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Employee retention rate – What it means, and how to practice it in 2022

Employee retention rate – What it means, and how to practice it in 2022


Quynh Anh Vu 22 Sep 2022 5 min read

We are living in the industrial revolution 4.0, which means that there is an increase in job opportunities for youngsters, not to mention the high skilled labor. In fact, The U.S. Bureau of Labor Statistics projects that over the next decade the economy will add 6 million jobs.

Thus, many talented workers might find that it is their choice to commit or leave the company for their own benefits, which is closely related to employee retention.

If your company is facing a high employee retention rate, it is high time for your business to determine employee retention as one of the key concerns for long-term company development strategies.

In this article, we give you a deeper look at the definition of employee retention, drivers of high employee retention rate, current statistics of retention rate in a specific industry, how to calculate employee retention rate accurately, and solutions for improving employee retention strategies.

What is meant by Employee Retention Rate?

Regarding employee retention, we usually mention employee turnover. Though these terms have some in common, it is not an interchangeable definition. Employee turnover is defined as the loss of organizational talent over a period of time.

Meanwhile, employee indicates an organization’s ability to prevent employee turnover, the number of people who leave their job in a certain period, either voluntarily or involuntarily.

A rise in employee turnover and retention both have a strong impact on business performance and favorable outcomes. The key difference is that the retention rate does not include new hires, it accounts only for people already employed during the period for which the rate is being measured.

Whereas, the turnover rate formula consists of people hired during the period for which the rate is being measured. Indeed, high turnover and low retention rates signify issues regarding the organization’s culture and employee experience.

employee retention rate
Employee Retention Rate

When it comes to retaining talented employees, we usually mention employee engagement and satisfaction. There are tons of reasons for employees to remain working status or leave a job based on motivation and contentment with company support and incentives. It belongs to human resource management strategies to attract new talented workers or keep loyal talents commit and contributing to the company in long term.

According to the 2021 Retention Report by Work Institute, among 10 reasons listed for leaving, there are top five organizational internal factors:

No. Categories Description Percentage
1 Career Opportunities for growth, achievement, and security 18.0
2 Work-life balance Scheduling, travel, and remote work preferences 10.5  
3 Job and environment Enjoyment and ownership in manageable work Physical and cultural surroundings 17.7
4 Manager Productive relationship preference 10.0
5 Total rewards Compensation and benefits promised and received 7.0

The basic formula for calculating retention is:

(# of individual employees who remained employed for the entire measurement period /

# of employees at the start of the measurement period) x 100

The retention rate is often calculated on an annual basis, dividing the number of employees with one year or more of service by the number of staff in those positions one year ago.

By contrast, the basic formula for calculating turnover is:

(# of separations during the measurement period /

Average # of employees during the measurement period) x 100

The turnover rate is often calculated every month which is added to calculate the annual turnover rate. It is defined as the number of separations divided by the average number of employees during that same period. Moreover, turnover can also be calculated by breaking down involuntary and voluntary turnover rates and high-performer turnover rates.

Effective and efficient practices can help to maintain high retention rates. It is needed a multifaceted, broad-based, and targeted strategy to achieve the best practices.

It is understandable that employees want to have work flexibility, a competitive compensation package, recognition for their contribution as well an opportunity to learn and develop for higher promotion. Based on their primary concerns, the article will provide four employee retention strategies for your organization retains your talents.

Collect Employee Engagement Survey

It is necessary to conduct survey frequently to understand what your employee is actually thinking about their job engagement and satisfaction, which also help to forecast staff retention and turnover rate. It is easy to access results and analytics.

Use a technical tool to help design and collect findings faster and more precisely with AhaSlides. We provide Employee Engagement Survey Templates for you to look at.

Strengthening Employee bonding

Do you know that team bonding can improve productivity, ease management and establish a working environment allowing everyone to feel comfortable? It will be hard for people to leave a place and rearrange a working relationship that is so meaningful to them.

In fact, Team building can be both indoor and outdoor activities. It is absolutely easy to design a quick employee building at the begging of the working day or a meeting. Let’s AhaSlides help you with our Quick Team Building Templates

Giving feedbacks and recognition

Giving enough opportunities for each employee to grow professionally or personally within their business by giving feedback for their completion as well as appraisal comment for their achievement. Realizing themselves learning something useful which helps broaden their knowledge and career is so important.

Offer a competitive base salary and extra benefits

Reconsider salary range and promotion frequently and fairly. Make sure employees understand all parts of their compensation package including bonuses, reimbursements, stock options, and incentives…  Besides, medical care and wellness benefits are important parts of compensation. Offering benefits that support the whole person is a form of employee appreciation.

Employee Retention Rate
Employee Retention Rate

Cost reduction, better customer experience, and increased revenue are some of the positive impacts that high employee retention brings out. It is never late for your organization to take further steps in solving low employee retention and high turnover.

Let’s Ahaslides help you to create an ideal work culture and satisfying workplace to retain your talented staff. With our help, you will find out a new and interesting way to communicate with your employee effectively.

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