What Is Employee Retention Rate?
Employee retention rate is a metric that measures the percentage of employees who remain with an organization over a given period. It’s the inverse of turnover rate and is a key indicator of employee satisfaction, engagement, and organizational health.
How to Calculate Employee Retention Rate
To calculate retention rate, divide the number of employees who remained at the end of a period by the number at the start of that period, multiply by 100. For example, if you started with 100 employees and ended with 90, your retention rate is 90%.
What Is a Good Retention Rate?
Retention benchmarks vary by industry. Generally, a retention rate above 90% is considered healthy. High-turnover industries like retail and hospitality may have lower benchmarks. Tracking your retention rate over time and comparing it to industry peers is more useful than chasing a universal number.
Strategies to Improve Employee Retention
The most impactful retention strategies address the root causes of employee turnover. These include improving onboarding, investing in career development, enabling strong manager-employee relationships, offering competitive compensation, providing work-life flexibility, and building a culture where employees feel recognized and valued.
