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Top 15 Employee Retention Strategies for Small IT Businesses in USA

In the competitive world of IT talent, keeping your star employees can feel like holding onto flying butterflies. But afraid not, fellow business warriors! Here’s the intel you need. This blog uncovers the top 15 employee retention strategies specifically designed to supercharge your US-based IT business and turn it into a talent magnet. From competitive pay to fostering a killer tech culture, we’ll equip you with the tools to build a dream team that sticks. Get ready to watch your retention rates soar and your success skyrocket!

Table of Content

  1. What are Employee retention Strategies?
  2. What is the current employee retention rate of IT industry in United States?
  3. Why employee retention matters?
  4. How to find top IT talent?
  5. 15 Employee Retention Strategies
  6. Best practices to implement in small IT business to retain your best employee
  7. Impact of employee retention on Organizational performance
  8. Conclusion

What are Employee retention Strategies?

Employee retention strategies refers to the ability of an organization to keep its employees engaged, satisfied, and motivated to stay with the company for an extended period. It involves strategies and practices aimed at retaining talented and valuable employees within the organization rather than losing them to competitors or other opportunities. However, IT companies need a higher retention rate to manage their website and App development projects which leads to higher quality results, increased efficiency, and a more competitive advantage. High employee retention is often indicative of a positive work environment, strong leadership, opportunities for growth and development, competitive compensation and benefits, and a culture that values and supports its employees. Employers typically strive to maintain high retention rates as turnover can be costly in terms of recruitment, training and lost productivity.

What is the current employee retention rate of IT industry in United States?

The IT industry has a higher turnover rate compared to the national average. Studies suggest it’s around 13.2% as of February 2024 [Worst Companies for Employee Retention (U.S. and UK)]. This means roughly 13.2% of IT employees leave their jobs each year.

It’s important to note that this is a turnover rate, not a retention rate. A retention rate would tell you the percentage of employees who stay with a company. To calculate a retention rate, you’d subtract the turnover rate from 100%. So, based on this information, the IT industry retention rate in the US would be around 86.8%.

Why employee retention matters?

Employee retention is crucial for several reasons that benefit both the company and its employees. Here’s a breakdown of why it matters:

  • Cost Savings:

High turnover is expensive. Recruiting and training replacements for departed employees takes time and money. Retained employees represent a return on investment in recruitment and training.

  • Improved Productivity:

Experienced employees are more productive. They understand the company’s processes, systems, and culture, and can hit the ground running. Hiring new resources take time to reach their full potential.

  • Knowledge Retention:

Employees accumulate valuable knowledge over time. When they leave, that knowledge goes with them. This can be a major setback, especially if it’s institutional knowledge specific to the company.

  • Positive Work Culture:

Low turnover fosters a more stable and positive work environment. Employees feel secure and valued, which can boost morale and collaboration.

  • Employer Brand:

Companies with high retention rates are seen as attractive employers. This can give them a competitive edge when recruiting top talent.

In short, employee retention helps companies save money, be more productive, maintain a strong knowledge base, and build a positive reputation. It’s a win-win for both employers and employees.

Read Also: How to find and hire dedicated remote development team?

How to find top IT talent?

Finding top IT talent requires a two-pronged approach: attracting and identifying the best fit through effective recruiting methods. Here’s a strategy that combines both aspects:

Attracting Top IT Talent:

  • Offer Competitive Packages:

Competitive salaries, benefits (health insurance, paid time off), and potential for growth are crucial. Consider equity or profit-sharing to attract high performers.

  • Showcase Company Culture:

IT professionals value a positive work environment. Promote your company culture through social media, career pages, and employee testimonials. Highlight work-life balance, remote work options, and opportunities for learning and development.

  • Build a Strong Employer Brand:

Be recognized as a great place to work. Participate in industry events, win industry awards, and get positive reviews on employer review sites.

