Understand what employee retention and cost means to help you chose wisely to keep your employees

Employee retention, calculation, definition and examples

Employee retention can be measured regarding the length of tenure and other factors that work together with the retention process. Calculating employee retention for tenure and length of employment may be extremely helpful in demonstrating employee satisfaction. Satisfied employees have a longer employment term and stay in their jobs.

What is employee retention

Employee retention is the percentage of people who are on staff and have remained from the start to the end of a specific period that the company has set. Employers track the staff in this group and extract such vital information as age, rank, and occupation. This data helps determine whether the employer is likely to retain workers under a certain age or those with advanced degrees etc. Retention calculations do not factor in workers who left the staff during the period they are calculating.

What are employee retention calculations?

Employee retention is calculated to show losses or profits. The society for human resource management provides an exact formula that employers are to follow in doing the calculations. Retention percentages are calculated by dividing the number of workers who remained by the total number of positions. The number you get is then multiplied by 100 to get a percentage.
Retention (R) = total number of workers currently/total number of positions x 100.

Example of a retention rate calculation

If you have 100 employees starting on the first day of the month and 90 employees by the time the month closes, you will have lost ten employees your retention rate will be 90%.
90 / 100 x 100 = 90%

Turnover calculations

Turnover is the percentage of employees who voluntarily leave within a given period. Retirements, new job offers, dissatisfaction, are some of the reasons that make employers leave one workplace and join another. Turnover is calculated by dividing the number of workers who have left by the total number of positions multiply by 100 to get the percentage.
Turnover = number of workers who have left / total number of positions x 100.

Example of a turnover rate calculation

If you had 175 employees in your company by the start of January and fifty workers, leave by the close of the month. A simple turnover rate equals 28.6%.
50 / 175 x 100 = 28.6%

A higher employee turnover rate can uncover problems that are within the organization. A high turnover rate is a warning sign that cannot be ignored. It should be a warning sign to make you review your recruitment process, change your compensation and benefits or incorporate planning policy. If you make it a habit to respond to these issues proactively, you will turn your company around, improve it as well as retain great employees.