Ultimate guide
Employee recruitment and retention
In this guide, we detail how to manage your recruitment and retention processes with clarity, intention and care. From creating a strategy that works for your business, to the step-by-step process of onboarding your new recruits – read on to find out more.
Contents
Go straight to the employee engagement topic you’re interested in by clicking on the text below.
Chapter 1
Introduction to recruitment and retention
In this chapter you’ll learn
- Why recruiting and retaining employees is important
- The goal of recruitment and retention
Recruitment and retention are two of the most important tasks for any HR team. Finding and keeping talented employees is paramount to business success, and the impact the right team can have on a business can’t be overstated.
Of course, recruiting and retaining people is not easy. Doing it well means combining clear strategy, tight processes (and automation where possible), with the knowledge, skills and collaboration of your people team(s) and line managers. And since the best people often come with the biggest demands for your HR team (think flexible working, higher salaries and nice benefits), maintaining your team needs to be managed carefully.
Luckily, this guide is here to help you do just that!
Why recruiting and retaining employees is important
Achieving business goals can’t be done without your people. It’s that simple.
As such, recruiting and retaining great people with the right skills, experience and attitude to achieve those goals is essential.
Having a robust recruitment process allows you to:
1. Improve productivity. We don’t have to tell you that a skilled and motivated workforce boosts productivity and leads to higher quality work.
2. Boost innovation. New people equal new ideas and different perspectives, and keeps your business fresh, modern and leading the way.
3. Reduce turnover. By recruiting the right people to begin with, you reduce the chance of them wanting to leave after a short time, saving your business time and money.
4. Drive growth. All of this combines to increase profit and growth for your business.
Having a retention strategy in place enables you to:
1. Save on costs. Hiring and training people is expensive! So keeping your skilled employees means you don’t have to spend more money (and time) on getting new people into the business.
2. Increase productivity. Experienced employees are usually more efficient at their work and used to your processes and tools, boosting productivity.
3. Improved customer experience. Your employees can provide a consistent experience to customers and support them with a greater depth of knowledge.
4. Strengthens your culture. Giving your business a stronger identity. Which in turn, leads to boosting your employee brand – making hiring easier too!
The goal of recruitment
Recruitment is the act of bringing a new person into a free role in the business. Often this is done in times of expansion (when new roles are created), when someone has left the business (leaving an existing role vacant), during a restructure (where there may be the same number of roles, but different responsibilities), or to cover a period of leave, such as maternity.
The goals of recruitment often are:
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Quality of hire
Finding someone who has the skills, experience and attitude needed for the responsibilities they’ll be given.
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Speed of recruitment
Recruiting within a set time frame.
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Cost per hire
There may be a budget per hire, or a target average cost per role filled.
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Employee experience
There may be additional goals to improve candidates’ experience during the hiring process, and/or onboarding process.
The goal of retention
Retention is the act of retaining your people in their current roles. There are many aspects that go into improving retention, from providing competitive salaries and a good benefits package, offering flexible working, ensuring employee wellbeing, empowering managers to look after their reports, and much more.
Perhaps the only retention goal you need is simply to reduce employee turnover rates, i.e. reduce the percentage of employees who leave in your company over a set time. Or you could frame this in a more positive light: increase employee retention rates (i.e. the percentage of employees who remain with your company in a set time).
Or, if you’re in the lucky position where your turnover rates are very low, it may be simply to maintain your current turnover/retention rate. (We’ll discuss what a good retention rate is later in this guide.)
Chapter 2
Employee turnover causes
In this chapter you’ll learn
- Most common reasons for high employee turnover
Keeping good employees is of course HR’s number one priority. But why do employees decide to leave for pastures new?
Here are the most common reasons why there may be a high turnover in a business:
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Inadequate pay and benefits
Of course, if your business is not keeping up with the industry standard by offering competitive pay, employees will look towards other opportunities.
Benefits can also play a part here – as employees expect more and more, you need to ensure your total job offering appeals to the calibre of candidates you want to recruit.
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Inconsistent management
Do your line managers act differently to each other, or even just inconsistent day-to-day? Are there differing attitudes towards flexibility, time off, or productivity expectations?
A lack of structure and inconsistent application of rules can cause staff to feel unfairly treated and frustrated.
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Lack of support
If managers and team members don’t fully support their colleagues with both their wellbeing and their workload, employees may burn out and be compelled to leave to protect their mental health.
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Poor company culture
If your company culture is overly negative, stressful, competitive or exclusionary, you won’t be able to retain good colleagues for long.