Identifying Top IT Talent:

  • Leverage Online Platforms:

Look beyond traditional job boards. Utilize platforms like LinkedIn, GitHub, Stack Overflow, and niche tech communities to find skilled professionals.

  • Craft Compelling Job Descriptions:

Clearly outline the role’s requirements and responsibilities, but also highlight the opportunities for growth and the impact the role has within the company. Avoid overly specific requirements that might exclude diverse talent.

  • Utilize Skill Assessments:

Implement technical assessments during the interview process to gauge a candidate’s coding abilities, problem-solving skills, and knowledge of specific technologies.

  • Prioritize Cultural Fit:

Technical skills are necessary, but so is cultural fit. Look for candidates who align with your company values and work style.

  • Employee Referral Programs:

Encourage current employees to refer qualified candidates from their networks. This can be a great way to find high-potential talent who are already familiar with your company culture.

Additional Tips:

  • Move Quickly:

The IT job market is competitive. Respond to applications promptly and streamline your interview process to avoid losing top candidates to other opportunities.

  • Think Outside the Box:

Consider hiring junior candidates with strong potential and provide them with training and development opportunities. You can also explore outsourcing or contracting for specific skillsets.

By implementing these strategies, you’ll be well on your way to attracting and identifying top IT talent for your organization.

15 Employee Retention Strategies

The US IT industry is a battlefield for skilled workers.  Small businesses, often face a particular challenge: keeping their talented employees happy and engaged. High employee turnover rate disrupts projects, drains resources, and hurts morale. But afraid not! Here are some of the best employee retention strategies that address various aspects of what employees value:

1. Competitive Compensation & Benefits:

It’s no secret – money matters. Analyse salaries and benefits packages given in IT industry in your region. Don’t just offer the basics; consider creative benefit options like student loan repayment assistance or on-site fitness centers. Explore offering Coporate Health Insurance to help employees save for medical expenses while reducing your company’s tax burden.

2. Invest in Growth & Development:

Tech skills have a shorter shelf life than a carton of milk. Show your employees you’re invested in their future by offering opportunities for professional development. This could include conference attendance, training programs in latest technologies like Next js, Gatsby or React Js or tuition reimbursement for relevant certifications.

3. Embrace Flexibility:

The rigid 9-to-5 workday is like an ancient history. Consider offering remote work options, especially for geographically dispersed teams. Explore flexible scheduling arrangements for parents or for those with evening commitments, or compressed workweeks where employees can work longer hours for fewer days. This empowers employees to manage their work-life balance, leading to greater satisfaction and productivity.

4. Prioritize Wellness:

Employee well-being directly impacts retention. Promote healthy habits with on-site fitness classes or yoga classes with instructors, offer access to mental health resources. Consider offering paid time off for mental health breaks to help combat burnout, a major factor in employee turnover.

5. Hire for Cultural Fit:

Technical skills are important, but don’t underestimate the power of cultural fit. Seek individuals who align with your company values and foster a collaborative, positive work environment. Conduct behavioral interviewing techniques to assess a candidate’s fit with your company culture beyond their technical knowledge.

6. Foster Open Communication:

Transparency and open communication are key to building trust. Encourage regular feedback sessions, hold monthly meetings to address company-wide issues, and create open communication channels (anonymous surveys, suggestion boxes) for employees to voice concerns or ideas.

7. Recognition & Appreciation:

Employees crave a sense of purpose and value.  Organize employee of the month to acknowledge outstanding work, big or small. Public praise at team meetings, bonuses tied to performance metrics, or even small gifts like gift cards can go a long way in boosting morale.

8. Empowerment & Ownership:

Micromanagement is a recipe for disengagement. Give your employees ownership of their projects and empower them to make decisions within defined parameters. This fosters a sense of trust and accountability, leading to increased engagement and job satisfaction.

9. Teamwork & Collaboration:

Humans are social creatures! Create opportunities for teamwork and collaboration through cross-functional project teams or internal hackathons. Foster a sense of togetherness through team-building activities (Fun Friday Activities).

