How to retain your top performers in 2025: A tactical guide
By Andrew Littlefield●7 min. read●May 20, 2025
When it comes to employee retention, let’s be honest: motivation and kudos don’t pay the bills. Rent is due, the credit card statement isn’t going to pay itself, and top performers know their worth.
But money alone isn’t why high-performing employees stay. Case in point: in 2010, LeBron James, Chris Bosh, and Dwyane Wade each took significantly less money than they could’ve earned elsewhere to play together in Miami. Why? To work with other A-players and chase championships. In short, they wanted to grow, win, and do it alongside other greats.
It turned out to be a smart bet. The trio went on to win back-to-back NBA titles in 2012 and 2013.
Your top employees are no different. They want opportunities, challenges, and growth. They want to work with other top performers. They want meaning.
Competitive pay is table stakes. If you want to retain them, you need to go beyond a decent paycheck.
The science of motivating and retaining top performers
One of the foundational studies on work motivation comes from Hackman & Oldham, whose 1976 study found that intrinsic motivation skyrockets when jobs offer variety, autonomy, clear feedback, and meaningfulness. In short, people are more engaged and perform better when they have control over their work, understand how it connects to the bigger picture, and aren’t stuck doing the same thing every day.
More contemporary psychological scholars have expanded on this theory. Most notably, Professors Edward L. Deci and Richard M. Ryan laid the foundation for self-determination theory — the idea that people are generally motivated by autonomy, competence, and connection with others.
“Great team members want to feel challenged,” says Tiffany Foo, Head of Talent at Initialized Capital. “They want to feel like they’re continuing to grow, get more exposure, and do more things.”
A 1999 meta-analysis from Psychological Bulletin found that rewarding people for tasks they already enjoyed doing hurt their motivation to continue. That’s right: paying people to do something they enjoyed made them enjoy it less. Further, giving them rewards just for trying or even completing a task reduced people’s interest in the task.
The authors argue it all comes down to autonomy and choice. When you turn a fun activity into something you have to do to earn a reward, it stops feeling like a choice, and that kills motivation. On the flip side, verbal encouragement can actually boost interest — as long as it doesn’t feel like pressure. Saying, “You should keep going!” backfires. Saying, “You’re doing great!” is much better.
Meaningful work drives better performance. In a 2007 study published in Organizational Behavior and Human Decision Processes, student fundraisers were asked to make calls to raise money for university scholarships. Before one shift, a group spent ten minutes speaking with a scholarship recipient who shared how the funds had impacted their life. One month later, students in that group had doubled their time on the phones and raised significantly more money than their peers.
In short, if you want to keep high-performing employees around, you need to challenge them, recognize them, and empower them to own their work.
5 tactics to retain your top performers
1. Offer competitive compensation
Top performers expect to be paid fairly. But that doesn’t mean matching a salary benchmark once and calling it done.
Top performers want a clear path to financial growth. Regularly benchmark and calibrate compensation to reflect both market rate and employee growth. This can also be an effective strategy for smaller firms that lack large budgets for salaries and signing bonuses. High-performing employees may be willing to accept a lower starting salary in exchange for a clear growth path that will pay off in five years.
Performance and retention bonuses are also key motivators. Use bonuses to reward impact and signal long-term investment. “Everyone should get great, market-rate-competitive salaries that reward tenure and reward meeting baseline expectations,” says Foo. “But top performers should be rewarded for being top performers.”
Merit-based payouts don’t have to be limited to annual bonuses either. Tying employee compensation raises to performance can also have a big impact.
2. Recognize and reward employee contributions
Compensation matters, but employee recognition and purpose can have an even bigger long-term impact. A 40-year meta-analysis found that intrinsic motivation (doing something because you find it meaningful or enjoyable) is one of the strongest predictors of high-quality work. But here’s the rub: extrinsic rewards like bonuses can actually weaken that internal drive. When people already enjoy a task, paying them to do it can shift their focus to the reward, making it the main reason they’re doing the work — a phenomenon known as crowding out.
Here are some ways to foster intrinsic motivation in the workplace:
Formal programs: Use structured employee recognition programs to consistently highlight standout work.
