Employee turnover rate differs from company to company, and from one sector to the next. Research in recent years has shown that nearly 77% of employee turnover could’ve been prevented.
As employee turnover is inversely proportional to employee retention, much can be learned from this.
Employee retention metrics can teach you more about your business than you may think. You’ll learn not only what sort of talent is most likely to leave but also, why this is the case.
Having this knowledge gives you the opportunity to do something constructive about it.
With that in mind, read below to discover the top nine employee retention metrics that you should be tracking, and why they’re so important.
Why Your Business Should Measure Employee Turnover & Retention
The foundation of any successful business is a stable, happy workforce. Analyzing employee retention metrics can help you understand how to keep your employees happy and with the company.
You should also measure these metrics because it can give you access to the following knowledge:
- The overall level of employee engagement, employee morale, and job satisfaction
- If your salaries are fair and/or competitive
- How effective your retention strategies are
- Where to improve your HR skills
- The exact reasons why employees are leaving
Top 9 Employee Retention Metrics Worth Tracking
Below are the top 9 retention metrics to track and analyze. Using these employee retention metrics will highlight the reasons for your voluntary turnover or employee retention rates. And the patterns you see forming will help you streamline your company’s HR processes accordingly.
Overall Employee Retention
If you have a promising employee retention rate, what can it be attributed to? Does it increase in proportion to employee loyalty rewards programs and professional development opportunities?
A high retention rate reflects that these initiatives are probably working for you. If not, what’s keeping your employees loyal? This will give you the means to ensure even higher employee retention rates through increased employee recognition.
Involuntary Turnover
Involuntary turnover rate describes the employees you’ve had to let go. A high involuntary turnover rate may be driven by purely economical reasons, some outside of your control.
An involuntary turnover rate can also result from unsatisfactory job performance due to poor training of staff. Consider ways you could have empowered employees to perform better.
Voluntary Turnover Rate
To calculate voluntary turnover, divide the number of employees who voluntarily left in a given period by the average number of employees. Multiply this by a hundred to get the turnover rate expressed as a percentage. A high voluntary turnover is anything over 10%.
High voluntary turnover rates can have several causes. This is because there are various reasons why good employees leave. Examine transcripts of exit interviews. What was the reason most often cited for resigning?
Departmental Differences In Retention Rates
Retention rates differ across departments. You could have a high manager retention rate in one, and a high employee retention rate in another. It’s important to understand why when you measure employee retention and voluntary turnover.
Tracking employee retention metrics of a particular department will show if your hiring manager is getting doing an adequate job in managing staff.
A noticeably poor retention rate may indicate that something needs to change. A low retention rate per manager could be due to poor workforce planning. If they can’t cope with the workload, you may need to assign more staff.
The Skillsets With The Most Turnover
The skills your company has lost can give greater insight into where your focus is needed. Are you mostly losing HR qualifications, sales experience, or leadership skills?
When any one particular skill set is the overwhelming majority of your employee turnover, it could mean your salaries for those positions are not competitive.
Average Employee Tenure
What is your average employee tenure? Leaving a job after years may have many reasons, but changing jobs after a few months is a red flag. Average employment length is a good place to start when looking to understand retention in the workplace.
To calculate average employee tenure, add the total number of employment years of all staff, past and present. Divide this by your total number of employees, to determine your company’s average employment length.
If the result is low despite a large workforce, your employees are not satisfied with their work environment.
Job Satisfaction Amongst Existing Employees
Satisfied employees stay loyal to the company, even during a harsh economic climate. Measure the employee satisfaction rate among your existing employees by conducting employee satisfaction surveys.
Employee surveys based on a simple employee satisfaction index will give you vital clues to what keeps employees happy and loyal.
Engagement Amongst New Hires
A positive onboarding experience is key to a high new employee satisfaction rate. If you don’t engage prospective employees from the start, they might not stay at your company.
Measure employee satisfaction with an extensive employee engagement survey. The most insightful measurement is the Employee Net Promoter Score, arrived at by asking how likely they’d be to recommend working for you.
A high turnover rate among new hires may indicate your recruitment, hiring practices or onboarding strategies are ineffective. Improve these, and you’ll improve employee retention amongst new hires.
Cost Of Employee Turnover
When you retain employees you save both money and time. Conversely, when turnover is high, so are employee turnover costs as you’ll be allocating resources to recruit and train new staff.
For your cost of employee turnover, multiply the average amount you spend on recruiting new employees by the number of people resigning.
Increase employee retention, and you’ll reduce these new recruiting and onboarding costs. You’ll have more funds for onboarding and loyalty schemes, which raises employee retention.
Final Thoughts
Employee retention metrics can give you insight into what your company is doing right, as well as what you might be doing wrong.
You’ll learn how to improve your employee engagement practices and employee retention strategies. Improving employee satisfaction improves employee retention metrics. That leads to a better company culture for all, as well as increased loyalty, higher productivity, and bigger profits.
Thus, tracking employee retention metrics is one of the best decisions any HR department can make for the business.
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