10. Create a Clear Career Path:

Ambitious employees want to see a future within the company. Develop clear career paths with defined milestones and offer opportunities for internal promotions. Mentorship programs can also be a valuable tool in guiding career development by pairing experienced employees with high-potential junior staff.

11. Fun & Games:

A little lightheartedness can go a long way! Create a fun work environment with game rooms (think foosball tables or video game consoles), casual dress codes on Fridays, or team lunches to celebrate milestones. This fosters a sense of community and keeps employees engaged.

12. Modern Tools & Technology:

Equip your team with the latest tools and technologies they need to be successful. This shows your commitment to providing them with the resources to do their best work. Conduct regular needs assessments to identify skill gaps and invest in training programs or new technologies that can enhance their productivity.

13. Diversity & Inclusion:

Embrace a diverse workforce and create a culture of inclusion where everyone feels valued and respected. This not only fosters creativity and innovation but also sends a strong message that your company values its employees’ unique perspectives. Partner with diversity recruitment agencies or attend job fairs at universities with strong tech programs to attract a wider pool of talent.

14. Stay Informed:

Keep your finger on the pulse of employee sentiment. Conduct regular surveys or hold open forums to gather feedback and identify areas for improvement.

15. Exit Interviews Matter:

When an employee leaves, exit interviews are conducted to understand their reasons for departure. This valuable information can help you identify and address any recurring issues impacting employee retention.

Best practices to implement in small IT business

Here are some best practices specifically targeted towards retaining talent in an IT company:

Addressing IT-specific needs:

  • Hire Remote IT resources:

Hire your resources on contract from an IT staff augmentation company to avoid employee retention. Staffing agencies have a pool of pre-vetted candidates, reducing your recruitment time. You only pay for the contractor’s work time, eliminating benefits and overhead costs.

  • Focus on Skills, not just Degrees:

The IT industry is constantly evolving. While a strong educational background is valuable, prioritize skills and experience over rigid degree requirements. Look for candidates passionate about continuous learning and staying updated with the latest technologies.

  • Offer Development Opportunities in High-Demand Skills:

Identify in-demand skills within your industry and provide training programs, workshops, or certifications to help employees develop those skills. This not only benefits the company by having a highly skilled workforce but also empowers employees to stay relevant and competitive.

  • Create Opportunities for Internal Rotation:

Provide opportunities for IT professionals to move across different teams or projects within the company. This allows them to broaden their skillset, avoid stagnation, and keeps their work engaging.

Building a Strong Tech Culture:

  • Invest in Modern Tools and Technologies:

Provide your IT team with access to the latest hardware, software, and development tools. This demonstrates your commitment to innovation and empowers them to do their best work.

  • Encourage Knowledge Sharing:

Create a culture of knowledge sharing within your IT department. Organize hackathons, brown bag lunches, or internal tech talks to allow employees to learn from each other and stay up-to-date on industry trends.

  • Recognize and Reward Technical Achievements:

Publicly acknowledge and reward employees who solve complex technical problems, develop innovative solutions, or contribute significantly to open-source projects. This fosters a sense of accomplishment and motivates them to excel.

Fostering a Supportive Environment:

  • Promote Work-Life Balance with Flexibility:

IT professionals often deal with demanding projects and tight deadlines. Offer remote or flexible work arrangements, generous paid time off, and discourage a culture of overwork.

  • Offer Mental Health and Wellness Resources:

The pressure to perform and constantly learn new technologies can lead to stress and burnout. Provide access to mental health resources, Employee Assistance Programs (EAPs), or wellness programs to support employee well-being.

By implementing these best practices, your IT company can create a work environment that attracts top talent, fosters engagement and growth, and ultimately reduces employee turnover.

  • Provide Opportunities for Remote Work:

Many IT jobs can be done effectively remotely. Allowing remote work options can improve employee well-being, attract a wider talent pool, and cater to those who value work-life balance.

