How do you measure employee retention and turnover rates?

1 What are retention and turnover rates?

Retention and turnover rates are percentages that show how many employees stay or leave your organization over a given period of time. Retention rate is the proportion of employees who remain with your company at the end of the period, while turnover rate is the proportion of employees who leave your company during the period. For example, if you have 100 employees at the start of the year, and 80 of them are still working for you at the end of the year, your retention rate is 80%, and your turnover rate is 20%.

2 How to calculate retention and turnover rates?

To calculate retention and turnover rates, you need to know the number of employees at the start and end of the period, and the number of employees who left during the period. The formulas are as follows:

Retention rate = (Number of employees at end of period / Number of employees at start of period) x 100

Turnover rate = (Number of employees who left during period / Average number of employees during period) x 100

The average number of employees during the period is the sum of the number of employees at the start and end of the period, divided by two. For example, if you have 100 employees at the start of the year, and 80 at the end of the year, and 25 employees left during the year, your retention rate is 80%, and your turnover rate is 25% (25 / (100 + 80) / 2) x 100.

3 Why are retention and turnover rates important?

Retention and turnover rates are important because they reflect the health and performance of your organization. High retention rates indicate that your employees are happy, motivated, and committed to your company's goals and values. They also mean that you are retaining the skills, knowledge, and experience of your staff, and that you are saving on the costs and efforts of recruiting and training new hires. High turnover rates, on the other hand, indicate that your employees are dissatisfied, disengaged, or looking for better opportunities elsewhere. They also mean that you are losing valuable human capital, and that you may have to deal with the negative impacts of low morale, productivity, and quality.

4 How to improve retention and turnover rates?

Improving retention and turnover rates requires a comprehensive and strategic approach to personnel management. To understand why employees stay or leave, you need to address the factors that affect their satisfaction and engagement. To do this, you should conduct regular surveys and exit interviews to gather feedback, provide competitive compensation and benefits, offer opportunities for career development and advancement, create a positive and supportive work culture, communicate clearly and frequently with your employees, involve them in decision-making and problem-solving, and provide flexible and remote work options that respect your employees' work-life balance. Recognizing and rewarding employees for their achievements and contributions is also essential for improving retention and turnover rates.

5 How to benchmark retention and turnover rates?

Benchmarking retention and turnover rates involves comparing your metrics with those of other organizations in your industry, sector, or region. This can help you evaluate your performance and identify your strengths and weaknesses. To benchmark your retention and turnover rates, you can use industry reports and surveys, professional associations and networks, competitors and peers, and consultants and experts. These sources provide average or median retention and turnover rates, best practices and benchmarks, disclosure of retention and turnover rates or strategies, and customized benchmarking and analysis services.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?