What Your Employee Turnover & Retention Rates Should Be - Glassdoor
Here’s What Your Staff Turnover and Retention Rates Should Look Like

Here's What Your Turnover and Retention Rates Should Look Like

According to SHRM’s 2017 Human Capital Benchmarking report, the average overall staff turnover rate in 2016 was 18 percent. If you are an HR manager, you might look at that number and compare it to your organisation’s rate and make a simple calculation: if your number is lower, you’re doing great, but if it’s higher, you need to do some work.

Unfortunately, measuring employee turnover and retention just isn’t that simple.

Definition of Turnover and Retention Rate

Turnover Rate Meaning: The number of employees who have left your company during a certain time period

Retention Rate Meaning: The number of employees who have stayed at your company for a certain amount of time.

The ideal turnover rate and retention rate for your organisation aren't necessarily the average rates listed on national surveys — they’re going to depend on factors such as your industry, your historical turnover rate and internal promotion rate. And if you don’t take the time to consider each of these factors, you might not end up with an accurate view of how your company is handling its turnover and retention.

Here are three things to consider as you establish staff turnover and retention rate guidelines for your organisation:

1. Measure the Right Metrics

First, start tracking the data you need in order to measure turnover and retention year after year. We’re not just talking about positions lost and positions filled — you also want to collect data around specific kinds of turnover.

For example, in the 2017 Human Capital Benchmarking report, the overall turnover rate is 18 percent, but that number drops to 13 percent when considering only voluntary turnover, six percent when considering involuntary turnover and just three percent when looking at only high-performers.

Furthermore, you’ll also want to account for turnover related to employees who left a position but did not leave the company, such as in the case of a promotion or inter-departmental transfer. Or you might have a situation where you’ve listed two openings, filled them both, and then had to fill them again. In this case, you’ll want to make sure you’re tracking turnover and retention separately and not simply assuming these numbers are inversely related to each other.

To make sure you have as accurate a view of what’s happening within your company, start tracking the following metrics now:

● Average employee tenure

● Positions opened and positions filled

● Overall turnover rate (Broken down into three categories: Voluntary, Involuntary, and employees noted as High-Performers)

● Average turnover due to promotions or transfers

How to Calculate Staff Turnover Rate

To calculate your Employee Turnover Rate, take the number of employees that left the organisation (over the calculation period) and divide by the total number of employees in your organisation during the calculation period. Multiply by 100 for your staff turnover calculation.

 How to Calculate Employee Retention Rate

To calculate Employee Retention Rate, first define the calculation period you’d like to track for. Then take the number of employees remaining in the organisation at the end of the period and divide it by the number of employees you had at the beginning of the calculation period. Multiply by 100 for your retention rate. 

You can also use established formulas from SHRM and SAMHSA to monitor your turnover & and retention rates over time, as well as to learn how to calculate more complex metrics like Voluntary Employee Turnover Rate.

[Related: How to Recruit Top Talent in the UK]

2. Consider the Context of Your Industry

Next, make sure you’re considering your staff turnover and retention rates within the context of your industry. After all, different industries maintain different standards for turnover because they face unique challenges associated with attracting and recruiting talent with the skills needed to perform the job.

For example, one of the industries with the highest employee turnover rates are the retail and restaurant sectors, running as high as 65 percent for retail and 73 percent in restaurants in the past few years. Comparing your IT startup’s turnover rates to those numbers might make you less worried about your turnover rate, but it won’t give you an accurate idea of whether or not your company is performing with its industry standards. Use resources from the US Bureau of Labor Statistics and consulting leaders like Deloitte and PwC to monitor your industry’s average retention and turnover rates.

[Related: Hiring Informed Candidates On Glassdoor Boosts Retention & Can Save Thousands]

3. Take Action

You can capture all the data in the world, but it won’t help you improve retention and turnover within your organisation unless you take action. So while the first step of managing employee retention and turnover is tracking it, the real work begins when you assess your rates in the context of your industry and identify whether or not your company needs to improve its retention strategies.

If you find your retention rates are on the low side and your turnover rates are on the high side, there’s a lot you can do to improve them. Not only will your efforts drive short-term benefits like lower recruiting and onboarding costs, but you’ll also allow your company to reap the rewards of a healthier company culture, including higher productivity and profitability. Focusing on company initiatives like increased transparency, flexibility and recognition can all help you improve your retention rates.

[Related: The Retention Secrets & Strategies of Top CEOs]

Don’t be daunted by how many different ways you can calculate, track and analyse staff turnover and retention. Decide how you’ll track these rates within your organisation, then use them to stay informed about how employees join and leave your company so that you can make powerful, strategic changes to how your company manages its human resources.

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