This can be difficult to spot though as many qualities that are perceived as good (such as rewarding working long hours, having a lot of banter in the workplace, or driving results with a sense of competition) can easily turn into a toxic workplace if left unchecked.
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Lack of progression
If there’s nowhere to go next in your company, then your ambitious employees will walk straight out the door.
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Lack of flexible working opportunities
To keep the best talent, you need to work to their schedule. Being inflexible with working hours, location, and other aspects may force competent staff members to find more flexible work.
In fact, 78% of job seekers prioritise work-life balance over salary.
The cost of employee turnover
It costs money to recruit new employees, which is why getting it right is so vital. And this isn’t just about sponsoring job ads – we also need to factor in the time it takes to recruit someone, recruitment agency fees and colleague referral fees, and the time and money it may take to train them when they’ve arrived.
How much does employee turnover cost an organisation? Recent statistics indicate:
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16
of the annual salary
is the typical cost of replacing a member of staff in jobs paying less than £30,000 per year. -
20
of the annual salary
is the average cost of replacing someone in roles paying between £30,000 and £50,000 per year. -
213
of the annual salary
is the potential cost of replacing someone in highly paid executive positions.
Chapter 3
Recruitment
In this chapter you’ll learn
- The recruitment process
- Onboarding new employees
Recruitment process
Recruitment is the act of bringing a new person into the business.
A lot goes into the recruitment process, which can make it a time-consuming affair!
The step-by-step process of recruiting for a role is:
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1. Identifying a need for a new role
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2. Writing the selection criteria, job description, and setting salary banding
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3. Signing off the role with the HR team and/or senior leadership
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4. Promoting the role
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5. Shortlisting candidates who apply
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6. Interviewing for the role
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7. Selecting the candidate
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8. Making them a job offer and any negotiations
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9. Onboarding your new hire
Recruitment steps to be mindful of
Chapter 4
Types of Recruitment
In this chapter you’ll learn
- The advantages and disadvantages of internal recruitment
- The advantages and disadvantages of external recruitment
- In-house recruitment vs working with agencies
Internal recruitment
Internal recruitment is the practice of searching within your company to hire or promote employees into a vacant role.
Advantages of internal recruitment
1. Keep your best people. Promoting your current employees not only keeps them with you for longer, it also sends a strong message to everyone else in your team: “we look after our employees. There are opportunities to advance here and have a fruitful career at our company.”
2. Save time and money. Recruitment is expensive! Considering the time it takes to go through the recruitment process (see above) and what it costs to hire one person, recruiting internally saves you in more ways than one.
3. Hit the ground running. As your internal hire will already be familiar with your company products, processes, and people, there will be a significantly shallower learning curve than hiring externally. This is ideal if you want a role filling quickly and for your new candidate to ‘hit the ground running’ in their position.
Disadvantages of internal recruitment
Of course, every approach has its downsides. Here are a few things to be aware of when it comes to internal recruitment:
1. Potential stagnation. It’s great to keep your most experienced people, but if you rely on internal recruitment too heavily, you risk the stagnation of your culture, products and processes. New ideas and perspectives are much more likely to come from outside your organisation, which can help push your business forward.
2. Creating resentment amongst the team. Promoting internally often means colleagues are battling for the same position. The candidates who don’t succeed in getting the position may feel upset or annoyed.
3. Difficulty with managers. If managers like their current team structure, they may be unwilling for their reports to move into new roles, and may even try and hinder the transfer process.
4. Leave a gap in your workforce. Of course, promoting someone in your team helps reduce time and costs to fill that role – but you may then have to fill their previous role instead. Ultimately, you can’t solely recruit internally, and will have to look outside your organisation as well.
External recruitment
External recruitment is when a company hires from outside the team. This is when employers need to advertise job roles and get new people interested in joining their organisation.
Advantages of external recruitment
1. Access a large pool of candidates. This might be an obvious answer, but of course hiring externally means you can tap into a large network of people who have a broad range of skills and experience, so you can choose your ideal candidate.
2. Gain fresh perspectives. Bringing new people on board also brings their new ideas, different perspectives, and experiences – including perhaps useful product knowledge and experiences of different business processes. With these insights, your business can keep on top of the competition.
3. Improve diversity. Following on from the previous point, hiring externally also means you have the opportunity to diversify your workforce. Read more on this below.
4. Fill any skills gaps. External recruitment allows businesses to fill any gaps they might have in the skill of their workforce. The new person will then be able to impart their knowledge to the team, improving the knowledge within the company.
Disadvantages of external recruitment
1. Expense. As mentioned, hiring externally can be very expensive – as you not only have to consider the job advertising fees and agency fees (if used), but also the resource cost of managing this time-consuming process.
