Employee Retention Policy Complete Guide [2025]

What is an employee retention policy?

Your company's attrition rate has gone up the roof, and you've just been asked to write up an employee retention policy. It's not as easy as it sounds.

An employee retention policy is the set of rules and regulations that employers use to keep their employees from quitting. Think of it as a set of company guidelines that keep your employees loyal and satisfied, their needs met and their accomplishments recognized. Though there are similarities across all employee retention policies, it's important that your employee retention policy should be tailored around your organization's needs and vision.

Pros and cons of an employee retention policy

While employee retention policies may seem to be the answer to all your organization's problems, they can also be a double-edged sword. They keep employees loyal and satisfied, but there are some rules that might put certain people off.

Pros of employee retention policies

1. Employee retention policies promote employee satisfaction and loyalty, which helps you avoid employee turnover. The more satisfied your employees are with their jobs, the less likely they will be to leave for greener pastures. In general, an employee retention policy can be considered to be a set of guidelines that keep employee morale up, employee engagement high and employee performance from dropping.
2. Employee retention policies make your manager’s job easier because they aren't kept guessing as to the best way to keep your workforce loyal. The employee retention policy should spell out what the employees’ needs are, and how managers should go about meeting them.
3. Employee retention policies also guide employee behavior, making it clear what behaviors are acceptable and unacceptable in the workplace. For example, an employee retention policy that prohibits inappropriate language or dress-code violations keeps your organization a professional environment where employees work comfortably and efficiently.
4. Employee retention policies can save you a ton of money! It's expensive to replace an employee. See how much employee turnover is costing your company with this employee turnover calculator.

Cons of employee retention policies

1. To make sure the employee retention policy is meeting your employees' needs, you need to know what those needs are in the first place. This can be complicated if your employee retention policy incorporates many rules and regulations that don't affect every employee or department equally.
2. Some people may not like employee retention policies because it limits employee freedom. Sometimes employees feel that they are being controlled by the rules and regulations of an employee retention policy.
3. Some employee retention policies don't always consider the needs of different departments, so getting everyone to agree on certain points can be complicated or even impossible depending on their roles within the company.

Example of an employee retention policy in action

One example of an employee retention policy would be a policy that helps employee track their performance, set goals and offer feedback. Some policies focus on employee benefits like healthcare or childcare. Other popular policies include a dress code or anti-discrimination policy. Sometimes an employee retention policy is focused on improving the employee experience and helping employees feel fulfilled while working at their jobs. These policies can also include growth opportunities or career development, so no one feels they are in a dead end job. The end result is always a decrease in voluntary turnover rate and improved job satisfaction.

For instance, take Google's employee retention policy. Google offers employee retention policies that encourage employee satisfaction and employee development. One employee retention policy example from Google would be the popular "20% time". Employees at Google have 20% of their workweek to experiment with a new project or idea as long as it helps them do their job better, which encourages employee creativity and innovation.

Best practices for an employee retention policy

The best employee retention policies are transparent so that every employee is on the same page. Ease employee anxiety by being open about your employee retention policy with your employees and go over it regularly with them. Make your policies as simple and straightforward as possible. Your employee retention policy doesn't need to be full of legalese and complicated language, and you shouldn't need a human resource degree to be able to understand it.

Every employee retention policy has to be fair and equal, or your employees may feel like they're not treated the same way in the workplace incidentally, one of the fastest routes to employee dissatisfaction and a high turnover rate. Be sure to consider both existing employees and that new employee just finishing the onboarding process. If you want to adopt an employee retention policy that includes employee feedback, make sure everyone is on board with whatever changes need to be made and that any changes are reflected across all departments. Target disengaged employees with retention surveys and find out what you could do to get these skilled employees interested in the work they're doing and engaged in the workplace.

To make sure your employee retention policy is effective, you need to remember that employee retention policies are not set in stone. Be willing to listen to employee feedback and change your employee retention policy as needed. An effective employee retention strategy should be fluid and able to adapt over time so that it can grow with the company without losing sight of employee needs.

Make employee recognition and appreciation a big part of your retention strategy. This can be done through employee appreciation days, recognition gifts, or simply introducing software like Matter so that positive feedback and appreciation become an integral part of every workday.

Final ideas for an employee retention policy

Writing your employee retention policy may not be a piece of cake, but with these best practices in mind and your eyes on the final goal, a positive employee experience and low attrition -- you’ll be able to write up an effective policy that fits your organization. As you begin putting together your staff retention policy, here are a few more ideas to keep in mind. 

• The best employee retention strategy is the one that works within your company culture. Every employee is different, so make employee retention policy adjustments based on employee feedback and department need. The more your employee retention policy fits in with your work environment, the less likely it is to be disruptive or upsetting.
• Introduce employee retention policies slowly and make employee feedback a priority for your policy. If you plan to alter any company norms or traditions, such as the dress code, take your time and work on changes gradually so that they can be accepted by as many employees as possible.
• Even if employee retention policy changes are approved, there may be employee pushback or other employee concerns about your employee retention program. Start by collecting current employee feedback and then adjust the employee retention policy as needed.
• Don't punish your employees for giving negative employee feedback; this will discourage employee engagement and make your employee retention policy employee feedback worse than useless. You want your employees to feel free to share their thoughts and opinions, even if those are not what you wanted to hear.

Implementing an employee retention policy is the first step toward reducing employee turnover. By communicating clearly with your employees about what your employee retention plan's employee expectations are, you can have an employee retention policy that is effective and results in employee satisfaction. This employee retention policy will make employees happier and more engaged, reducing the employee attrition rate and increasing team loyalty while delivering a work environment you can be proud of.