Employee Retention Rate: Learn all about it

Employee retention is one of the most important aspects of any business. If you have high turnover, it can lead to decreased productivity and morale, as well as a higher cost for recruiting and training new staff. Employee retention can inform managers and decision-makers about the quality of their recruitment process, staff motivation policies, performance management strategies, and more. By understanding the factors that influence your employee retention rate, you’ll be better placed to create the right environment for attracting talent and ensuring they stay as part of your team.

In this blog post, we’ll cover what the employee retention rate actually is. We will also take a look at how you can use it to calculate an overall score plus how it helps to improve areas and increase its long-term sustainability. Let’s dive into each topic so you can better understand how retaining employees play an important part in a successful business operation.

What is employee retention rate?

Employee retention rate is a measure of employee turnover. You can calculate it by dividing the number of employees who left their job in a given period—a year, quarter or month—by the total number of employees at the beginning of that period. It’s important to understand turnover, as employee retention rate can significantly impact your organization’s ability to retain talent and stay competitive in the market.

How to calculate the employee retention rate

Calculating employee retention rate is a simple process. Companies take the number of employees who left their jobs during a specific period (usually either annually or quarterly) and divide it by the average employee size during that same period. This number is then multiplied by 100 to calculate the employee retention rate as a percentage.

For example, if a company’s employee size was 120 at the beginning of the year and 80 employees left during that time period, the employee retention rate would be calculated as follows: 80/120 = 0.667 x 100 = 66.7%.

This employee retention rate calculator is an excellent tool for you to use if you want to know exactly how your company’s employee retention rate stacks up against other organizations.

What is a good employee retention rate?

A reasonable employee retention rate will vary from company to company and industry to industry. Generally speaking, employee retention rates of 90% or higher are considered good. It indicates that a company is successful in providing employee satisfaction, creating a positive employee experience, and providing employee retention strategies that effectively reduce turnover rates.

Why employee retention matters

Your business’s success is heavily reliant upon the strength of its team. Tracking employee retention rates will provide insight into how engaged your workforce is and the effectiveness of your hiring and onboarding procedures. These numbers can be invaluable in gauging overall organizational health and detecting potential problems before they become larger issues.

Although employee turnover is a natural and unavoidable part of life, losing your top talent or replacing staff more quickly than you can hire new employees has far-reaching effects on businesses. Not only is employee turnover expensive, but a high employee retention rate will create a stable workforce that contains your company’s most valuable asset—your employees.

Employee retention rate

How to improve employee retention rate

Make the right hire

If you want to succeed in employee retention, it starts with a mindful recruitment process. Understand what each candidate brings to the table and if they have the necessary skills for their role. However, consider their aspirations and how well they fit your company culture. Long-term success is guaranteed when candidates are not only right for the job but feel comfortable in a business setting as well.

Offer competitive compensation and benefits

One of the most important things you can do to improve employee retention is to offer competitive compensation and benefits. If your employees feel they are being paid fairly and receive good benefits, they will be more likely to stay with your company. You should regularly review your compensation and benefits packages to ensure they are competitive with other companies in your industry.

Invest in employee development

Another way to improve employee retention is to invest in employee development. Employees who are constantly learning and growing will be more likely to stay with your company. You can invest in employee development by providing training opportunities, mentorship programs, and opportunities for career advancement.

Create a positive work environment

Another key to improving employee retention is to create a positive work environment. Employees who feel valued and appreciated will be more likely to stay with your company. You can create a positive work environment by promoting open communication, offering flexible work arrangements, and fostering a culture of respect and inclusion.

methods to motivate your team

Align people with your vision and mission

Employees are more likely to stay with your company if they feel connected to your vision and mission. Help them understand how their role contributes to the organization’s overall success by providing clear goals and objectives.

Provide opportunities for growth

Giving your employees opportunities for growth is another way to improve employee retention. Employees who can grow within your company are more likely to stay with you. You can provide opportunities for growth by offering promotions, training opportunities, and new challenges.

Be flexible

Being flexible with your employees is another way to improve employee retention. If you can offer flexible work hours or telecommuting options, employees will be more likely to stay with your company. Additionally, being flexible with vacation days or other time off can also help improve employee retention.

Promote jobs from within

Promote from within your company instead of hiring from outside. Employees who feel like there is potential for advancement will be more likely to stay with your company. Additionally, promoting from within can foster loyalty and employee engagement.


A culture of transparency is key to employee retention. Employees want to feel like they are part of the decision-making process and that their contributions are valued. By fostering open communication, you can ensure that employees are well-informed and have the necessary information to make informed decisions.

Maintaining communication between managers and employees is essential for employee satisfaction and retention. By fostering open communication across the organization, breaking down silos, and encouraging transparency, organizations can create an environment where workers feel valued—leading to greater job fulfillment and employee retention.

A word from SublimePeople

A high employee retention rate is a good indicator that your business is doing well. If you’re concerned about your company’s employee turnover, there are a few things you can do to improve it. First, take a look at how you’re recruiting and hiring employees. Make sure you’re attracting the right candidates for the job by being clear about what the position entails. Once you’ve hired someone, onboarding them properly will help them feel like they belong at your company. Finally, create an environment that promotes retention by fostering open communication, providing growth opportunities, and showing appreciation for a job well done. By taking these steps, you can improve employee retention and keep your best workers on staff for years to come.

You might also be interested in How to Keep an Employee? (14 Proven and Effective Strategies)