Employer turnover risk is at a 10-year high, according to Gallup data. 51% of workers report they’re watching for or actively seeking a new job. For employers, this means they need to vigilantly track employe retention metrics to spot signs of turnover and stop it in its tracks.
What is Employee Retention?
First off, it’s important to know what employee retention means. Employee retention refers to an organization’s ability to keep employees and limit turnover. High retention rates indicate a stable workforce, while low retention rates suggest high turnover, which can be costly and disruptive.
What Are Employee Retention Metrics?
Employee retention metrics are quantifiable measures that help organizations track and understand how well they are retaining their employees. These metrics provide insights into the reasons why employees stay or leave and can help identify areas to improve HR practices.
Why Measure Employee Retention
Measuring employee retention helps organizations understand workforce trends, identify turnover causes, and develop retention strategies to improve employee satisfaction and engagement. Retention metrics also help reduce hiring and training costs by minimizing employee churn.
14 Best Employee Retention Metrics to Track
When deciding what employee retention metrics to track, consider the following:
1. Employee Retention Rate
Retention rate is the number of employees who remain with the company for a specific time period—usually demonstrated as a percentage. Companies may measure this annually or based on a specified fiscal period.
To measure retention rate, use the following calculation:
(Total employees at end of period / Total employees at start of period) x 100.
What is a Good Retention Rate?
Retention rates vary by industry, location, and economic conditions. But generally, a retention rate between 80% to 90% is considered positive.
2. Employee Retention Rate by Group
Analyzing retention by group allows you to identify potential disparities and pinpoint areas where targeted interventions can make a significant impact. By segmenting your data, you can also uncover how different demographics, departments, or manager relationships influence employee loyalty and satisfaction. This helps you create a more equitable and supportive workplace for everyone.
This calculation can be applied for different groups or managers:
(Number of new hires who stayed for a specific period / Total number of new hires during that period) x 100.
New Hire Employee Retention Rate
New employees are your biggest flight risk. In fact, Paycor data shows employees who have been with a company for two years or less are 38% more likely to quit in the next 12 months. Keep an eye on your new hire retention rate. Low retention could signal that you need to adjust your onboarding or talent management strategy.
Employee Retention Rate Per Manager
Significant variations in retention rates across teams managed by different individuals can highlight the impact of management styles and leadership effectiveness on employee satisfaction and loyalty. This helps pinpoint managers who excel at retaining their teams and those who may need support or development in their people management skills.
Employee Retention Rate Per Gender
Analyzing retention rates by gender reveals potential disparities in the employee experience for different gender groups. Significant differences may indicate underlying issues related to inclusivity, equal opportunities, work-life balance support, or bias within the organization that need to be addressed to ensure fair and equitable retention across all genders.
Employee Retention Rate Per Ethnicity
Similar to analyzing retention rates by gender, you want to uncover and remedy any potential disparities in the employee experience for people from various racial and ethnic backgrounds.
Employee Retention Rate by Department
Different departments may experience varying retention rates due to factors such as the nature of the work, team dynamics, management within the department, or specific skill demands. Tracking this metric helps identify departments with high turnover and allows for targeted interventions to address the specific challenges within those areas.
3. Voluntary Turnover Rate
A voluntary turnover rate determines the percentage of employees who leave an organization on their own accord. It excludes layoffs and terminations. Measuring this employee retention metric helps you spot problems with culture, engagement, and satisfaction.
The formula for calculation is: (Number of voluntary resignations during the period / Average number of employees during the period) x 100.
4. Involuntary Turnover Rate
Involuntary turnover (layoffs and terminations) can indicate issues with hiring practices, performance management, or the overall fit between employees and their roles. While some involuntary turnover is expected, letting people go takes a toll on both morale and the bottom line. Tracking this metric helps evaluate the effectiveness of talent acquisition and performance management processes.
The formula for this calculation is:
(Number of involuntary resignations during the period / Average number of employees during the period) x 100.
5. Talent Turnover Costs
Losing employees has significant financial implications, including recruitment costs, onboarding expenses, lost productivity, and the impact on team morale. Quantifying these costs highlights the financial benefits of retaining valuable employees and justifies investments in retention strategies.
Calculating turnover costs requires summing up the various costs associated with all types of turnover, including agency fees, recruiter time, training time, orientation programs, severance pay, and more. Since it’s difficult to determine the exact cost of turnover, a common approach is to estimate the cost of losing an employee as a multiple of their annual salary.
Gallup estimates the cost to replace employees as:
- 200% of a leader or manager’s salary
- 80% of salary for technical roles
- 40% of salary for frontline workers
To calculate your total turnover costs, check out this calculator.
6. Average Employee Tenure
Average employee tenure provides a general overview of workforce stability. A higher average tenure typically means you have a more experienced and loyal workforce, potentially leading to lower turnover costs and a stronger organizational knowledge base.
While you want a high tenure, don’t let a lower number scare you. Sometimes that’s a result of much needed growth or company reorganization. If this metric dips unexpectedly, though, you may want to investigate further.