2. Disrupting the team. Hiring externally leaves you more at risk of bringing someone on board who isn’t a cultural fit. For example, they could bring a negative attitude that creates discontent in the team, or not get along with existing team members, causing disruption. (When hiring internally, you’ll already have a good idea the person will be a good fit in your team already.)
3. Longer onboarding period. Anyone completely new to the business will need to spend longer acclimatising to your way of working: tools, processes, and creating professional relationships with your team, suppliers and stakeholders. All of this means it may take longer for them to start their value-adding work.
In-house vs working with agencies
Recruitment can be managed in two ways:
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Recruiting in-house
This is when your own staff manage recruitment. There might be a HR or recruitment professional or team who work with senior leaders and managers to identify and promote vacancies, shortlist candidates, set up interviews and onboard new candidates.
Generally, the person or people managing recruitment will use their solid understanding of the business and the people they’re working with (e.g. hiring managers) to create a personalised, efficient process that can be adjusted quickly if need be.
It’s a great option for businesses wanting to keep control over their recruitment process. However, it is more expensive and time-consuming than using an agency.
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Working with agencies
This is when a company outsources their recruitment to an external firm. The agency will work with members of the hiring business to find out about the role, promote it, shortlist candidates, and communicate on behalf of the business throughout the process. This frees up resource in the company’s own workforce to focus on other areas of the business – though they will still have to designate some time to supporting the agency and conducting interviews.
Agencies have the benefit of scale: being able to handle multiple job vacancies at once, which is ideal for larger companies in particular, and may reduce the cost-to-hire. It also of course reduces the administrative burden for the business’ HR team, freeing up resource. However there is more risk of miscommunication and misalignment on the kind of candidates needed, due to a lack of in-depth company knowledge and the desire to fill the role quickly.
Diversity recruitment strategy
Proactively nurturing a diverse workforce should be high on the agenda for any HR team. After all, diverse businesses are 36% more likely to outperform their less diverse peers.
We know that hiring people specifically because they bring more diversity into the business (known as positive discrimination) is against the law. So how do we create a diverse culture in this case?
A great place to start is with your hiring process. Attracting candidates with a range of backgrounds and then assessing them fairly for the role is a good way to naturally introduce different perspectives into your organisation.
How can this be achieved?
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Work with professional groups
Our Head of HR Operations Patrick Cunningham spoke on this at his talk at HR Technologies in Spring 2025.
He described the transformation his business – and himself – experienced when working with a recruitment agency to employ people with intellectual disabilities get a job in his company.
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Review job descriptions
Ensure your language is clear, inclusive and doesn’t inadvertently introduce bias.
Focusing on skills and competencies is more inclusive than qualifications and time spent within a profession.
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Use a blind hiring process
You’d be surprised at how much subconscious bias plays a part in hiring decisions.
If you have the people power to do this, removing candidates’ name, gender, dates, and any other personal information before reviewing CVs and covering letters can help candidates be reviewed for their merits alone.
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Be wary of hiring for ‘culture fit’
Dismissing candidates who don’t think or act like your current team not only limits your vision.
It may also inadvertently discriminate against people with different ethnicities or people who are neurodiverse, who may have different communication styles than your own.
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Create a positive action programme
If your feel a certain group is disadvantaged or underrepresented in your organisation, you can lawfully take positive action to encourage their participation.
Chapter 5
Interviewing techniques
In this chapter you’ll learn
- Competency interview questions
- Situational interview questions
- Using the STAR method
Competency interview questions
Competency interview questions are very common. They’re designed to assess a candidate’s abilities and involve asking the interviewee to recount a past experience, such as to give an example of when they worked well as a team, tackled a tough customer communication, or kept calm in a crisis. Interviewers may use these to understand their thought process and reasoning, as well as their skills and behaviour.
They are also known as a skill-based or behavioural interview question.
Situational interview questions
Situational questions are when an interviewer asks how the candidate might respond to a hypothetical situation i.e. “What would you do if…”. This is usually to assess their problem-solving abilities, or how someone would cope with stress. The situation could reflect what may happen in their day-to-day role.
☆ What is the star method? ☆
The star method is a way of answering common interview questions. It helps interviewees structure their answer to fully explain their competency in previous tasks.
Chapter 6
Employee retention
In this chapter you’ll learn
- The importance of staff retention
- The role of HR in employee retention
- Measuring employee retention
- Staff retention strategies
Employee retention is one of the clearest indicators of a strong people strategy. It’s not just about stopping people from leaving. It’s about creating the kind of workplace where they don’t want to.
