8 Employee Retention Metrics You Need to Know [2022]

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Employee retention is one way for organizations to measure whether they’re successfully meeting their goals. Engaged and satisfied employees are more likely to remain with an organization long-term. Additionally, high employee retention also indicates that an organization’s human resources team is effective at hiring the right people for the role and culture fit.

There are many ways for organizations to improve their employee retention, including investing in workplace wellness to boost employee health and engagement. However, to increase retention, managers need to know how to measure it. This guide to employee retention metrics covers the top ways to measure retention and turnover.

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Importance of Measuring Employee Retention

Having a high employee retention rate is generally considered a marker of organizational success among other factors, including profitability and employee productivity. High turnover can cost an organization time and money, as well as other resources. Taking steps to minimize turnover and maximize retention is critical to ensuring organizational success.

Below are a few reasons why organizations should focus on retaining employees and mitigating turnover:

  • Minimize hiring costs: Hiring new employees is expensive, and there are many direct and indirect costs involved. Depending on the organization and the role, it can take up to six months for organizations to recoup their investment in a new hire.
  • Reduce disruptions: Employee turnover is also disruptive, causing unproductive downtime that has ripple effects that extend to other roles and departments.
  • Save time: Recruiting, hiring, and training new employees is time-consuming. When a new employee doesn’t work out, it takes time away from other responsibilities and priorities that managers need to focus on.


Top Employee Retention Metrics

To improve the effectiveness of your organization’s employee retention strategies, you need optimal ways to measure how many employees remain at your organization vs. how many employees depart. By dividing the total number of former employees by the total number of current employees, you obtain your organization’s overall turnover rate.

In addition to measuring overall turnover rate, the following are additional metrics you can use to evaluate and improve employee retention.

1. New Employee Retention

Retaining new employees is essential to reducing disruptions in productivity and mitigating financial losses. To improve the success of the new hire onboarding process and to retain new talent long-term, it’s important to measure how many new employees leave during their first year of employment.

To calculate the new hire retention rate, divide the number of new employees who have left the organization by the total number of new employees hired during the same period.

2. Voluntary Turnover

There are two broad types of turnover—voluntary and involuntary. Voluntary turnover occurs when an employee chooses to leave the organization to take a new job, go back to school, move to a different city, or for other possible reasons.

By tracking voluntary turnover, your organization can identify a pattern of challenges that are leading to employees leaving their roles. A high voluntary turnover rate can suggest an issue with hiring for fit, compensation, or another problem that can be resolved.

3. Involuntary Turnover

Involuntary turnover occurs when the organization lets an employee go for issues like lack of performance, incompatibility with company culture, or legal issues.

If your organization is facing a high involuntary turnover rate, it may indicate an issue with your organization's talent recruitment, vetting, and hiring process. Examining why your organization is having to let people go shortly after being hired can help to strengthen your hiring process.

4. Talent Turnover

Another way to measure employee turnover is to assess the value of the employees that are leaving, whether voluntarily or involuntarily. The talent turnover rate helps paint a picture of how valuable an employee is to your company and, therefore, how costly their departure is.

By measuring talent turnover, you can determine whether your most talented employees are leaving at higher or lower rates than other types of employees. To measure talent turnover, you’ll need to assign a value to each employee based on the role they fill within the organization.

5. Department or Manager Retention Rate

The main goal when measuring employee retention is to help identify the cause of employee departures. One way to determine why people may be leaving your organization is to measure which departments or managers have higher turnover rates than others.

When there’s a high turnover rate under a particular manager, it may indicate there’s an issue with the manager’s leadership skills or the relationship between the manager and the employees. Likewise, a higher turnover rate within a particular department may indicate that this type of role is lacking crucial resources employees need to do their jobs well.

6. Employee Satisfaction

Employee satisfaction is one of the key metrics that human resources departments measure to ensure organizational success. Companies with engaged employees not only experience lower turnover but higher profitability as well.

Employee satisfaction is a critical metric to keep track of as part of your employee retention program. There are numerous ways to measure employee satisfaction, including through survey results, absenteeism rates, and employee net promoter scores (eNPS).



7. Average Employment Length

The average employment tenure within your organization can provide key insight into the effectiveness of your HR strategy. To measure your organization’s average employment length, add up the total number of employment years of all employees—both past and present—and divide this number by the total number of employees.

To know how your organization’s average employment length compares to other organizations in your industry, you can refer to data collected by the Bureau of Labor Statistics.

8. Turnover Costs

Having a clear idea of how much employee turnover is costing your organization can be a motivating factor in improving employee retention and engagement levels.

To measure employee turnover costs, you need to know how much it costs your organization to recruit, hire, onboard, and train a new employee. This amount will vary based on the role and experience level of the employee.

Turnover costs not only include the cost of hiring but also the cost of severance and other applicable benefits, as well as any lost productivity incurred while the position is vacant.


Improve Employee Retention With Workplace Wellness Programs

Knowing which employee retention metrics to track is only the first step in strengthening your organization’s human resources practices. The next step is knowing which actions to take to make targeted improvements.

Workplace wellness is one approach to optimizing your organization’s employee retention plan. Workplace wellness programs contribute to the health, well-being, and engagement of employees, increasing retention rates and reducing levels of voluntary turnover.

Wellics offers a robust workplace wellness program that collects and analyzes data, allowing your organization to determine how employee health and well-being initiatives contribute to an increase or stabilization in employee retention. Use Wellics to set custom metrics, including various employee retention metrics, showing you the relationship between employee wellness and retention over time.

Learn more about the power of the Wellics wellness platform in helping organizations build stronger and higher-performing teams.

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Originally published May 31, 2022 - 7:54 AM, updated May 6, 2024


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