Secrets to Growing Employee Engagement and Retention

Long Read - 10-12 minutes

Engagement is a key driver of employee retention and created through a combination of factors, including wellbeing, flexibility, recognition, career development, people management practices, culture. When these elements are in place, employees naturally feel more positive about their work and workplace. It creates a connection between employee and employer, meaning there is a greater chance of them seeing a future together.

Retention is a core focus for HR teams due to the ongoing challenge of recruitment and rising costs of employment. Resources are scarce and vacancies are often left unfilled, meaning retaining top talent and skills within the organisation is critical to business success.

In this ebook, we will look at the link between employee engagement and retention, with a focus on:

• The importance of building employee engagement

• How to establish if employees are engaged

• A manager’s role in building engagement and retention

• How to measure engagement

• Areas to focus to build an engaged workforce

• The role of recognition, collaboration and career development

• Wellbeing and flexibility at work

• Employee Ownership Trusts

The importance of employee engagement

What is employee engagement?

Gallup defines employee engagement as “the involvement and enthusiasm of employees in their work and workplace”.

When employees feel disengaged, they tend to go through the motions and have little motivation, sense of purpose or enthusiasm to contribute and make a difference to the future success of the organisation. Engagement is the difference between surviving and thriving at work.

What impact does engagement have on retention?

In Gallup’s State of the Global Workforce Report 2025, Europe emerged with the lowest regional percentage of engaged employees (13%). When you drill down into the results at UK level, engagement drops to 10%, while 30% of employees said they were actively looking for a new job - equalling the result across Europe.

Low engagement is not just a European issue. Across the globe, engagement is falling and 79% of employees are disengaged to some extent. Declining engagement costs a business in terms of productivity, quality of product/service, absence, loyalty, workplace dynamics, profits, and talented people actively choosing to leave.   

On the flip side, high engagement is linked to having a sense of purpose and happiness at work. It is also strongly linked with positive mental health. Where high engagement exists, businesses experience 78% less absence, 18% higher productivity and are 23% more profitable compared to companies with low employee engagement. Source  

Lord Mark Price said it best in last year’s Work L Global Workplace report 2024

Workplace happiness is essential for economic success and productivity. Companies that prioritise employee wellbeing and engagement not only see a stronger bottom line but also build a workforce that’s motivated, loyal, and better equipped to face future challenges.

- Lord Mark Price, Founder of WorkL and WorkL for Business 

How do you know if employees are engaged?

Employee engagement is generally measured through an online engagement survey and tracked throughout the year using shorter pulse surveys to take temperature checks at various points in time. These can be a useful monitor when a business is going through a period of change.

Commonly, engagement surveys track an employee’s feelings of happiness and satisfaction at work, sense of role and purpose, and recommendation levels (i.e. would employees recommend the business as a great place to work). When combined, these answers give a total engagement score. The higher the score, the more engaged the workforce.

You have to ask your employees questions to find out whether they are engaged. While a survey provides valuable statistical data, in-person conversations can also reveal a lot about a person’s satisfaction at work. One-to-one coaching conversations with managers, stay interviews (see below), roundtable discussions and focus groups are all helpful verbal feedback channels.

Other metrics most businesses monitor that may indicate low or declining engagement are:

• Increasing rates of employee absence

• Declining productivity and quality of output, perhaps coupled with an increase in errors

• Poor customer satisfaction levels

• An increase in employees leaving the business (high turnover or low retention).

A word about surveys

Be wary of asking too many or the same questions every time. Pulse surveys can be revealing in their results, but people can grow tired of responding to them, making the results less reliable.

• Keep the questions short and to the point: complexity will put people off.

• Choose your words carefully: for two reasons a) to measure the correct data, and b) so that people understand what you are asking them.

• Re-order the questions each time: to keep people on their toes and avoid survey lethargy.

• Pulse surveys should be shorter: ask between one and three questions. 

What is a stay interview?

