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IT'S time, then money, that does the talking when employers are trying to retain their staff, according to a survey by global employment agency Hudson's HR.

Other incentives and flexible work options are also important as Australian small businesses struggle to stop valuable staff members moving on and they battle a national skills shortage and just 4 per cent unemployment.

Hudson's HR surveyed 7185 employers nationally and found almost one in three said staff retention was a problem for their business and nearly all - 96 per cent - used formal staff engagement programs.

The most widely used staff engagement strategy, at 67.5 per cent, was flexible work options. This included job sharing, flexible leave and working from home.

Financial incentives were embraced by 62 per cent of employees, followed by leadership development (48.2 per cent), succession planning (47.7 per cent) and mentor programs (36 per cent).

Western Australia was the only state where employers put financial incentives top, with all other states rating flexible work as the key.

Hudson said it considered the main drivers behind this to be the boom in the WA economy and the state's geography, as employers use financial incentives to lure talent from the East.

And in certain industries money seemed to talk louder than others.

The resource sector considered financial incentives as the leading engagement tool (82.5 per cent).

In the financial services sector, 79.4 per cent relied on financial incentives, followed by IT (74.5 per cent), construction, engineering and property (74.3 per cent) and manufacturing (62 per cent).

Hudson's national practice leader of assessment and development Simon Moylan said, with the job market continuing to tighten, employers work harder to attract, engage and retain talent.

He said a successful staff engagement strategy should take "a holistic approach, incorporating a range of initiatives including financial incentives, flexible work options, management support, ensuring job fit and career advancement opportunities".

He said many enticements were performance driven and were in the form of share options rather than a bonus.

"This offers a financial outcome, plus it ties them to the company for a given period," Mr Moylan said.

"The cost of losing good staff far outweighs the cost of implementing these initiatives, so ultimately it's about offering an attractive employment proposition where employees have the option to leave but choose to stay."

He said the "visible" cost of turnover, including recruitment, hiring, orientation and training sits somewhere between 50 and 150 per cent of an individual's annual salary.

"However, the additional unknown costs such as loss of expertise, reduced productivity, lower morale, the cost of the vacant position and the training of the new hire, means the true cost of turnover may be up to three times this amount."

Mr Moylan said, while high turnover could be costly, moderate turnover was healthy.

"The challenge for employers is to balance the cost of turnover with the need to inject the organisation with new talent and fresh ideas."