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How to Increase Employee Retention

Updated: Sep 1, 2023

Employee retention is a key challenge for many organizations, especially in a competitive market where talent is scarce. High turnover rates can have negative impacts on productivity, morale, customer satisfaction, and profitability. Therefore, it is essential for managers to understand what motivates their employees and how to create a work environment that fosters loyalty and engagement.

Employees meeting around a table

Using Maslow's hierarchy to improve retention.

One useful framework to understand employee motivation is Maslow's hierarchy of needs, a psychological theory that proposes that human beings have five basic needs that must be satisfied to achieve their full potential. These needs are:

Maslow's hierarchy of needs
  • Physiological: The need for food, water, shelter, and other basic necessities of life.

  • Safety: The need for security, stability, protection, and freedom from fear or harm.

  • Belonging: The need for social interaction, affection, acceptance, and belonging to a group.

  • Esteem: The need for recognition, respect, achievement, and self-confidence.

  • Self-actualization: The need for personal growth, creativity, fulfillment, and realization of one's potential.

According to Maslow, these needs are arranged in a hierarchy, meaning that the lower-level needs must be met before the higher-level needs can be pursued.

For example, if an employee is stressed because they are worried about their ability to pay their rent, it can have a negative impact on their ability to focus on work. Therefore, managers can unlock their employee's potential by helping them move up the hierarchy of needs.

Here are some practical ways to apply Maslow's hierarchy of needs to employee retention:

1) Provide a compensation plan that provides for physiological needs.

Employees need to feel that their basic needs are being taken care of while working for your company. As an employer, you can improve employee retention by ensuring your entry-level roles provide compensation packages that allow your employees to take care of their basic needs.

Turnover at entry-level roles tends to be high, as employees jump from employer to employer in search of making enough money to pay off debt, cover rent or mortgage expenses, food, clothing, and other basic living expenses. If basic needs are not met, employees will not be motivated or loyal, creating more retention risk.

Therefore, managers need to monitor the compensation packages of their competitors, along with the typical living expenses within their region, and ensure they are providing fair compensation. They should offer benefits such as health insurance, retirement plans, education reimbursement, and paid leave when financially possible. The money spent supporting the financial health of your workforce will ensure their physiological needs are met, which will reduce the risk of employee turnover.

2) Create a safe work environment.

Employees need to feel safe and secure in their work environment, both physically and psychologically. This means that managers should ensure that the workplace is free from hazards, accidents, violence, harassment, discrimination, and other threats.

Unsafe work conditions and toxic workplaces lead to low morale, higher levels of absenteeism, and elevated turnover rates. Failure to create a safe work environment can drive up labor expenses because employees will require greater compensation in exchange for the physical and psychological risks they take by working for your company.

Managers should establish clear policies and procedures for dealing with any issues or conflicts that may arise and communicate them effectively to the employees. Furthermore, managers should foster a culture of trust and transparency, where employees feel comfortable expressing their opinions, concerns, and feedback without fear of retaliation or punishment.

3) Establish a sense of belonging.

Employees need to feel that they are part of a team or a community where they can interact with others who share their values and goals. Organizations must be clear on their mission and values and establish best practices, rituals, and routines that attract, develop, and retain employees that align with the organization's purpose.

Managers play an important role in building a sense of community. They must be

  • Selective when bringing on new talent

  • Quick to address culture-damaging behaviors

  • Skillful in resolving disputes

  • Willing to remove individuals who do not align with the culture

Through their leadership, managers can stimulate the collaborations and teamwork necessary to build a strong sense of community within the organization.

4) Give work that builds employees' self-esteem.

Employees need to feel that they are valued and respected for their work and that they can grow and develop their skills and abilities. This means managers should assign challenging and meaningful work to their employees and provide them with clear expectations and feedback.

Managers should also offer training and development programs for their employees and support them in pursuing their career goals.

As employees move up the hierarchy of needs, opportunities to gain status, recognition, power, and influence become more important. Leaders must be intentional in providing employees with opportunities to expand their responsibilities and acknowledge their contributions.

5) Assist employees in pursuing their dream.

Employees need to feel that they are fulfilling their potential and achieving their personal aspirations. This means that managers should understand the interests and passions of their employees and help align them with the organization's vision and values.

Managers should also encourage creativity and innovation among their employees and allow them to experiment with new ideas and approaches.

Novelty, engagement, and retention go hand in hand. To retain employees at the top of the hierarchy, it is vital to provide them with the latitude to keep work fresh, exciting, and engaging while staying within the overall mission and vision of the organization.


By applying Maslow's hierarchy of needs to employee retention, managers can create a work environment that satisfies the diverse needs of their employees at different levels. This will increase employee satisfaction and loyalty and enhance employee performance and productivity. Ultimately, this will benefit both the organization and the employee. By identifying which stage your employees is on the hierarchy and identifying ways to satisfy their current need, you will increase their loyalty and decrease the risk of turnover.


Thank you for reading this blog

Executive Coach Dorian Cunion

I am a father, husband, executive coach, and former retail executive. My coaching expertise comes from 21 years of leading operation, sales, and marketing teams. I understand what it is like to feel stuck, undervalued, and underappreciated.

I also know what it takes to invest in professional development, climb the corporate ladder, and find fulfillment at work.

Your career path is a scavenger hunt. Each opportunity prepares you for the next. Allow me the opportunity to help you clarify your path and accelerate your professional development.

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