Employee retention: Businesses urged to look beyond financial aspects to keep teams engaged

In today’s tight labour market, hiring the right talent can be particularly difficult, yet retaining them is an entirely new challenge that many business leaders dread.

Employee turnover can be costly for businesses, driven by expenses tied to recruitment, onboarding, and training.

While employee retention is crucial, it is not so simple, as a number of issues can play a part in a worker’s decision to leave a business, including problems with leadership, a lack of flexibility, poor progression, limited opportunities, and better offers elsewhere.

Mariella Galea, HR Consultant and Trainer at HR TalentLEAD, on Wednesday (today) said that in 2024, business leaders and managers are struggling with fostering an environment that “not only attracts but retains top talent.”

“Employee turnover remains a significant business concern. Starting from the recruitment phase, the ultimate goal is to onboard employees who excel, stay, and grow within the organisation,” she added.

However, she remarked that the ultimate challenge lies in organisations’ ongoing effort to keep these team members “engaged and motivated,” and this is where employers and managers play a critical role.

“Neglecting this aspect can lead to costly turnover, which impacts not just the bottom line, but also team morale and productivity,” Ms Galea continued.

Studies have found that whenever an employee leaves, it can cost businesses from one half to two times that worker’s annual salary to replace them. This is due to added costs such as advertising the position, onboarding the replacement, and the lost productivity during the time the role is open.

Other HR specialists have noticed that some local companies are opting to tackle employee turnover by offering definite contracts with the intention of “locking in” employees past their probation, a move that has been heavily criticised.

Ms Galea said that businesses need to look beyond employee compensation as the primary focus in order to reduce turnover.

“While important, it’s the non-financial aspects – the work culture, growth opportunities, and employee engagement – that truly drive retention. This focus is essential for long-term resilience and growth,” she added.

This is especially the case since nowadays, given the accelerated integration of automation, artificial intelligence (AI) and digital technologies at the workplace, different processes are being completely transformed.

“However, we must not overlook the human element. Employees are not merely replaceable assets. In this dynamic landscape, our approach to talent management must be adaptive and forward-thinking,” Ms Galea said.

“This journey into 2024 is about more than just surviving; it’s about thriving by building robust, engaged, and capable teams,” she continued.

Ms Galea is a highly experienced HR professional, having served as a freelance HR Consultant and Trainer for the past nine years and as Head of HR at Michele Peresso Group for the last two years. Throughout her career, she has led and handled projects related to excellence in HR, leadership development, training programmes, and employee engagement, among others.