We’ve all heard of onboarding and exit interviews, but have you come across a stay interview? Asking key questions during regular 121 conversations can motivate and boost retention, e.g. Which of your strengths do you feel are underused? How do you think these could be better-used in your role?

The role of leaders in building engagement and retention

People leave bad managers, not bad companies

Good line management is so often the difference between an employee deciding to stay or leave their employer. People leave weak managers and poor leaders who do not listen to, or seek to understand, others. People leave leaders who fail to develop themselves or their team, and who never recognise or reward strong performance.

Managers have a huge role to play in leading the behaviours that drive engagement and building a culture where it can thrive. From top down, leaders have a responsibility to communicate business strategy and explain employees’ roles in it. With this understanding, people are more likely to feel the sense of purpose linked to strong engagement and retention.

Managers must first understand their own important role in creating a business culture that embeds and champions employee engagement. One aspect of this is building strong relationships through continuous team dialogue.

Managers should be using their regular one-to-one conversations to ask: 

• How supported do you feel by me and the wider leadership team?

• Where and how could we improve the support you receive?

• What’s one small change we could make that would improve your overall wellbeing?

• Which tasks drain your energy the most, and how often do they crop up?

A flexible manager mindset

There is also a growing need for managers to demonstrate flexibility in the way they lead by recognising and adapting to each individual’s needs. For some leaders this requires a simple shift in mindset, others may need to be supported with skills development. Read on for more about flexibility in the workplace.

Where to focus to build an engaged workforce

Whether you’re an owner-manager or belong to a HR function, the areas to focus on to boost engagement are the same.

1. Collaboration

Collaboration is about focusing on the ‘feeling involved’ part of engagement. Opportunities for collaborative working include project work, team building and corporate social responsibility activities such as volunteering and fundraising.

Collaboration offers employees the possibility to connect with other teams and departments, to expand their network and build new relationships - inside and outside the workplace. It is a chance to contribute to organisational growth and success through ideas sharing, teamwork, and shared goals. Collaboration builds trust and helps employees to feel valued, heard and understood, promoting a sense of belonging and involvement that strengthens engagement.

2. Career development

Access to learning and development is critical to growing engagement and retaining talent within the organisation. Employees want to see a clear path for personal and professional growth, but this won’t look the same for every individual. 

That’s why regular, meaningful career conversations are integral to building engagement. When managers listen to and understand the development needs of their team members, employees feel heard. As development opportunities arise and are taken up, employees feel wanted and motivated to contribute to their team and organisation’s success.

PDPs with a difference

A popular trend right now is the personalised development plan. Forget the lengthy, complex 3-year career development plan. We’re talking short, simple, action-oriented career development plans with clear links to company values and goals. Setting short-term or mini goals is often more motivating than having annual targets.

3. Recognition

While salary is an important part of employee reward, it’s also a basic human need. When it comes to recognition, employees require more than financial rewards. Recognising employee contributions and achievements beyond this broadens the potential to strengthen engagement and retain employees within the business.

What recognition best practice looks like

• Sharing positive feedback in manager one-to-ones

• Sending a thank you card or e-card

• Open praise in team meetings

• Peer-to-peer thanks and recognition 

• Monthly recognition programmes, e.g. employee of the month

• Annual employee awards programmes

• Celebration events 

4. Flexibility

In the 2024 Global Workplace report, over 4,000 of the 400,000 respondents identified flexibility as an area for improvement in their workplace. There continues to be great debate around flexible working, with brands such as Amazon mandating a return to full-time office-based working. This kind of employer ruling is a huge turn-off for many, particularly amongst working parents, carers, people with disabilities, and those who most value flexible and hybrid working. Researchers at Kings College London found that 10% of UK office workers would quit straight away if a five-day return-to-office was mandated by their employer.

When it comes to demonstrating flexibility, it’s better to trial an initiative to test how it works for everyone, rather than dismissing it completely. This approach demonstrates fairness and an open mind, even if it doesn’t work out for your organisation in the long term.

