Discover how a strong workplace culture can boost employee retention and learn practical strategies to create an environment where your team wants to stay.
In today's dynamic workplace, company culture has emerged as a crucial factor in employee retention. Following the significant workforce shifts of 2021, organizations are prioritizing culture as part of their retention strategy—and with good reason. A Principal® SMB Sentiment survey reveals that 86% of businesses consider employee retention a top concern.
It's estimated that replacing leaders and managers costs around 200% of their salary, professionals in technical roles 80%, and frontline workers 40%
Your workplace culture is more than just a buzzword - it's the foundation of your organization's identity. It typically encompasses your shared values, expectations, purpose, and standards. Think of it as your company's personality and the "why" behind your brand. While this definition might seem straightforward, culture's impact can touch every aspect of your business, from employee satisfaction to customer experience. Research shows that among employees rating their organization’s culture as good or excellent, just 15% say they’re actively looking for a new job. Conversely, 57% of those who rate their organizational culture poorly are actively or will soon be looking for another job.
Take a moment to grade your company culture on an A-F scale by considering these key areas
- Organizational purpose: How clearly is it defined and communicated?
- Core values: How well are they integrated into your day-to-day business practices?
- Employee recognition practices: Do team members feel genuinely valued?
- Communication channels: Are they open, transparent, and effective?
- Accountability measures: How consistently are standards maintained?
- Mental well-being support: What resources and programs are available?
If employees’ answers are inconsistent, it may be time to start cultivating the company culture you strive to meet. Here are some ways to start:
- Conduct thorough exit interviews to understand why employees leave and what employees are saying about the culture.
- Ask long-term employees where the disconnect is between the culture you aspire to and what is occurring.
- Align company values with those most important to employees.
- Provide comprehensive leadership training on cultural expectations.
- Consistently reinforce company values across all communications, from job descriptions to performance reviews.
People generally want to work in a place where they feel valued, heard, and safe. A strong workplace culture can bring these elements to the forefront, demonstrating to your employees that they are truly the most important part of your business. To leverage your culture for improved retention, focus on these key areas:
Quality feedback starts with providing specific, timely recognition that demonstrates each employee's value. Create regular opportunities for both formal and informal feedback throughout the year to maintain ongoing dialogue. Ensure all feedback is actionable and growth-oriented, giving employees clear direction for development. Remember to document and celebrate employee achievements, reinforcing their contributions to the organization's success.
A comprehensive approach to well-being includes implementing benefits that address physical, mental, and financial health needs. Offer flexibility to help employees balance work and personal responsibilities, recognizing that each person's situation is unique. According to the 2025 Principal SMB Sentiment survey, 94% of employees say work-life balance is important to overall job satisfaction.
Build an environment where diverse perspectives are actively sought and valued as drivers of innovation. Encourage employees to bring their authentic selves to work, help create a culture of openness and acceptance. Focus on building diverse teams that can drive innovation through varied experiences and viewpoints. Establish employee resource groups and mentorship programs to support professional growth and community building within your organization.
Maintain active dialogue through regular surveys to gauge employee sentiment and frequent one-on-one conversations with team members. Take visible action by implementing changes based on the feedback received, showing employees their input matters. While 60% of U.S. employees reported having a way to provide feedback about their employee experience, only 30% say their feedback is acted upon by their employer.
Helping build your company culture
Every moment presents an opportunity to strengthen your company culture. Start by assessing your current state, identifying gaps, and creating an action plan for improvement. Remember: Your employees are your greatest asset - show them they're valued through a culture that supports their success and growth.
For more information, contact your TPA distribution director (PDF) or local Principal representative today.