State-owned enterprises (SOE’s) in South Africa have long been financial albatrosses around the government’s neck. The government decided to restructure them so that they can play a role in the overall economic development of the country (Didiza, 2002:15). Transnet, one of South Africa’s largest SOE’s, is the largest transportation company in South Africa and is divided into various business units, of which Spoornet (rail transportation) is one. Spoornet has had to evolve from a subsidised state owned enterprise to a semi-privatised business unit, able to survive in a competitive business world. This entailed streamlining and restructuring the business unit in order for it to become more productive and financially fit. One of the biggest threats was the amount of human capital that Spoornet employed. The workforce had to be reduced in order to allow Spoornet to become an effective and competitive business unit. In addition to this, Spoornet must adhere to affirmative action policies instituted by government labour laws (Employment Equity Act, Act 55 of 1998). This act was introduced to redress the present effects of South Africa’s past in bringing about a diverse workforce broadly representing South Africa’s demographics. This has resulted in early retirement packages being offered to assist Spoornet in achieving employment equity targets. All of these changes have had a major impact on employee turnover that has resulted in a large amount of skills and expertise being lost. Professional, specialised and skilled people are in global demand, which has added to the exodus of employees from many organisations. Spoornet has experienced this at an alarming rate, so much so that in 2001, they established a retention committee to address ways to reverse the high number of specialised employee exits. Abstract iv The overall purpose of the research was to identify strategies for Spoornet to retain their specialised and skilled employees, thereby reducing the amount of specialised and skilled staff turnover. The research methodology for this study comprised the following steps: • Firstly, a full literature study regarding strategies that an organisation can utilise for the retention of their critical employees was researched. • Secondly, the views of current Spoornet employees on retention strategies were assessed in an empirical study, which involved completing a questionnaire. • Lastly, recommendations due to the findings of the researcher were identified for Spoornet to retain their highly skilled and specialised employees.