As a manager who is strategizing on how to deal with the employee turnover, we expect you to take specific measurable. The specific actions are possible by measuring statistics such as the employee turnover rate and retention rate. Employee retention refers to the number of staff left in an organization for a particular duration of time. Employee retention rate formula is a simple and effective step in identifying the employees' stability. If the employees are satisfied at their workplace, the more they are likely to stay at a job for longer periods.
To achieve Employee retention rate divide the number of the employee who are remaining by the total number of the employee hired. Then the figure is converted into a percentage by multiplying by 100. The employee retention rate formula= (Retained employees/total number of employees) x100. Here are the guidelines on how to calculate the retention rate.
How to calculate employee retention rate.
- Determine the length or period at which you are going to monitor the employee retention rate that is, monthly, quarterly, mid-year, yearly. Then, obtain the employee census data from their respective departments. The data should entail or the details of the hire date and the length of services period.
- Gather information on the turnover rate. Obtaining turnover data is a simple method as the number of employee turnover rate is usually low. For example, if the number of employees hired at the beginning of the month is 50 and two were terminated, then the turnover rate is (50-2)/50 x 100=4%; thus the retention rate for that month is 96%.
- Another way to calculate the employee retention rate throughout the year is by gathering the number of employees remaining in an organization per month then finding the mean retention. It is also applicable if you are calculating the retention rate quarterly. For example, if the retention rates are 100%, 98%, 90%, 92% then the overall retention rate quarterly is 95%- obtained by summing the four figures then dividing by 4.
- If you want to calculate long-term employee retention rate, then the employee retention rate formula is useful in your case. Consider a company that is existing for the past 20 years and want to calculate its retention rate. 100 employees were hired on the first day, and only 20 employees are remaining in the institution from day one. Then the overall retention rate is 40/100 x 100= 40%.