Peer-to-peer recognition: Encourage colleagues to spotlight each other’s wins.
Awards: Monthly shoutouts or quarterly MVP-style awards can keep your top talent engaged, especially when they come with public praise or perks.
3. Resource their work appropriately
There’s nothing more frustrating than being great at your job and blocked by bad tools, unclear processes, or resource constraints.
“Here’s the truth: my clients are not looking to make a change because of their salary or because they didn’t receive a bonus this year. They are coming to me because they are burnt out,” says career and leadership coach Julie Starr.
You hired a smart person to do a job they’re skilled at. Help them thrive by:
Providing the right tools, tech, and talent to help them execute effectively
Prioritizing work ruthlessly to avoid burnout
Eliminating roadblocks (policy-wise and people-wise)
Managers often fail here by being pennywise and pound foolish: paying big salaries, but skimping on the resources those salaries require to actually create value for their organization.
4. Invest in personalized learning and career growth
If your budget is tight, make up for it with transparency, frequent feedback, and professional growth opportunities. High-performing employees want to become even harder to replace. Feed that ambition.
Leading motivational psychology researchers Edwin A. Locke and Gary P. Latham laid the groundwork for effective motivation in their 2002 meta-analysis. This study found that clear, challenging goals are among the most effective motivators, often outperforming monetary incentives. Giving top performers stretch assignments, leadership opportunities, and upskilling support fuels both loyalty and performance.
Here’s how to do it:
Role advancement: Offer formal promotions or lead roles on high-impact projects.
Manager and leadership training: Don’t assume great ICs know how to lead. Provide training and support.
Upskilling and reskilling: Provide budget for professional certifications, conferences, and classes.
Mentorship programs: Pair junior talent with your best, and let your best help them grow.
Keep in mind that modern careers don’t typically follow a linear path. Your sharpest employees may seek to add skills to their resumes that stretch beyond their job descriptions.
“Top performers are often Swiss army knife players. They understand that growth is not linear. They’re flexible and see how their skill set could help enhance or optimize different teams or functions,” says Starr. “Organizations can meet top performers where they are by offering more internal mobility opportunities, especially those that allow folks to make a lateral move or pivot from one team to another and apply their knowledge, skills, and leadership in a new way. ”
These investments are often cheaper than retention bonuses — and often way more powerful.
5. Improve work-life balance with flexible arrangements
Not every perk has to cost money. Flexibility is one of the most valued (and affordable) forms of non-cash compensation.
“Flexibility is key,” says Foo. “Letting people work when they are best suited to work goes a long way.”
That trust pays off. According to self-determination theory, when employees feel autonomous and respected, they’re more committed and creative.
Tactics that work:
Remote or hybrid work options that give employees freedom to work where they’re most productive.
Flexible schedules to accommodate caregiving, wellness, or peak productivity windows.
Sabbaticals or extended PTO for long-term retention and burnout prevention.
Ultimately, it comes down to measuring employee impact instead of time in front of a computer. If the work is great, does it really matter if it happened at 8am or 10pm?
Summary: The retention checklist
To retain your top performers in 2025, focus on five core areas:
Great pay is the baseline, but not the full story. Top performers expect competitive compensation, including performance-based bonuses and growth-aligned pay raises, but salary alone won't keep them from leaving.
Challenge and autonomy drive motivation. Research shows that high performers stay engaged when they have meaningful work, ownership, clear goals, and opportunities to collaborate with other greats.
Recognition beats rewards. Intrinsic motivation is more powerful than extrinsic rewards. Public praise, peer recognition, and purpose-driven work often inspire high-performing employees more than a cash bonus.
Support them with tools and growth paths. Avoid burnout by resourcing their work properly, and invest in leadership training, stretch roles, and career development, especially for non-linear paths.
Flexibility is fuel. Remote work, flexible schedules, and autonomy over time and space signal trust — and that trust builds long-term loyalty and better performance.
Follow these tips, and you’ll not only be able to attract high-performing employees, but keep them for the long haul.
FAQs
Updated May 20, 2025
