10 employee retention metrics you need to track
What are the most important employee retention metrics to track?
The core employee retention metrics to track are turnover rate, retention rate, turnover costs, and overall employee satisfaction, because together they show who leaves, why, and what it costs.
- Watch them monthly or yearly so you spot problems early.
- Use the numbers to fix pay, managers, and work culture.
- As a result, you keep more of your best people and spend less on hiring.
Employee retention metrics to track
- Turnover rate
- Voluntary turnover
- Involuntary turnover
- Employee retention rate
- Turnover costs
- Absence rate
- Average employee length
- Retention per manager
- New employee satisfaction
- Overall employee satisfaction
Keeping good employees matters as much as hiring them. Long-term staff show that you care for your people the way you care for your customers.
Employee turnover can be costly and disruptive. Some industries have high turnover by nature. Still, constant hiring can lead to big losses through lost work and labor costs.
The good news is that you can prevent most of these losses by watching retention closely.
By tracking the right employee retention metrics, you learn how happy your staff are. So this article walks through the ten key metrics for a stable, engaged team.
What is employee retention?
Employee retention is a company’s ability to keep its people for the long term.
It shows how well you build a place that motivates and engages staff. These factors push people to stay and grow with you, or to look for work somewhere else. In addition, strong employee engagement often keeps them from leaving in the first place.
Retention matters because it cuts turnover costs. It also builds a positive culture and supports long-term success.
Employee retention metrics
Employee retention metrics are measurable signs that help you track the factors behind retention.
By tracking them, you can spot patterns, trends, and issues that may hurt staff satisfaction. As a result, your managers can act early to improve retention and build a better workplace.
10 employee retention metrics to track
The following employee retention metrics give you clear insight into your retention efforts.
1. Turnover rate
The turnover rate is a key metric. It measures the share of employees who leave within a set period.
Most companies work out turnover once a year for their reports. Here is the formula they use.
Overall turnover rate = [(number of employee turnovers/average number of employees in a year)*100]
By tracking this metric, you can spot trends in staff attrition. It also lets you dig into the reasons and take action to reduce turnover. For a wider view, these employee turnover statistics help you compare your numbers with the market.
You can also split turnover into two groups: voluntary and involuntary.
2. Voluntary turnover
Voluntary turnover covers people who choose to leave on their own.
Tracking it helps you see why staff go and whether common themes need work. For example, it may point to career growth, work-life balance, or culture fit.
However, not all voluntary turnover is bad. In addition, you can split your results into two types:
- Functional turnovers – These involve poor performers who leave. Losing disengaged staff who drag down output can save you real money over time.
- Dysfunctional turnovers – Meanwhile, these involve top performers who leave. Watch this closely, because it can hurt your culture and work environment.
3. Involuntary turnover
Involuntary turnover covers people who are let go or laid off by the company.
This metric shows a lot about performance management. It also reflects how well your policies work and how healthy the business is.
4. Employee retention rate
The employee retention rate measures the share of staff who stay over a set period.
A high rate points to a healthy work environment and good experiences. On the other hand, low retention should prompt you to ask what went wrong. It also helps to know how turnover differs from attrition so you read the numbers correctly.
So tracking this metric shows how well your retention plans work overall.
5. Turnover costs
Watching turnover costs helps you measure the money side of staff leaving. This metric covers recruiting, hiring, training, and lost work from open roles.
You can work out turnover cost with this formula:
Overall turnover cost = total number of employees * turnover rate * cost of departure
Depending on the role, the average turnover cost of staff can reach twice their yearly salary. So high turnover can cost firms more than they put into a single employee.
Once you know the money impact, you can make a strong case for retention. As a result, the business saves money over the long run.
6. Absence rate
The absence rate measures how often and how long staff are away.
According to the US Bureau of Labor Statistics, the average absence rate sits around 3%. High absence may point to low motivation, weak engagement, or unhappiness.
By tracking it, you can catch retention issues early. So you can then act to lift staff well-being. For example, better work-life balance can keep absence low.
7. Average employee length
The average employee length measures how long people stay with you. This metric shows whether staff tend to stay for years or leave fast.
It also tells you how well your onboarding and retention plans work.
8. Retention per manager
Your managers shape retention too. After all, they lead and support your teams most of the time.
Looking at retention by manager shows who keeps their people best. As a result, you can spot good habits and support those who need help.
Strong onboarding practices also help each manager start new hires off well. By doing this, every manager can build a team that wants to stay.
9. New employee satisfaction
Tracking how new hires feel shows how well your onboarding works.
Fixing gaps in that early stage matters a lot. So it can shape how committed new staff feel to the company.
10. Overall employee satisfaction
Finally, overall employee satisfaction is a key metric for the mood across your team. It captures how happy and well your people are, which shows the health of your culture.
A 2020 poll by Gallup found that engaged, satisfied staff can lift productivity and profit by 18% and 23%.
So tracking this metric helps you find concerns that may be hurting retention.
Factors that affect employee retention
Retention is not always simple to read. Many factors shape it, both inside and outside the business.
By working on these factors, you build loyalty and long-term commitment. The following factors play a big role.
Employee compensation
Pay should match each person’s skills and effort as a thank you for their work. In addition, adjusting pay to market rates on a regular basis can lift retention a lot.
Professional development opportunities
Staff who see a clear career path tend to stay. Access to learning and growth programs helps too.
Investing in their professional development builds their skills. It also shows that you value their growth.
Support from managers
Managers play a big part in retention.
Staff who feel backed by their managers tend to stay. Regular feedback and open talk help as well.
So train managers in clear communication and leadership. As a result, they build a place that earns loyalty and engagement.
Work environment
A positive workplace with a healthy culture is key to satisfaction and retention.
People do well where they feel valued, respected, and part of the team. This ties back to your work culture and company vision.
So a supportive, inclusive space lifts engagement and cuts turnover.
Work-life balance
A healthy work-life balance matters more each year. Firms that value it show they care about their people. In fact, small changes to improve work-life balance can boost how long staff stay.
For example, flexible schedules, time-off rules, and supportive plans all help. As a result, staff can manage work and home with less stress.
Why you should track employee retention metrics
Tracking employee retention metrics brings many benefits. In short, it lets you:
- Spot retention issues early and fix them before they grow.
- See how well your current plans work and make data-driven changes.
- Compare your retention with industry benchmarks to see where you stand.
- Measure the cost of turnover and build a case for retention spending.
- Build a culture of steady improvement by measuring your results.
These metrics are vital for firms that want to keep top talent, cut turnover costs, and build a better workplace. By tracking them and fixing the factors behind retention, you protect the future of your team. So it is best to start today.
Employee retention metrics FAQs
How often should you measure employee retention metrics?
Most firms track turnover and retention once a year for their reports. Still, a monthly or quarterly check helps you act faster. For example, a rising absence rate can warn you months before people quit.
What is a good employee retention rate?
A good rate depends on your industry, since some fields lose staff faster than others. As a rule, most firms aim for a retention rate near 90% or higher. So compare your number with peers in your sector, not with every company.
Which metric best predicts future turnover?
Overall employee satisfaction and engagement often warn you first. When these scores drop, quits usually follow. So pair them with absence rate and voluntary turnover for a clearer picture.
How do you reduce high turnover costs?
Start by fixing the reasons people leave, such as low pay or weak management. Better onboarding and career growth also help. As a result, you spend less on hiring and training replacements.
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