By fneedle@hubspot.com (Flori Needle)

Sometimes employees stay at a company for many years, loving the work they do and feeling like they’re exactly where they’re meant to be. Conversely, some employees leave and pursue other opportunities.

Whatever the case is for your business, you likely want to retain all of your employees, whether they’ve been with you for ten years or just started last quarter.

In this post, learn what employee retention is and discover high-impact strategies that will help you satisfy your employees and keep a low retention rate.

What is employee retention?

Employee retention is a business’s ability to keep their employees and reduce employee turnover, which is when employees leave their jobs for other opportunities or reasons.

Increasing employee retention directly impacts business success, as having more employees or the right amount of employees makes it easier to reach business goals.

Employee retention is expressed as a percentage, and below we’ll discuss how it’s measured.

How to Calculate Employee Retention Rate

The formula to calculate your employee retention rate is rather straightforward. You simply divide your total number of remaining employees during a set period by the total number of employees you began with during that same period and multiply the number by 100.

For example, let’s say you began Q1 with 43 employees and finished Q1 with 39 employees. Your equation would look like this:

(39 / 43) x 100

And your employee retention rate would be 90.69%, or 90.7% rounded to the nearest 10th.

Why is employee retention rate important?

Employee retention rate is important because it helps you understand how your business fares in keeping employees and whether or not there need to be improvements to your employee retention strategies.

If your rate tells you that you have lower retention, your business likely spends more money hiring new employees than helping existing employees succeed. In fact, according to Gallup, the cost of replacing employees can range from .5 to 2x times an employee’s annual salary.

How to Improve Employee Retention

Recent HubSpot Data found that marketers reported that they believed that the reasons for high employee turnover were a lack of work-life balance, lack of flexible schedule, or lack of career growth opportunities.

Data Source

Improving employee retention means reducing employee turnover and continuing to meet overall business goals that contribute to success. It usually begins with hiring the right employee and additional strategies we’ll discuss below.

Employee Retention Strategies

1. Use comprehensive hiring practices.

As mentioned above, employee retention often begins by simply hiring the right people. And, the best way to hire the right people is to have a recruitment process that ensures you’re hiring the right people.

It’s best not to subject candidates to a long and drawn-out process as it may send them elsewhere. More so, going through interviewing in a way that helps you best understand the candidate and if they …read more

Source:: HubSpot Blog

Author: Aaron