The relationship between employee engagement & retention

The relationship between employee engagement & retention

Mastering employee engagement to improve your employee retention rate is no small feat. It can feel like a daunting task that quickly leads to confusion and frustration — but understanding and prioritizing employee engagement and retention is imperative for organizational success.

If you aren’t fully aware of the importance of employee engagement and retention to reduce reasons for employee turnover — keep reading. We’re sharing how engagement and retention are intertwined, the long-term benefits of employee retention, and proven strategies that help you retain top talent.

How does employee engagement help retention?

Employee engagement cultivates a deep connection to daily tasks and responsibilities. It helps encourage employees to go beyond meeting just the basic requirements of their jobs. When employees are engaged, they’re more likely to work toward achieving larger company-wide goals.

Engagement plays a substantial role in the psychological contracts that are often implied in employer-employee relationships. These contracts are unwritten agreements that outline expectations between a company and its employees or workers. Contracts can lay the groundwork and set expectations about everything from job satisfaction to professional growth opportunities. As expectations are met, employee engagement levels can increase. Conversely, when companies fail to meet their commitments, the result can be high turnover rates as employees who don’t feel valued will likely leave.

Gallup research found that companies with engaged teams can have a 24 - 59% lower turnover rate. 

Benefits of retaining engaged employees

The advantages of increased employee retention go far beyond just improving your bottom line. They can shape your entire company culture, and more importantly, public perception of your brand.

Increased productivity

A disengaged employee will work slower, will be less effective, and may hold the company back. Engagement fosters commitment, and employees committed to their organization are more invested and often show higher productivity levels. Some studies suggest that an engaged employee might be up to 17% more productive. 

Higher profitability  

Engagement and retention work together to increase profitability. According to research, highly engaged employees can garner 21% higher profitability rates than their engaged peers might. 

Reduced turnover costs

You can substantially reduce costs by retaining your top talent. An analysis by Society for Human Resource Management (SHRM) found that replacing employees can cost businesses up to twice an individual’s salary. 

Costs of employee turnover can include: 

  • Recruitment expenses
  • Time and money it takes to plan and conduct interviews for a new employee
  • Training periods
  • Downtime during transition periods when a role isn’t filled
  • Lost productivity as new hires acclimate to their role

Positive company culture

High engagement leads to a positive company culture. Engaged workers are more likely to collaborate and realize mutual success. A positive culture further bolsters unity, employee morale, and job satisfaction.  

Lower absenteeism rates

Engaged employees are more likely to show up to work. Some research estimates that high engagement can result in a 41% reduction in absenteeism.

Strengthened employee relations

Companies with engaged employees typically see strong relationships among coworkers. These strengthened relations can improve teamwork dynamics, positively contribute to conflict resolution capabilities, and enhance communication.

Stronger customer relationships

Customer satisfaction correlates directly with employees taking pride in your services or products. They’re intrinsically linked, as happy and satisfied customers can drive revenue and growth, which are crucial for employee engagement and retention.

Research supports this, too. Gallup found that companies with engaged employees have 10% higher customer ratings on average.

Strategies for increasing retention through employee engagement

Bolstering retention rates in your organization relies deeply on fostering employee engagement. You can implement the following engagement and retention strategies to enhance job satisfaction and lead to improved company culture.

Create a positive culture

Positive workplace environments are pivotal in driving engagement that can improve retention. Leaders must create atmospheres that make employees feel valued, respected and included. A significant part of establishing positivity in the workplace depends on leadership ensuring that transparency and open communication are company-wide values.

Recognize and reward people

Recognizing people for a job well done (or for their effort) is essential to increasing job satisfaction and engagement. Recognition can take various forms, including:

  • Performance-based bonuses
  • Incentives
  • Public acknowledgment
  • Certificates
  • Paid time off
  • Memberships or sponsored outings

Rewarding hard work with employee appreciation tactics boosts employee morale and motivates your workforce. It can be instrumental in enhancing employees’ commitment to their company.

Establish a healthy and positive leadership team

Leadership is critical when it comes to employee engagement and retention. People who believe they can trust their superiors are likelier to take risks and go above and beyond. You can build an effective leadership team by training key stakeholders so they can hone their skills.

Encourage work-life balance

Healthy work-life balance for employees is a common expectation from today’s workforce. Recent research discovered that when companies prioritize work-life balance, employees are more satisfied and have better job performance scores — they’re also more committed to their employers. 

