Measuring Employee Retention: 10 Metrics to Track in 2023
Measuring Employee Retention: 10 Metrics to Track in 2023
Measuring employee retention is an effective way for your organization to determine if you have met your goals. Satisfied and engaged employees are much more likely to stay with an organization long-term. Also, a high employee retention rate shows that the HR team is effective in hiring the right people for the culture and role in the business.
What Is Employee Retention?
Employee retention refers to strategies, policies, and practices used to keep talented employees at an organization and to help reduce the turnover rate. The goal is to help minimize how many employees leave the business during a set amount of time. Essentially, when your business has a high employee retention rate, the employee experience is positive.
The Importance of Data on Employee Retention
Accurate employee retention metrics will help your HR department determine if their processes are working or if things need to be changed or revamped. While tracking employee retention takes time and effort, the data this provides is invaluable for improving the employee experience.
Learn more about what you need to track to determine your company’s employee retention success or failure here.
Key Employee Retention Metrics to Track
Some of the essential employee retention metrics you need to actively track include:
1. Employee Retention Rate
This is the fundamental metric to know when it comes to tracking employee retention. Your employee retention rate shows the company’s ability to keep workers for a set period of time. Usually, a good retention rate is anything over 90%. It’s important to balance the retention of current employees and allow new employees with better skills to be hired.
2. Retention Rate Per Category
It’s possible to calculate your retention rates across several different categories.
You can determine your retention rate per manager, which lets you see how each manager is doing regarding employee retention. Higher retention rates for one manager show that their leadership skills provide value for their team. To determine this, you should take the total number of employees per manager and subtract the number of employees who left per manager. You then divide this number by the total number of employees per manager and multiply by 100.
You can also calculate a manager’s retention rate. A poor retention rate among your managers may indicate they are overstretched or that they don’t have the tools needed to be effective in their leadership position.
The retention rate per department will allow you to see if some departments have issues that need addressing.
3. Voluntary Turnover
Voluntary turnover is the percentage of employees who are willingly leaving their job. There are several reasons that voluntary departures occur, including relocation, joining a more desirable company, or finding a new job. Understanding the voluntary turnover rate is essential to help you know what needs to be done to improve the employee experience and ensure that more employees remain with your company.
4. Involuntary Turnover
This is the percentage of employees laid off or dismissed by the business in a set time. If there is a high involuntary turnover rate, it indicates a lack of initiative to develop these employees or subpar workforce planning.
5. Employee Satisfaction Rate
When employees are satisfied in their positions and roles, they will stay longer than employees who are unhappy or dissatisfied. Happy employees are those who feel they are challenged by their work, valued by the organization, and that they are receiving fair compensation. Your HR department must help create ambitious goals to encourage, challenge, and drive employees. Doing this can also help to increase overall employee satisfaction rates.
6. Employee Tenure
Knowing how long the average employee remains with your business or organization helps determine employee satisfaction. If the average employee tenure is low, it’s clear that changes should be made. Higher tenure averages mean employees are happy and challenged in their positions and stay with the company longer. To determine the average employee tenure, you will divide the total employment time for employees by the total number of employees.
7. Employee Turnover Cost
Retaining employees is essential for an organization because turnover is expensive. To determine the cost of employee turnover, it’s necessary to collect information on the costs involved and then assign a dollar value to this.
8. Engagement Scores
Employee engagement is a top indicator of whether an employee intends to stay with the company. There are a few ways to collect engagement scores, including engagement or pulse surveys. With these, you can see the current engagement of employees and take steps to improve them, if necessary.
9. Job Satisfaction
Job satisfaction measures how happy an employee is in their job. Employees will begin looking for new opportunities outside the company when they are dissatisfied.
You can utilize the Employee Satisfaction Index, which consists of three questions that are measured on a scale of one to 10.
10. Flight Risk
Knowing what employees are most likely to leave is helpful. Unfortunately, predicting what will happen in the future isn’t always possible. It’s important to consider things like pay, changing roles, and life changes that may result in an employee leaving the company. Knowing who is a flight risk may help you mitigate this by taking steps to help with their situation or improve it somehow.
Taking time to track employee retention metrics can help you better understand your overall employee retention. It is beneficial in several ways. However, it also helps you to assess how effective your retention efforts are. When you know these metrics and take the time to learn about why employees leave, it is possible to make improvements that will pay off in the long run.
Take time to keep this information in mind and implement strategies to improve your employee retention. This will help increase productivity and profits while ensuring your employees are happy and satisfied in their positions.