A new report by the Chartered Institute of Personnel and Development (CIPD) found that nearly four fifths of organisations struggled to hold onto their staff in 2006.

Just 29 per cent of employers train internal staff so that they will be suitable for promotions, despite the fact that 89 per cent of those companies using this initiative believe it has a positive impact.

Report author Nicola Monson said that employers' approach to recruitment and retention needs to take account of both business and employee needs.

"All organisations rely on talent so employers need to take a proactive approach to talent management and tap into the skills of the people wanting to contribute and progress," she said.

"Actively developing employees should not only increase the internal talent pool, in turn reducing their reliance on external candidates, but also see problems retaining staff ease due to new career opportunities."

The report also found that only 30 per cent of employers offer flexible working, yet 74 per cent believe it has a positive impact.