Retention rate is the percentage of employees who remain at your company during a certain period of time. You can calculate your retention rate by dividing the number of employees on the last day of a particular timeframe by the number of employees on the first day. Most companies measure their retention rate on a quarterly or annual basis. Retention rate can serve as a high-level indicator of employee satisfaction, onboarding and training effectiveness, and employee engagement. The closer your retention rate is to 100%, the better. Low retention rates can lead to low morale, work quality, and productivity. Plus, hiring new employees to replace the ones you lost can really add up. Gallup estimates that onboarding replacements can cost [half to two times an employee’s yearly salary](https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx). A company’s culture, inclusivity, recognition, and benefits can all play a role in improving an organization’s retention rate. When employees work with colleagues who respect them, get placed on challenging, meaningful projects, and get rewarded for their hard work, they are much more likely to be and stay engaged. Work-life balance can also contribute to a company’s retention rate. Offering more flexible work schedules and encouraging employees to take time off when they need to rest can greatly impact employees’ longevity at your organization.
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