a comprehensive process that works for your organization. When led by HR with a dedicated review platform, like PerformYard, you can prioritize your best and brightest so they continue to impact your company in positive ways for years to come.