Countless employers are focused on hiring top talent, but how many organizations commit the same time and resources to employee retention? Companies can save money and headaches in the long run—and get a leg up on the competition—by overhauling their retention strategy. As you begin this process, use the following metrics to measure your efforts.
Employee retention refers to an organization’s ability to keep its employees and is usually represented as a percentage that is calculated on an annual basis.
To calculate the employee retention rate, divide the number of employees who have been in their position for a year by the number of employees in the position a year ago. If a position was added during the year, it would be excluded from the calculation.
Use the following metrics to track your retention efforts:
Voluntary turnover is a type of employee departure when a team member leaves a role or organization on their own terms, either for a new position, to relocate to a different city, or for another reason.
In many cases, voluntary turnover can be especially costly because the departures can be unexpected and result in unfinished projects that require other teammates to pitch in.
Use this equation to calculate the voluntary turnover rate:
Involuntary turnover is a type of employee departure where a team member is dismissed from a position within a company.
This can be the result of many different factors, including poor performance, company cutbacks, company restructuring, a violation of company policies, and more.
Use this equation to calculate the involuntary turnover rate:
Employee attrition is a staffing metric that determines the natural rate of team member departure within a given organization. In these cases, when an employee leaves the company, their position isn’t filled or replaced by a new hire.
A good attrition rate is typically low, as it indicates that the company is growing by adding new positions or filling vacancies instead of eliminating a position altogether. Meanwhile, a bad attrition rate is typically high.
Use this equation to calculate attrition rate:
Certain managers may have higher-than-average turnover rates for their teams. While not necessarily indicative of poor management—some managers may just have bad luck—it’s certainly good to know in case the trend needs to be addressed.
To calculate this rate, simply use the turnover calculation but only include the employees who worked under a certain manager within a specified time period. The result can be calculated for each manager to compare performance among the management team
HR and hiring managers shouldn’t be expected to calculate all of these rates by hand. Thankfully, HR technology provides a comprehensive solution that makes life easier for the organization.
Using an applicant tracking system (ATS), human resources professionals can store and track all necessary hiring data and processes in one single portal. In the best ATS platforms, the entire recruitment cycle begins and ends in the system, from job postings to onboarding.
An ATS may be provided through a comprehensive human resources information system (HRIS) or as a standalone tool. With the former, all employee data is easily integrated for the most essential HR processes, including benefits administration, PTO tracking, and Form 1095-C reporting.
What Else Should Employers Know About Retention?
There’s more to retention than simply knowing the numbers. In addition to tracking the right metrics, organizations should employ retention strategies that can reduce turnover within their ranks.
From conducting an HR audit to enhancing employee engagement and educating teammates on available resources, each tactic can improve the company’s retention rate.