3 Reasons Why Your Retention Rates are So Low

Your employees are your company’s biggest asset, and their departures cost you. Departures also hurt morale as productivity falls. While you can’t completely eliminate employee turnover, you can always reduce it. However, you have to know why people are leaving sooner than expected in order to know what to do to stem the losses. Here are three possible reasons why your retention rates are so low.

A Lack of Employee Benefits

Pay rates aren’t the biggest reason people leave jobs – benefits are. This is why group insurance plans are essential to any retention strategy. Yet many businesses fail to realize how significant this is.

Nearly ninety percent of employees give some or heavy consideration to employer benefits like health insurance and flexible work schedules. For comparison, roughly one percent of surveyed employees leave because of pay rates. More importantly, health benefits are so important that some people will refuse a job that doesn’t include it while others will take your job until they find another one that does provide health benefits.

A Lack of Flexibility

Flexible work arrangements are an invaluable benefit, and it may not cost employers anything. For someone with a 9-5 office job, being able to work from home reduces the stress and costs of commuting. Giving people the option to take every other Friday off could reduce their need for vacation time without affecting performance. Allowing them flexibility on when they come in could help them meet the needs of their family. You end up providing work-life balance to people who otherwise might have to leave due to personal or family needs.

Bad Managers

Bad managers are so prevalent that we often hear that people don’t leave companies but bosses. And one industry study found that four in ten workers had left at least one company because of a bad boss.

You can determine if this is the case by looking at turnover rates. If turnover is much higher in one department than the rest, it may be due to one bad manager. It may not be an incompetent or bad boss. It is sometimes due to a mismatch between what bosses think employees want versus what they deliver.

For example, most employers think people want good wages and job security. Yet employees say they want appreciation, to feel like an insider, and sympathetic help with personal issues most. These desires were ranked more important than job security and wages. It also mattered more than interesting work and promotion opportunities.

The issue may be a toxic workplace instead of the fault of a single bad boss. This is harder to determine for certain, but warning signs include lawsuits, complaints, and negative data in exit interviews. You can learn more by asking those who are leaving why they are leaving. On the flip side, building a positive work environment was ranked the most successful retention strategy by Human Resources professionals, while having better managers in place was almost as good.


Don’t assume that more money will keep your best people on the payroll. Understand why people are leaving so that you can take the right steps to prevent further departures.

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