Despite stock market volatility and fluctuating trade policies, the U.S. labor market has continued to surprise economists with lower-than-expected numbers for those seeking unemployment benefits. There have also been signs that employee turnover continues to present challenges for businesses. For these reasons, employee retention strategies remain a central focus for Human Resources (HR) professionals this year.
According to transformative social entrepreneur Pedro David Espinoza, founder and CEO of the nonprofit organization Pan Peru USA, effective employee relations ultimately come down to one thing: genuine relationships. He should know, having led professional development sessions and workshops on intrapreneurship, entrepreneurship, empathy, and diversity for managers and senior leaders at large corporations such as Dell, Microsoft, Meta, Bristol Myers Squibb, and Cisco.
Employees leave and retention rates tank: Still major concerns in 2025
Major international insurance brokerage and risk management company Gallagher’s 2024 U.S. Workforce Trends Report found that retention remains the biggest challenge for HR professionals, with more than 50 percent of operations executives naming it their primary problem.
At the same time, business leaders are struggling to engage their current employees. Gallup’s 2024 State of the Global Workplace report found that employee engagement decreased by 21 percent, marking its lowest level in 11 years. In particular, members of the Millennial and Gen Z generations, who account for 51 percent of employees, leave their employers for a new job after only 2.5 years on average.
“This churn causes big headaches for businesses,” Espinoza says. According to Espinoza, businesses lose a lot more than just a worker when a team member departs. They also lose that person’s expertise, knowledge of the company culture, and relationships with key coworkers, business partners, and clients.
“Workplaces aren’t just a set of cogs in a machine,” he says. “It takes time for someone to understand the nuances of their role and attain high productivity. When that person goes, they take all of that with them.”
The hiring process is also very expensive. “Just think about how long it takes to vet applications, draw up a shortlist, interview candidates, and find the right new hire,” Espinoza says. “Onboarding new employees is time-consuming and labor-intensive, which adds to the expense.”
Indeed, according to research from Gallup, businesses spend between 50 and 200 percent of a role’s salary to fill it with a new worker. The good news is that, by following a few effective strategies, business leaders can give themselves the best chance of retaining employees and promoting productivity at the same time.
Here are Espinoza’s top tips for retention and employee job satisfaction:
1. Promote transparency
“Companies can retain important talent through clear and transparent communication,” Espinoza explains. “Building trust is hard, but doable, so get to know your team so they can get to know you, too. Companies can be more intentional by involving employees in strategic planning, holding open retreats, and adopting an open-door policy. Encourage employees to be honest, which means being willing to hear hard truths and negative employee feedback sometimes.”
2. Professional development opportunities
Espinoza also recommends offering professional development opportunities. “This reassures crucial employees that the business values them and increases employee job satisfaction,” he says. “One example would be hiring consultants to train their staff members on specific business outcomes. I’ve seen how retention increases personally: I’ve watched Millennial employees who started as interns become senior managers or directors thanks to these sessions.”
3. Appreciation
In addition, Espinoza advises that companies prioritize giving personalized recognition to help employees feel seen and appreciated. “If you want to retain top talent, then you need to commend them for their efforts,” he says. “If they feel like their contributions to the work environment are going unnoticed or have been misunderstood, employee morale can decrease. A few months later, the employees quit.”
Another way to keep employees where they belong and reduce turnover is to understand that many value work-life balance even more than money.
4. Remote work and a good work-life balance boost employee engagement
“Another important component, especially for Gen Zs, is having a flexible work arrangement,” Espinoza says. “This can boost retention for the younger generation during turbulent times.”
For instance, many employees appreciate the ability to set their own schedules and work at times when they are most productive. Many also value the ability to live where they feel most comfortable, which might not be the same metro area as their company’s main headquarters.
For this reason, Espinoza recommends understanding what specific team members want most and offering relevant forms of flexibility as a top priority. “This not only improves retention and mitigates against employee burnout but also motivates people to stay loyal to your company,” he says. “Employee sentiment is everything, and their satisfaction can take a real hit when people feel like a rigid adherence to rules is preventing them from leading a full, rich life.”
In addition, Espinoza raises the question of moonlighting and asks businesses to reconsider their traditional stance of disapproval. “Companies should allow employees to have side gigs, because let’s face it: we live in the gig economy,” he says. “Everyone has a side hustle.”
Indeed, Fortune reports that almost 90 percent of workers have a second pursuit in addition to their main occupation.
Improve employee retention in 2025
High employee turnover doesn’t have to be a fact of life. Ultimately, strong retention stems from paying attention to and caring for every employee as an individual and fostering genuine relationships characterized by psychological safety between managers and subordinates.