In high-paced corporate atmospheres, emphasizing the importance of balancing professional and personal demands is increasingly important.

Promote work-life balance in your organization by: 

  • Offering flexible schedules to reduce stress levels whenever possible
  • Providing mental health days 
  • Including mental health benefits like online therapy for employees 
  • Creating family-friendly policies that help working parents struggling to balance demands

Welcome diversity and create a sense of belonging

Diverse teams bring various perspectives together, often resulting in innovative solutions that promote engagement. Creating an inclusive workspace where everyone feels they belong can do wonders for retention — it can increase loyalty that, in turn, reduces employee turnover rates. 

Fostering a true sense of belonging requires an ongoing effort across all levels of an organization — and it starts with leadership who must actively promote diversity initiatives.

Offer opportunities for professional growth

Providing ample opportunities for professional growth is a strategic way to keep employees happy and engaged. Continuous learning expands skill sets and drives retention by ensuring employees feel appreciated and valued. Not to mention, opportunities for professional growth are an important benefit in the minds of workers today. 

One study found that 60% of people surveyed would rather work for a company that offers professional growth opportunities over a job with better pay — and more than half of respondents (53%) said access to professional growth opportunities might prevent them from leaving a company. 

Offer competitive pay

While compensation isn’t everything, it goes without saying that salary plays a significant role in employee engagement, job satisfaction, and the ability to keep people in a position. 

To enhance engagement and reduce turnover, pay must reflect skills and expertise and be competitive enough to make a job attractive compared to a competitor. 

Create stellar benefits packages

Having a stellar benefits package ensures people feel appreciated. Competitive and comprehensive packages can attract and encourage top talent to stay for the long run.

Allow for flexible schedules when possible

Flexible schedules became more prevalent as a result of the COVID-19 pandemic. While many people are back in the office now, the option to work from home or to have a flex schedule is something many workers today value. Wherever possible, allow for flexible schedules to improve employee retention.

Make communication a priority

Open communication is essential to developing long-term employee retention and engaged employees. Communication can be enhanced by: 

  • Implementing open-door policies
  • Providing employees opportunities to share feedback
  • Offering safe ways to voice concerns or frustrations

When people feel safe expressing themselves and their needs, it reinforces the idea that they’re an asset to a company, which can be critical in keeping them happy in their jobs. 

Provide adequate training

Proper onboarding and training are priceless tools that help create an environment where people can thrive. Appropriate and effective training ensures new hires are confident and comfortable in their roles. It enhances engagement and increases job satisfaction — and some research shows that up to 86% of millennials say they might not leave a job if they had better (or any) training. The same study found that companies that don’t have robust onboarding processes are twice as likely to have higher turnover rates. 

Retain happier, more engaged employees

Organizational success relies on employee engagement and retention. Engagement in the workplace is a powerful solution that drives productivity, a solid commitment to a company, and high job satisfaction. According to some research, companies with highly engaged employees can see a 21% higher rate of attendance and an 86% increased productivity rate.

Using the engagement and retention strategies discussed here, you can transform your organization. An excellent way to start this transition is by offering mental health services from Talkspace. 

You can make mental health help for employees accessible, affordable, and convenient. Learn more about why businesses have partnered with Talkspace to prioritize mental health in their company. 


  1. Nink , Marco, and Jennifer Robison. “The Damage Inflicted by Poor Managers.” Gallup, December 20, 2016. Accessed August 18, 2023.  
  2. Society for Human Resource Management (SHRM). “Retaining Talent: A Guide to Analyzing and Managing Employee ... - SHRM.” Accessed August 18, 2023. Accessed August 18, 2023.  
  3. Gragnano, Andrea, Silvia Simbula, and Massimo Miglioretti. “Work–Life Balance: Weighing the Importance of Work–Family and Work–Health Balance.” International Journal of Environmental Research and Public Health 17, no. 3 (2020): 907. Accessed August 18, 2023.
  4. Bright Horizons. “Millennials Desperate for Financial Stability, in Search of Employer Support to Get There.” Accessed August 18, 2023. Accessed August 18, 2023.
  5. LORMAN Education Services. “39 Statistics That Prove the Value of Employee Training,” September 1, 2021. Accessed August 18, 2023.
  6. Harter, Jim. “Employee Engagement vs. Employee Satisfaction and Organizational Culture.” Gallup, August 13, 2022. Accessed August 18, 2023.

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