HR Best Practices: How to Calculate Employee Retention Rate

Employee Retention Rate: A Modern HR Leader’s Guide

Employee retention is all the buzz right now during this post pandemic state of the ‘Great Resignation’ as the term has been deemed. The floodgate of new job opportunities has opened up and your staff members may be looking to see what else is out there for them.

Organizations need to reinvent their culture and update their policies and thus, are turning to their HR professionals, or hiring firms like Flex HR to support their HR functions for them. In order to continue to grow, employee retention rate must be measured to track how many workers are remaining at your company year over year.

ChartHop asked Kathy Zadroga, HR consultant at Flex HR, for her authoritative solution.

HR specialists know the simplest way to calculate employee retention rate is with an analytics solution tool. Bothe current and historical information is provided, and no additional work or spreadsheets are required. Therefore, you can easily keep tabs on how your retention rate trends over time by using this type of automation.

“This ongoing focus is important because, as Kathy Zadroga points out, calculating retention rate more frequently can help you stay on top of negative trends before they become serious issues and it’s already too late. When a company calculates its retention rate on an annual basis, it risks missing out on what the trends mean.”

If you do not have a calculation tool you can compute employee retention rate using the following formula:

(Employees at the end of the timeframe – New hires during the timeframe) / Employees at the beginning of the timeframe) x 100

Our Flex HR experts advise on setting a timeframe, perhaps once a month, to calculate your retention rate to get a check on what individuals remain at your organization. Next come prepared with the number of employees you had at the beginning of that time period and the number at the end of the time period. Now subtract the number of new employees hired during this timeframe and ta da – you arrive at your retention rate from that timeframe.

The lower employee turnover, the better for any business. Afterall, you want to keep your best talent with you for as long as possible. Generally speaking, organizations should aim for a 90% retention rate or higher. It’s important to take a look at your company’s retention rate consistently to help reduce costs, maintain good employee relations and increase company culture and morale.

Read the full article in ChartHop here