To calculate average employee tenure, use this formula:
Sum of the tenure of all current employees / Total number of current employees.
7. Absenteeism Rate
The absenteeism rate measures the percentage of scheduled workdays that employees are absent. You can measure it for individual employees, teams, or departments. An employee with a large number of unplanned absences may be disengaged, dissatisfied, or dealing with health/personal issues. No matter the cause, it’s a good idea to meet with the employee and see if you can offer any support.
To measure absenteeism rate, use the formula:
(Total number of absent days / Total number of scheduled workdays) x 100. For a benchmark, the average rate across all industries in 2024 was 3.2%, according to the U.S. Bureau of Labor Statistics (BLS).
8. Attrition Rate
Attrition rate refers to the overall reduction in the workforce over a period, regardless of the reason (voluntary resignation, involuntary termination, retirement, etc.). While attrition includes all departures, tracking it alongside retention and turnover rates provides a complete picture of workforce dynamics.
To calculate attrition rate, use this formula: (Number of employees who left without replacement / Average number of employees) × 100.
Additional Employee Retention Metrics to Monitor
Not everything that matters can be counted quantitively. When it comes to predicting employee turnover, some of the most telling signs don’t show up in spreadsheets or quarterly reports. They’re the subtle shifts in behavior, the small changes in engagement, and the barely perceptible differences in how someone moves through their workday. Here are some additional employee retention metrics you should monitor through qualitative data:
9. Employee Engagement
Highly engaged employees are more likely to be satisfied, productive, and committed to the organization. Measuring employee engagement (through surveys, feedback sessions, etc.) provides insights into the level of connection and enthusiasm employees feel toward their work and the company. Low engagement is a leading cause of turnover.
10. Employee Satisfaction
Employee satisfaction reflects how content employees are with different aspects of their job and the company, such as compensation, benefits, work environment, and work-life balance. It’s important to measure and react, as dissatisfied employees are more likely to seek employment elsewhere.
Similar to employee engagement, satisfaction is usually measured through surveys that ask employees about their contentment with various job aspects. Responses are often on a rating scale, and the results are analyzed to determine overall satisfaction levels and identify specific areas of dissatisfaction.
11. New Employee Satisfaction Rate
Since green employees are at higher risk for turnover, you may want to break this at-risk group into its own data set. You’ll use the same measurement tools used for employee satisfaction, just on a subset of employees.
12. Flight Risk
Identifying employees who are at a high risk of leaving allows the organization to proactively intervene and address their concerns before they resign. This can involve analyzing various factors such as engagement levels, recent performance, tenure, compensation satisfaction, and expressed intentions.
Assessing flight risk often involves a combination of quantitative and qualitative data, such as manager feedback, performance metrics, or predictive analytics.
13. Job Satisfaction Rate
Employee satisfaction is broader, encompassing benefits, work-life balance, compensation, company culture, and more. Job satisfaction, on the other hand, focuses narrowly on the individual’s specific roles and tasks.
While a low employee satisfaction rate shows unhappiness with the company as a whole, a low job satisfaction rate may just mean a person is in the wrong position. Meet with employees who rate their job satisfaction poorly to see if there’s a better fit for them within the organization.
14. Employee Happiness
While related to satisfaction, employee happiness encompasses a broader sense of well-being and positive emotions related to work. Measuring happiness provides a more holistic view of the employee experience and potential retention risks.
Employee happiness can be assessed through short, frequent pulse surveys with questions focused on overall mood, energy levels, and feelings about work. Qualitative feedback and observations can also contribute to understanding employee happiness levels.
If you notice dips in employee happiness, consider ways to improve well-being and work-life balance, such as offering a meditation workshop or early release day, or promoting any mental health benefits you offer.
Why Collect Data on These Employee Retention Metrics
By collecting data on these employee retention metrics, you’ll be able to:
- Understand whether retention rates are improving, declining, or staying stagnant over time, and identify any recurring reasons for turnover.
- Compare your organization’s retention metrics to those of competitors and industry averages to assess your performance.
- Evaluate the effectiveness of new programs or policies aimed at improving employee retention.
- Inform strategies related to recruitment, compensation, benefits, employee development, and management practices.
- Identify early warning signs of turnover and proactively addressing potential retention risks.
- Quantify the financial benefits of retaining employees and justify investments in retention strategies.
Measure Metrics of Employee Retention with Paycor
When it comes to employee retention, there are a lot of metrics to track. Automate the data collection and analysis process with an HR tool that offers robust analytics. Paycor’s HR Analytics software offers easy-to-consume, real-time insights into your turnover data. It crunches the numbers to spotlight which factors are likely to increase or decrease resignation across your organization so you can implement changes that boost retention.
Paycor’s predictive resignation feature identifies employees at risk of resigning, factors driving that risk, and the probability and extent of employee turnover in the next 12 months. This gives companies a chance to salvage employee relationships or get a head start on finding replacements.
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