Improving Employee Retention: A 2026 Guide

What happens when you let low employee engagement slide? The consequences aren’t just low-energy employees or a stiff working environment. It’s high turnover and low retention.

Let’s say that, up until now, an organization barely cared how workers felt. That lack of compassion is no longer professional posturing or corporate tradition. Today, it’s poison for profits and growth. Poor retention and high turnover are an eight-trillion-dollar problem for companies worldwide. 

Meanwhile, employee retention is a high-ROI investment. Today, we’re writing a new chapter on fixing retention and cutting turnover. Here’s how to improve employee retention this year, including costs, causes, and nine proven strategies.

The impact of high turnover and low retention

Recent estimates show that the bare-bones cost of a new hire averages more than $5,000. Gallup says fully replacing a worker costs 1.5 to two times the employee’s annual salary. Most sources suggest that this isn’t the whole picture. 

We don't always account for the other costs of a departure and a new arrival. For every person who quits and every person who replaces them, productivity drops. Funds are diverted to onboarding as an employee with less organizational familiarity works to match the former employee's efficiency.

Meanwhile, customer service suffers and morale drops as employees deal with the uncertainty of a rotating cast of coworkers. Some of their former coworker’s tasks may have even landed on their plate for the time being, heightening their risk of burnout.

💰Discover the true cost of high turnover at your organization. HeyTaco’s turnover calculator shows you exactly how much departing employees cost.

Why’d they leave? The problems plaguing your retention rates.

If an employee leaves because they aren’t getting paid enough, you’ll probably know it. Poor compensation is an accessible reason, an easy answer. We all know there’s a massive difference between feeling like you’re not being paid enough to fill your role and feeling like you’re not getting paid enough to put up with the following:

• Lack of recognition and appreciation. Employees who regularly receive recognition are far less likely to leave–in fact, it cuts the risk almost in half. When recognition is done right, it can clear up or compensate for many other bad retention-makers.
• The old “dead-end job.” People don’t invest or stay fully engaged in relationships they see going nowhere. But promotions aren’t all employees mean when they mention leaving over a lack of opportunity. Overcoming challenges, learning new skills, and mentorship give hope for the future.
• Substandard leadership. Whether they don’t value recognition or communicate poorly, employees sometimes want to ditch their manager. Not the whole company.
• Toxic environments. Gossip, cliques, a culture of blame, and the fear bullying creates. Even overly strict environments can stifle good employees. Micromanagement destroys confidence and signals a lack of trust.
• High pressure and unbalanced workloads. An ever-growing scope of work, unreasonable expectations, and more make the environment stressful. What leaders may call “dreaming big” or “aiming high” can end up burning out the people partially responsible for making it happen.

It’s harder for workplaces, especially startups and rising organizations, to get away with any common cause of high turnover. Too many organizations are meeting the workforce’s demands, from flexibility to supportive cultures. 

How to improve employee retention: Key drivers for attracting and keeping the best talent.

Now we’ll dive into practical ways to keep employees. For each strategy, we’ll note which staff segment will benefit most, but this will naturally vary by organization. We’ll also share implementation tips.

Here’s how to improve employee retention, nine ways. 

1. Offering a recognition-rich culture. 

Recognition is the most-prescribed remedy for low retention. It’s how you deliver authentic appreciation, one of the most common gripes in exit interviews. Managers should recognize employees at least once a week and foster a culture where thank-yous are part of the ritual, not just habitual.

Additionally, rewards and awards (including peer-nominated) and milestone celebrations, such as work anniversaries, should be consistent, timely, and, again, authentic. But what matters even more is devising natural ways to celebrate small, daily wins. 

Peer recognition can help lift morale and quell toxicity bubbling under the surface. Gamification and rewards are a boon for Gen Z and Millennial workers.

Who needs this most: Everyone. That includes new hires, remote employees, high performers, all generations, regardless of tenure. 

Implementation: This is a long-term initiative requiring monthly planning. However, if you use a peer recognition tool (ahem!), you can get that part of it off the ground this week. Here’s a step-by-step guide for building a recognition program. 

🏆 BONUS: Get specific examples of how engagement experts and people leaders at successful companies use peer recognition, rituals, and awards for connections and culture. 

2. Revisit and revitalize your onboarding process.

Your onboarding process, from the information you share to the vibes you convey, should align with what it’s really like to work at your company. However, starting right amid a cultural shift is possible. 

Setting clearer expectations is first. This may mean streamlining and adjusting the pace and cadence of communications. The biggest issue new hires have during onboarding is information overload. 

Recognition starts before day one, too. If you’re not handing out swag, have managers and peers send welcome messages, or include them in a team ritual or meeting.

Who needs this most: New hires. 

Implementation: Create a 90-day onboarding plan with a documented learning path. Start pushing engagement and connection earlier and earlier. Hybrid onboarding seems to get the highest marks from new hires. So, if you’re fully virtual, update your process to successfully onboard remote workers.

