The Real ROI of Employee Retention: Why Recruitment and HR must align

Sourcing of new talent remains one of the main areas companies focus on in today’s fast moving talent market. An equally critical and often undervalued area lies in retaining the talent you already have. Employee retention is not just a “nice to have”, it is a strategic investment with measurable ROI, and aligning recruitment and the HR functions is key to unlocking it. The metrics from misco’s latest reports show how tightly recruitment, HR and retention need to work together to deliver business value.

When employees stay, organisations benefit in multiple ways: reducing hiring and onboarding costs, faster productivity, stronger culture and continuity, and improved employer brand. In the latest misco survey on HR Developments issued in 2025, misco found 78% of Maltese HR leads cited staff retention as the main strategic objective for their function. The cost of losing talent is significant; the desire to retain it is clearly expressed by Maltese HR leaders; and yet many organisations still face high turnover and voluntary exits.

To turn retention into a business advantage, recruitment and HR must work together. Recruitment is not just about filling vacancies. It is about finding the right people whose values and motivations align with the organisation. When recruiters engage candidates with clarity around culture, career path and expectations, HR’s job of retaining that talent becomes far easier. Despite efforts in recruitment, many organisations still face significant recruitment challenges. In misco’s 2025 HR Developments survey, 66% of employers cited lack of experienced applicants as a key reason for recruitment difficulties and 61% cited salary demands.

What does this mean for retention? If recruitment selects people based purely on “can they fill the seat” rather than “will they stay and thrive”, you expose yourself to turnover risk. So:

• Craft job adverts that clearly reflect the role, culture and career path so the expectations match reality.

• Screen for fit (values, motivation, care, aspirations) and skills. An excellent technical hire who doesn’t feel connected to the team or culture is a high turnover risk.

• Build candidate-experience into recruitment: clarity, respect, realistic previews of the role – all of which sets the tone for the relationship.

HR functions must move beyond the operational: policies, salaries and benefits alone won’t deliver retention. HR needs to drive engagement, development and culture by establishing meaningful onboarding and induction programmes to ensure that new employees feel connected, supported and productives from day one. Continuous learning and development opportunities give employees reasons to stay and grow within the organisation. Engagement metrics and exit analyses feed into strategy – understanding why people leave is the first step to reducing turnover.

Insights from a survey conducted by misco on Employee Well Being at the Workplace found that 57% of respondents reported their job as stressful at times. High levels of stress can impact retention, so HR must address well-being, culture and workload as well as traditional engagement.

When recruitment and HR operate in silos, retention suffers. When data and goals are shared, retention becomes a strategic metric.

Calculating the ROI of retention will vary from one organisation to the other however you can estimate retention ROI by combining:

• Recruitment cost per hire (advertising, screening, induction)

• Time to productivity (how long until a new hire fully contributes)

• Performance differential between new hire and experienced employee

• Turnover cost (exit processing, lost knowledge, disruption)

For example, if your average cost to hire is €8,000, and a new hire takes 6 months to reach full productivity (during which output is 70% of target), you can see how reducing early turnover by even one employee in a year saves you not only the €8000 but also the productivity shortfall and risk of knowledge loss.

In a struggle to find the right talent, many organisations focus heavily on getting people to the door. But the smarter, higher return strategy is to keep those people once they are in. When recruitment and HR align around retention as a strategic business objective, organisations don’t just fill seats. They build sustainable teams, strengthen culture, reduce cost and enhance competitive advantage.

*Sponsored article by Misco Malta