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Impact of employee retention on Organizational performance

Here is a table of comparison of employee retention to organizational performance:

Employee Retention Rate (%)

Impact on Organizational Performance


Below 70% Significant Negative Impact
  • High costs associated with recruiting and training new employees
  • Loss of institutional knowledge and expertise
  • Decreased productivity due to onboarding and skill gaps
  • Low employee morale and potential for a toxic work environment
  • Difficulty attracting top talent
70% – 80% Moderate Negative Impact
  • Some of the negative effects listed above may still be present but to a lesser degree.
  • Increased focus on talent acquisition efforts to offset turnover.
80% – 90% Positive Impact
  • Reduced costs associated with turnover
  • Improved productivity due to a stable workforce
  • Higher employee morale and engagement
  • Increased employer brand reputation which helps attract top talent
Above 90% Highly Positive Impact
  • Significant cost savings from reduced turnover
  • Strong knowledge base and expertise retained within the organization
  • High levels of productivity and innovation
  • Positive and collaborative work environment
  • Top talent is actively seeking opportunities within the company


  • These are estimated ranges and the specific impact will vary depending on the industry, company size, and other factors.
  • Employee retention is just one factor that contributes to organizational performance. Other factors such as leadership, strategy, and market conditions also play a significant role.


In today’s competitive IT landscape, retaining top talent is critical for the success of any small business. High turnover rates can cripple a small IT company, leading to lost productivity, increased costs, and a weakened knowledge base.

By prioritizing employee retention strategies, small IT businesses can cultivate a thriving work environment that fosters engagement, growth, and satisfaction. This translates into a number of benefits, including a more skilled and productive workforce, a positive employer brand that attracts top talent, and ultimately, a stronger and more successful organization.

Remember, employee retention is an ongoing process. By consistently demonstrating your commitment to your employees’ well-being, professional development, and a positive work culture, you can build a loyal and high-performing team that will propel your IT business to new heights.

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How can I measure the success of my employee retention?

After applying all the necessary strategies to retain your employees, it is important that you measure your success. There are a few key metrics to track employee retention, such as:

  • Turnover rate: This is the percentage of employees who leave a company in a given period.
  • Retention rate: This is the opposite of the turnover rate, and it represents the percentage of employees who stay with the company.
  • Time to hire: This metric tracks how long it takes to fill an open position. A longer time to hire can indicate difficulty retaining employees.

By understanding why employees leave and taking steps to address those reasons, companies can improve their retention rates and create a more successful workplace.

Why do employees leave their jobs?

There are many reasons why employees might leave a job, including:

  • Low salary or wages: If employees feel they’re not being compensated fairly, they’ll be more likely to look elsewhere.
  • Poor work-life balance: Employees who feel overworked or stressed are more likely to burnout and leave.
  • Lack of recognition or appreciation: People want to feel valued for their contributions.
  • Limited growth opportunities: Employees who feel stuck in a dead-end job will be more likely to look for new challenges.
  • Toxic workplace culture: A negative or hostile work environment can drive employees away.

I can’t afford to raise salaries across the board. Are there other ways to improve compensation and benefits?

Not every company would fulfill the unrealistic ask for hikes of employees. But on the same page if you still don’t want to loose on that employee you can try these ways-

  • Offer profit or equity sharing: Incentivize employees for target achievements or give them a stake in company
  • Provide wellness programs or gym memberships: These can be valuable benefits without a huge cost increase.
  • Offer flexible work arrangements: This perk can be a major selling point for many employees, without a direct financial cost.
  • Invest in professional development opportunities: This shows employees you value their growth and can boost morale.

How can I improve communication with my employees?

  • Hold regular meetings: Keep employees informed about company news and goals. Also,  talk about their challenges.
  • Encourage open communication: Create avenues for employees to share feedback and concerns anonymously.
  • Implement performance management systems: Regular feedback sessions can improve communication and employee engagement.
  • Utilize surveys and polls: Gather employee input on company culture, work processes, and satisfaction levels.

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