What does retention mean in recruitment?
In recruitment, retention refers to how well your organisation keeps hold of employees once they’re hired. It links closely to onboarding, engagement and long-term planning. When recruitment and retention are aligned, you see fewer regrettable leavers and a much better return on hiring investment.
Three main benefits of employee retention:
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Lower recruitment costs and less time spent refilling roles
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Higher productivity from experienced, settled employees
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A stronger, more attractive workplace culture
What is the role of HR in employee retention?
HR professionals are the architects of retention. From onboarding to exit interviews, they shape the employee experience. They drive the policies, training, progression paths and cultural foundations that help employees feel supported and valued. When HR has a seat at the table, retention improves.
Measuring employee retention
Measuring retention helps you track how many people are staying, spot potential problems and benchmark progress. It’s a key metric for HR and business leaders alike.
Retention rate formula
Here’s the standard way to calculate employee retention:
Retention rate = ((Employees at end of period – New starters during that period) ÷ Employees at start of period) × 100
For example, if you began the year with 120 employees, hired 15 new ones, and ended with 110:
((110 – 15) ÷ 120) × 100 = 79.2% retention rate
Staff retention strategies
Retention isn’t about quick wins or token gestures. It’s about building a culture where people feel respected, valued and encouraged to grow.
These proven strategies can make a real difference.
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The three Rs: Respect, Recognition and Reward
Retention begins with the basics:
• Respect employees’ time and contributions.
• Recognise achievements regularly.
• And reward success fairly, through pay, development and flexibility.
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Strong onboarding and induction
The first few weeks shape the whole employee experience.
A clear, welcoming and well-planned induction helps people settle in, feel connected and start off on the right foot.
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Career development and training
People are more likely to stay where they can grow.
Offering career pathways, development opportunities and clear progression helps retain top performers and motivates others.
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Wellbeing and work-life balance
When people are burnt out, they leave.
Supporting wellbeing with flexible working, mental health resources and manageable workloads shows employees you care about more than their output.
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Line manager capability
Managers have a direct impact on day-to-day experience.
Training them to communicate well, lead with empathy and support development will boost both engagement and retention.
Chapter 7
Recruitment and retention glossary
In this chapter you’ll learn
- Key term definitions
No fluff, no jargon. Just clear definitions of the terms you need to know.
Attrition
Attrition is when employees leave your organisation and their roles are not immediately filled. It’s a natural reduction in headcount over time.
Attrition vs turnover
Attrition is usually voluntary and not backfilled. Turnover includes all employee departures, whether voluntary or involuntary, and usually involves hiring a replacement.
Retaining employees definition
This refers to your ability to keep employees for an extended period, particularly high performers and those in critical roles.
Turnover
Turnover is the rate at which employees leave your organisation and are replaced. A high turnover rate may point to poor engagement, management issues or cultural problems.
Retention rate
Retention rate shows the percentage of employees who stay with your business over a given time. It’s a key performance indicator for HR.
Learn more about recruitment and retention
PAST WEBINARS
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Recruitment best practice: nailing your hiring process
Ready to sharpen your recruitment skills and build a stronger, more inclusive workforce?
Watch our free HR Fundamentals webinar, where you’ll discover the essentials of effective recruitment and how to get it right from the start. Learn how to design a robust, compliant, and inclusive recruitment process that attracts the best talent and sets your organisation up for success.
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Retention strategies | Keeping your best people
Struggling to keep top talent?
Watch our free HR masterclass to discover the true cost and causes of employee turnover, how to measure your retention rate, and what role HR plays in creating a culture where employees want to stay. You’ll gain practical insights into the Three Rs of Retention and learn proven strategies to strengthen employee loyalty and engagement.
Chapter 8
Frequently asked questions
In this chapter you’ll learn
- A summary of key statistics from our findings
FAQs
It’s an additional payment or allowance offered to attract or retain staff, particularly in hard-to-fill or high-demand roles.
Good retention means your employees are staying long enough to grow, contribute and succeed. It also suggests your working environment is healthy and your people strategy is effective.
For many sectors, a retention rate of 85 to 90 percent is considered strong. Lower rates may signal the need to reassess culture, management or reward.
High turnover means a large number of staff are leaving your organisation in a short period. It often reflects poor engagement, limited progression or low satisfaction.
Use the formula:
((Employees at end of period – New starters) ÷ Employees at start of period) × 100
Start by listening to employee feedback, investing in development and improving line manager capability. Then take action. Small changes can have a big impact on whether people stay or go.
Contents
Go straight to the employee engagement topic you’re interested in by clicking on the text below.