Professional in Human Resources (PHR) Practice Exam

Providing competitive compensation and benefits is the most effective strategy for employee retention because it addresses one of the primary reasons individuals choose to stay with or leave an organization. When employees feel that they are compensated fairly and that their benefits meet their needs, they are more likely to remain with the company. Competitive compensation serves not only to reward employees for their contributions but also to signal that the organization values their work and is committed to their well-being.

In addition, offering robust benefits packages can enhance job satisfaction, encourage loyalty, and reduce turnover rates. Healthcare, retirement plans, paid time off, and other perks create a sense of security and appreciation among employees, further solidifying their commitment to the organization.

Other strategies, such as promoting based on seniority, might not align with individual performance and can lead to feelings of stagnation among high performers. Restricting upward mobility typically leads to dissatisfaction as employees often seek growth and advancement in their careers. Eliminating employee feedback from decision-making processes can alienate staff and reduce their engagement, as employees value having a voice in how their working conditions and roles evolve. Therefore, providing competitive compensation and benefits is a well-rounded approach to ensuring that employees feel valued and motivated to stay with the organization.