3. Invest in employee growth (and their managers, too).

Feeling like there’s no growth possible at a job is usually a communication problem, and it often comes down to management. Employees came in expecting to go in one direction, and then it just sort of meandered off course. And no one seemed to care until they were ready to split.

Provide clearer updates about internal mobility opportunities. Look into possible lateral moves and stretch projects. Mentorship, especially pairing a newer hire with a tenured employee, is a plus. 

Managers may also need additional training. There should be ways to hold them accountable when they don't carry out communications (like regular career path discussions and 1:1s). 

Who needs this most: High performers and experienced employees who would be most attractive to competitors. Gen Z and Millennial employees also see this as a perk.

Implementation: Plan for quarterly career path discussions, more intensive training, and mentorships. Offer workshops, lunch-and-learns, and other skill-sharpeners at least monthly. 1:1s with managers should occur every one to two weeks.

4. Money isn’t everything, but it will always matter.

When your staff is engaged, other companies have to spend much more to lure them away. How much more it takes depends on what you’re offering. Secure market-rate pay, then focus on the rest.

Benefits. Employees often don’t use them because they don’t know what they are. It gets buried during onboarding. They also find that many are hard to access and difficult to use. In some cases, employers even have an attitude about providing them in the first place. That lands even harder when the package isn’t personalized to what they need.

As we can see, the key to resolving such challenges isn’t necessarily spending more money. It’s reviewing, updating, and instructing–transparent communication. Adjust offerings to the individual. Send reminders of what they have, with tips on how to use it. 

Who needs this most: Everyone, including you. 

Implementation: Review and remind of benefits quarterly. Develop and adopt a total rewards approach to compensation that highlights and makes visible a company's non-monetary perks. This is better for intrinsically-motivated performance. That’s their regular compensation, benefits, recognition, growth and development, a culture of recognition, and our next key driver of retention, work-life balance. 

5. The new work-life balance includes work-life respect. 

Some degree of burnout currently affects about two-thirds of employees. They cite reasons such as feeling they have too little time to complete their work, as well as a lack of tools and resources to get it done. 

Honoring one’s work-life balance means setting boundaries. For example, an employee draws a line at answering emails all weekend or refusing to take on someone else’s responsibilities. Work-life respect involves one of the best-known burnout preventives: flexibility. 

Offer flexible work arrangements where possible, including hybrid and remote models. Wellness programs, such as gym membership reimbursements, step challenges, and educational opportunities, also help. 

Personalizing wellness programs for your staff is critical. Stress management workshops or a financial literacy class may matter more than a Pilates subscription.

Who needs this most: Gen Z and Millennial workers report suffering burnout more often. This may be because they face greater economic anxiety than their more financially established colleagues. However, everyone should understand the company’s stance on work-life balance as part of a total rewards strategy. 

Implementation: Conduct a study that surveys employees and leadership to identify needs. Draft clear, cohesive policies concerning PTO and flexible work arrangements. Use the information gathered to design one or two wellness programs at a time. Plan monthly challenges, quarterly initiatives, and year-round wellness incentives.

6. Provide the structure to contain an inclusive community.

Creating community isn’t just about flexing an enviable culture; it provides holistic support, preventing burnout and sustaining engagement. People are less likely to leave because they’re already where they belong.

Survey employees to identify where Employee Resource Groups could help. Reach out to remote employees more often than you would to hybrid or in-person staff. Water-cooler-style breaks, shared interests, and special cross-department collabs can also help build connections. And never underrate the power of varied team-building exercises. 

Who needs this most: Emphasize and heavily promote all resources to new hires and remote employees. High performers may also need more “down-to-earth” interaction with colleagues. Performance-driven employees who don’t feel like an integral part of the team are more likely to leave.

Implementation: This strategy also begins with surveys. Identify ERG needs, common interests, shared values, and other preferences that help us discern the conditions for productive social interactions. Test different team-building exercises ASAP to find those that can become team rituals.  

7. Find the purpose, share the meaning.

When employees know how their work contributes to success or makes other tasks possible, their job has meaning. With meaning, they build a connection that keeps them engaged. When they’re engaged, they are more likely to remain retained.

We can take this a step further by sorting out what an employee does that aligns with a company’s values. Someone can know their job is to sit and type specific information into designated fields and be okay with that. When their manager points out that their attention to detail is a company asset that increased accuracy by 15% that month and carried over to improve efficiency in other areas, it means more.

Make successes visible, and back them up with facts where possible. Don’t just recognize performance. Recognize the qualities and behaviors that the company considers necessary for success.

Who needs this most: Everyone, especially new hires and younger generations who need more concrete evidence and reminders of values. 

