Is your organization retaining quality employees or losing them too frequently? Reducing employee turnover is one of the most important steps most HR professionals aim for, but knowing where you stand is the first step.
Calculating Employee Retention? How to Do It
Calculating employee retention statistics is a critical part of managing an employee retention plan or putting one into place. If you want to grow your company with qualified professionals who want to remain in the company long-term, you need to know why they are leaving and if they are leaving at a rate that is too high. To do this, learn what your retention statistics are. This number helps you to maintain your employee numbers over time, which aids in team building.
What Is This Number?
An employee retention rate is also known as the stability index. In other words, it is how stable a company is based on its ability to retain employees and build teams. If you have a high number, this indicates the business is doing well in this area. If it is too low, this could mean employee morale issues are present that need to be taken care of prior to bringing more staff on. This number is an indicator of how well your company’s employee base is operating.
The basic formula for calculating employee retention rates is the following:
The number of employees with more than 1 year of services X 100 = Rate
Here are a few more things to keep in mind:
- You should know, as a human resource officer, how many people you have on board.
- Know how many people have at least a year of service for the company.
- To gather this information, use files or appointment individual departments to determine their staffing numbers.
- Ignore those with less than 1 year of service with the company.
- Do not include those who plan to retire or resign in the current period, if you know this information.
- Do individual department stats first and then do the company wide factors in the same way.
Now that you have this information, analyze the results. Monitor the changes from one period of time to the next. Determine if there are specific areas of the business with lower numbers than others. This could indicate a problem in those specific areas. What are those with a higher retention rate doing differently? Knowing this information allows you better to understand what is happening within your business, and how to build your teams over time. You can then make changes, as you need to in order to boost these numbers.