Retention Management – These Incentives Really Help to Retain Employees

Mar 21, 2023

Employee retention is becoming increasingly important in times of demographic change and looming shortages of skilled workers. For successful and crisis-resistant companies, it is crucial that they can keep their employees motivated and retain them in the long term. This is where Retention Management comes in.

But what does retention management mean for companies today? And what incentives are needed to keep employees truly motivated and retain them?

What does “Retention Management” mean?

Retention management is a combination of the terms “retention” and “management”.

  • “Retention” means “preservation” in German.
  • The term “management” stands for “administration” and “management.
  • Integrated into the corporate context, retention management therefore means taking measures to ensure the medium- and long-term loyalty of qualified employees to the company.

Retention management is the art of retaining talent without shackles. The intellectual capital of employees is the decisive success factor”, R. Lipkau, War for Talents


What do incentives contribute to successful retention management?

In order to retain satisfied, motivated and high-performing employees in the long term, companies should offer incentives. These incentives should be individually designed and match the desires of the employees. The alignment of need and incentive in turn promotes the emergence of motivation and retention.

What role do material incentives play?

Material incentives represent a central element of the incentive system. Material incentives are:

  • financial benefits
  • non-cash benefits or benefits in kind

These material incentives go beyond salary. Examples of cash benefits include:

  • Vacation pay
  • Company pension
  • Bonuses

Examples of in-kind and utility services are:

  • Drinks and food in the office (contribution in kind)
  • Discounted use of a gym (effective power)

Material incentives are particularly suitable for recognizing employees’ achievements, qualifications, experience and degrees. These incentives often take on the role of a status symbol and express appreciation toward employees. 

However, material incentives alone are no longer enough to retain employees in the long term.

What roles do intangible incentives play?

1. Company culture

A particularly important intangible incentive is the corporate culture. Employees should be able to identify with the company’s values, attitudes, manners and beliefs.

A company must ask itself these questions in order to reflect on its own culture:

  • What values does the company represent? Are these values also lived out?
  • How are conflicts and mistakes dealt with?
  • Is communication transparent and at eye level?
  • What are the company’s goals and opportunities for the future?

2. Trust

Trust is the be-all and end-all of any collaboration and an important component of retention management. This includes:

  • Self-determination,
  • freedom of decision,
  • personal responsibility,
  • flexibility.

Employees expect, for example, a balance between career and private life, through flexibility and self-determination. Mobile working, home office and free time management are important factors that create long-term ties to the employer.

3. Communication

Open and transparent communication and a clear feedback culture play an important role in employee satisfaction and motivation. 

  • Transparency should be created here with regard to organizational development. Employees should be informed about future changes. They should be offered opportunities for further development. According to a study by Hewitt Associates GmbH, professional development opportunities are among the strongest positive factors influencing employee commitment. 
  • In addition, business relationships based on partnership and the elimination of strict hierarchies are relevant for employees. The decisive factors here are manners and “togetherness” within the company. A “you” culture and a shared dinner, for example, can strengthen team cohesion and promote a pleasant working atmosphere.

What does that mean in summary? 

Retention management is a broad topic that is influenced by many factors. Today, the topic is more important than ever. To retain employees in the long term, they should create material and immaterial incentives. Old and rigid structures should be replaced by flexibility, trust, a partnership-based approach and open communication. Effective retention management offers very good long-term prospects for economic success as well as sustainably satisfied and motivated employees.

You want your employees to be motivated and stay with you in the long term? Maybe you have already thought about a retention management strategy, but don’t know how to implement it? 

contact us for a no-obligation consultation to get the best possible support in retaining your employees!

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