Implementation: Leadership clarifies the company’s mission and values. More consistent recognition with a focus on making “small” stuff visible can start right away. Spot and shout out value-tied wins, such as a great customer call or thinking outside of the box.

8. Never take your finger off the pulse.

You can’t fix problems like low retention if you don’t know what’s wrong. Often, you won’t know what’s really wrong unless you ask. Pulse surveys assess culture health, managerial competence, and overall satisfaction.

Here’s another great benefit of building a culture of recognition. When employees feel more seen, they’re more inclined to speak up. Inviting, acknowledging, and acting on feedback are unbeatable forms of recognition. 

Furthermore, useful feedback affects retention. Employees know where to improve and what they excel at, which increases their security and confidence.

Who needs this most: All segments benefit from feedback loops and surveys, but what you watch for differs. Insights from veteran, tenured employees can signal drastic shifts. Responses from newer hires help measure onboarding success. Participation from remote workers indicates how engaged they are. 

Implementation: Organize biweekly, monthly, and quarterly surveys. Educate management on feedback loops. Arrange systems for accepting anonymous feedback. Devise sorting and review systems to address and resolve feedback.  

9. Incentivize, recognize, reward.

Genuine appreciation will always win, but if you want to bump up those rates this year, show employees you mean business. Service awards and incentive programs are more standout ways to acknowledge and thank someone for their loyalty. 

Some cases warrant profit sharing and bonuses. The key is to center the emotional value of loyalty and gratitude. Monetary perks have a limited effect. Consider them enhancements, and keep the pricier ones in your back pocket.

Who needs this most: Experienced tenured employees, remote workers, and high performers. These groups are most likely to disengage when they feel their efforts don’t matter to their employer.

Implementation: The quality and impact of rewards and incentives depend on how you tailor them to the organization. Further reading:

• Monetary vs. non-monetary rewards
• Employee incentive program ideas
• Service awards that acknowledge employee loyalty

Measuring the results of your renewed retention efforts

Ready to lightly crunch some numbers and see how everything’s paying off? Do this monthly:

1. Find two numbers: employees at the beginning of the month and employees at the end. 
2. Divide the number of employees who remained by the beginning-of-month total.
3. Multiply by 100.

If you stay above 90%, you’re doing an excellent job. If you start dipping into the 70s, implement new strategies.

It’s also worth spending time and effort measuring employee engagement. Drops in engagement are a harbinger of future departures. 

If you’ve implemented HeyTaco, analysis is a bit easier. Use the Taco Economy assessment to confirm how peer recognition tools are driving positive cultural shifts.

Case study: How peer recognition saved the day following a merger

Mergers and acquisitions are rough on retention rates. Boosting engagement and strengthening the culture are two proven solutions. That’s quite a challenge for a staff that’s both global and fully remote. 

When digital marketing agency Acadia acquired Bobsled Marketing, the solution was baked into the sale: HeyTaco. Acadia wisely kept this part of Bobsled’s culture, softening the edges of a big shakeup.

HeyTaco made it easy for Acadia to tie their core values into the team’s existing recognition platform. It also became the springboard for team rituals and celebrations. New hires learn all things taco before they even begin, coming in fully prepared to join the culture of appreciation.

More than anything, peer recognition throws the team a life preserver when the job gets stressful. “It gives you energy when you need it most,” says their people leader, TiAnna. 

Peer recognition isn’t just happy feelings and nice sentiments. It taps into the emotional resilience and reassurance needed to stay rooted in our roles.

Common retention mistakes every workplace should avoid

Wrapping up, we need to share a word of caution, a cache of caveats, that can hinder progress. As you implement new strategies, beware of:

• Delayed action. Offering someone a cash incentive only when they’ve submitted their resignation is a no-go. Focus on growing and engaging the people you have.
• Ignoring burnout. Employees who interact less, call in sick more often, or start procrastinating and doing less are at risk. Work-life balance isn’t just a buzz phrase. 
• Letting leadership slide. Share data, survey results, and the true cost of turnover with leaders. Their participation in recognition programs and willingness to adopt a total rewards approach make all the difference.
• Set-it-and-forget-it implementation. Recognition, benefits packages, incentives, flexible arrangements, and learning opportunities share a few things in common, but the most important is this: they all require personalization and regular review to stay effective.

Recognition is a proven retention driver. Peer recognition helps it happen organically.

The high cost of turnover and the reputational damage of poor retention can’t be ignored or erased. They can still be lessons organizations learn from and recover from. 

Some strategies, like reviewing and personalizing benefits and incentives, take time. Curating a robust lineup of growth opportunities, refining the company’s mission messaging, and rolling out a slick new onboarding process can all take a hot minute, too.

What doesn’t is recognition. Roll it out next week, start introducing rituals, and watch something beyond a regular “thank you” happen. Those small attitudinal shifts are piling up to create a sense of belonging. 

Learn how HeyTaco works and try it risk-free for 30 days.