Flexibility in the workplace also means responding to diversity, equity and inclusion needs. Managers need to see employees as people with feelings, fears and families, not as robots who think only of work. People should not have to leave part of themselves at home to come to work. When employees feel safe and valued as an individual, they are more likely to feel engaged and remain in the business.

5. Wellbeing

Employee wellbeing involves more than designating a wellbeing room or providing fruit and healthy snacks. Wellbeing has to be embedded in the culture of the business as a way of working and understanding others, encompassing physical, mental and financial health.

In a Bupa survey of employees in tech and digital companies, those at non-executive level revealed that health and wellbeing support is a key consideration when choosing who to work for. This makes it a key factor in employee retention. Every employee has the right to lead a healthy, productive working life. If they don’t feel satisfied, they will choose another employer that can provide what they need.

Embedding wellbeing into company culture can be particularly powerful within SMEs, where personalised employee experiences are easier to manage and deliver. It’s not just about the manager-employee relationship either, wellbeing is about how employees treat one another as much as removing barriers to work.

Case study - Propellernet, Brighton

In a fiercely competitive digital industry known for burnout and high turnover, Propellernet differentiated itself by prioritising wellbeing and personal growth as core to their business, proving that flexibility and a commitment to personal development are achievable and effective retention strategies.

Initiatives introduced included:

• Each time a business goal was met, a ‘dream ball’ containing a staff member’s personal dream was drawn, funded, and actively encouraged.

• Comprehensive flexible working options, tailored to the individual.

• Extensive investment in mental wellbeing, including training for managers.

• Continuous career conversations focused on personal aspirations and growth.

The results

• Consistently high staff retention above industry norms (over 90% year-on-year).

• Exceptionally high employee satisfaction and engagement, particularly around wellbeing support and personal development opportunities.

• Recognition and multiple awards for Best Places to Work in the UK, enhancing talent attraction.

6. Employee Ownership Trusts (EOTs)

Employee ownership is not just for large organisations. SMEs can benefit from the model too, ensuring long-term stability, creating loyalty, building employee engagement and retention.

An EOT allows a company to become employee-owned by setting up a trust that holds a controlling interest in the company on behalf of its employees. Moving to an EOT structure is a significant show of trust and respect and a commitment to fostering employee engagement.

When coupled with other measures, such as establishing an employee forum, appointing employee representatives, and fully transparent communication, EOTs can significantly increase engagement.

Case Study - Riverford Organic, Devon

In 2018, when the founder of Riverford Organic Farmers expanded operations, they decided to transition to an Employee Ownership Trust structure. In an industry prone to high staff turnover, the aim was to foster genuine ownership and engagement among employees by directly involving them in strategic decisions, reinforcing transparency and trust.

The results

• Staff retention improved significantly, particularly among operational roles where turnover was historically high.

• Employee engagement scores increased, consistently above sector averages.

• Profitability and productivity metrics improved, driven by the increased sense of ownership and collective responsibility.

Measuring engagement

The only way to establish how best to enhance employee engagement and retention is to ask your people what’s important to them. Your employees will tell you which areas you need to prioritise in order to improve the workplace experience. Pulse surveys can help a business to tune in to how people are feeling. The simple act of asking one question a month can be truly revealing.

For example, rather than mandating a return to the office five days a week, why not ask:

Would you prefer to return to full-time office working, or continue with a hybrid/flexible working model?

Surveys should be used alongside a variety of other feedback mechanisms, allowing employees to choose their preferred method.

Acting on feedback

Asking employees for feedback is a positive step towards improving engagement and retention rates. Acting on that feedback will show genuine care for your employees and actively shift both measures. This promotes a culture where employees feel heard and valued, building a more engaged, loyal, and productive workforce, with lower absence and higher retention rates.   

If you would like support measuring employee engagement or have queries about any of the themes covered in this ebook, get in touch with our team. We’re here to help. Call us on 0161 941 2426 or email p3advice@p3pm.co.uk