Compensation plays a significant role in employee retention. Competitive salaries, bonuses, and benefits packages help attract and retain top talent. Ensuring that compensation is fair and aligned with industry standards is crucial for maintaining employee satisfaction and reducing turnover.

For example, a tech company might offer competitive salaries, stock options, and comprehensive health benefits to retain its employees. Regularly reviewing and adjusting compensation packages based on market trends and employee performance helps ensure that employees feel valued and fairly compensated.