One of the most common dilemmas HR leaders face today is deciding where to focus their efforts — retention or recruitment. Both are crucial for maintaining an organization’s productivity, performance, and growth.
Recruitment means bringing in new talent. The process includes identifying candidates, attracting them, conducting interviews, making selections, hiring, and onboarding. It requires a significant investment to help businesses move forward. Retention, meanwhile, is about nurturing that talent. It involves keeping employees engaged, motivated, and committed once they’re on board.
While recruitment often gets more attention (and budget), the benefits of retention are frequently undervalued. Many organizations fail to recognize the true cost of turnover. According to Gallup, replacing a leader or manager can cost up to 200 percent of their salary. Replacing technical employees costs around 80 percent, and frontline workers 40 percent—not to mention the intangible losses in morale, culture, and institutional knowledge.
So, what should HR leaders prioritize in today’s evolving workplace? Let’s dive deeper to explore the balance between recruitment and retention and what’s proving to be more beneficial in the long run.
The cost factor
Recruitment: Hiring new employees comes with a range of direct (hard) and indirect (soft) costs that can significantly affect an organization’s budget and efficiency.
Hard costs are tangible expenses that are easier to quantify, including:
- Advertising and Recruitment Fees – Costs from job postings, agency fees, and recruitment platforms.
- Pre-employment Screening – Expenses for background checks, assessment tests, and other vetting processes.
- Training and Onboarding – Costs of training new hires, especially in technical roles, and introducing them to company systems, tools and policies.
Beyond these, there are soft costs that don’t show up on the balance sheet but are equally impactful. These include:
- The time investment of HR and hiring managers in the recruitment process.
- Lost productivity: New hires typically start at low productivity level in their first month, resulting in a notable output loss during their adjustment period.
Retention: Retention costs, on the other hand, generally include salary increments, benefits packages, and professional development initiatives. Retention is usually measured as the percentage of employees who remain with an organization over a specific period. A strong retention rate reflects a healthy workplace culture, effective leadership, and satisfied employees, all essential for boosting productivity and long-term success.
When to prioritize what
Finding the right balance between recruitment and retention depends on your organization’s goals, challenges, and growth stage. If valuable employees are leaving, especially those in crucial or high-performing roles, it’s a sign that you need to focus on retaining your staff. On the flip side, if productivity is low and the workplace culture feels stagnant or misaligned, hiring new talent can bring fresh energy into the organization. It can also fill skill gaps more effectively than reshaping the current team.
To strengthen both sides of the talent equation:
- Evaluate Your Workforce Regularly
Run periodic HR health checks to measure employee engagement and pinpoint areas for improvement. Fostering open dialogue and involving employees in decision-making builds trust and motivation. - Invest in Learning and Development
Providing ongoing training helps employees grow, builds internal capabilities, and lowers reliance on external hires. It also contributes directly to better retention. - Streamline Your Recruitment Process
Use tech to simplify hiring workflows, reduce time-to-hire, and maintain quality. A smooth, efficient process appeals to top candidates and cuts down on recruitment costs. - Audit Hiring and Retention Practices
Regularly assess how much time, money, and resources you’re putting into talent management and whether it’s paying off. Audits help keep your strategies aligned with goals, budgets, and compliance standards.
Expert insights
We spoke to HR experts to understand how companies can effectively balance retaining top talent with bringing in fresh skills. Here’s what they had to say:
Invest in people: Employee retention is a long-term investment that delivers meaningful returns over time.
Amneet Kaur Sahdra, Director at Outsized India Pvt Ltd, underscores the importance of valuing existing employees. While fresh faces bring new energy, the real gold often lies in the people already on your team who know your business inside out.
“The best companies do both: they hire smartly and invest intentionally in their own people. That means spotting potential, giving real opportunities to grow, encouraging managers to coach, and making career paths visible. When you stop seeing your team as a cost and start treating them as your greatest investment, you don’t just keep great people—you create a place where they thrive,” she adds.
Balance fresh and experienced talent: One of the biggest challenges the companies face is balancing new talent with their existing workforce.
Satish Kumar, Senior Director of Talent & Culture for Accor India & South Asia, advises that this balance begins by recognizing the unique strengths each group offers.
“Accor focuses on creating clear growth paths for existing employees while thoughtfully bringing in fresh energy that aligns with our culture. By listening actively and fostering development, we maintain a strong, motivated team that drives lasting success,” he explains.
Final Thoughts
Balancing recruitment and retention need a flexible approach that meets both employee expectations and company goals. Every business has different needs based on its industry and market demand. For example, what works for a tech company may not work for a retail company. Therefore, using the same method for managing talent across different sectors is not effective. Companies should be adaptable and responsive in how they manage talent. This way they can better support their employees, improve satisfaction, and successfully enhance both recruitment and retention.