Successful recruiters rely on data and analytics. It’s because numbers speak volumes about the process and its strong points and tiny (or massive) gaps. Now, data remains your most reliable ally once a new hire is welcomed to the team. And there are all sorts of elements to inspect and measurements to track. Introducing: employee retention metrics.
Spoiler alert – this one’s crucial! So, how is employee retention calculated? What can you do to interpret the score correctly and turn your tactics around for improved results? Follow this simple guide & start from the basic formula. Then, copy our strategy step by step.
What is employee retention?
Some companies manage to build strong bonds with their employees from the very first encounter. They never seem to struggle with employees’ loyalty, contentment, or engagement. In other words, they have a certain hocus-pocus going on. And it works perfectly, making their best people stick around for years. But if we look past the abracadabra stuff, we’ll see a more businesslike concept.
So, according to the official HR + recruitment glossary, employee retention is a huge deal. And it tends to revolve around healthy, prosperous, and refreshing working environments. Its definition says that it stands for a company’s ability to prevent employee turnover. Simply put, it’s the ability to lower the number of people who leave their jobs over a specific period. Turnover rates refer to both the individuals who left the firm voluntarily and involuntarily. So, it’s clear why this topic is perpetually hot and prioritized. Because if everything’s done right, firms get to retain their top performers on board and avoid all sorts of negative impacts caused by high turnover rates.
Why is focusing on improved retention the key to success?
Companies need their best employees to stick around. And only by developing a fail-proof retention strategy can they reduce turnover risks. And since people leave their jobs for countless reasons, it’s no wonder that this field represents a bit of a challenge (*a softened way to say that you’re doomed if you don’t figure out how to retain the top professionals*).
Anyway, aside from not failing big time because you lost your outstanding performers, here are a few key benefits of improved employee retention to look forward to:
- Saving a lot of time and money on recruiting, onboarding, and training new people,
- Cutting down on costs of an “empty seat” & other expenses that tend to pop up whenever you lack skilled and reliable in-house workers,
- Increasing productivity and workplace morale by keeping the entire team satisfied and motivated without sudden disruptions and departures that shake the whole crew’s structure to its very core,
- Educating employees and enabling them to use the amplified knowledge and fresh sets of skills to enhance your products, services, and overall market reputation,
- Feeling the positive impact on your revenue thanks to more experienced, skillful, and happy workers.
And so, once you define your targets and go for them to improve your retention tactics, you’ll get numerous perks. Ultimately, contented and driven workers are the only unavoidable element that can make you become the employer of choice.
How do you analyze employee retention?
The crucial metric for tracking employee retention is employee retention rate. You can calculate it by subtracting the number of employees who have left in a specified period of time from the total number of employees and then dividing that into the total number of employees.
The precise formula you should use looks like this:
(Total number of employees-number of employees who have departed)/Total number of employees
However, there are other elements to analyze. Start by looking into employee happiness. This one is the ultimate key to understanding what’s happening, what needs to be fixed, and what are your best characteristics and strengths.
3 essential employee retention metrics examples
As we said, employee happiness makes it to the very top of the list of critical metrics for employee retention. It’s a massive success factor. Now, this one gives you a lot of choices. So, how you’ll track it is entirely up to you. It could be done through routinely shared surveys. Also, you could create a custom metric to get more accurate information. According to research, 90% of workers would appreciate being asked for their feedback and truly heard. So be sure to start there.
Now, there are a few more vital steps to take to understand how your team is doing and how satisfied everyone is.
New employee satisfaction rate
It’s easy to see why this metric is important. According to studies, a well-thought-out and effective onboarding process can boost retention rates by more than 80%. However, if you fail to provide adequate support to a new hire, the odds are against you. In fact, new hire turnover is so common that nearly 20% of them would leave within the first two months. So, it’s best to find a perfect way to measure how newly hired employees really feel about their job and what their thoughts and notions regarding the welcome they’ve received are. Their feedback will help you pinpoint certain issues and fix them quickly to avoid bigger problems in the long run.
Voluntary vs. involuntary turnover rate
Separating voluntary turnover from involuntary is vital. Because once you do, it gets much easier to see where the difficulties come from. The drill is simple – spotting a high voluntary turnover rate most likely points to unhappy employees. These headaches may come from poor motivation, inadequate pay, or a toxic culture. Whatever the reason, you must find out quickly and refine your ways. On the other hand, high involuntary turnover rates suggest that something’s wrong with your hiring process. So double-check the actual company’s needs and take another glance at your candidate persona.
Retention rate per manager
If you notice a high turnover rate with a certain manager, that is undoubtedly a sign that something is wrong. If you don’t look closely and find the cause for dissatisfaction, these numbers will stay the same. Or worse, the churn could increase. So beware of bad managers. Make sure to play it extra safe when hiring them. And later on, it will be up to you to teach them to respect and promote a healthy environment where people are happy and productive.
Best strategies to boost employee retention
Once you learn how to calculate employee retention metrics, it’s time to put those insights to use. Make a strategy that will help you engage, motivate, and keep your top employees. Start by learning what truly keeps them going and what their aspirations are. Then, stay focused on those targets and keep your trustworthy employees by your side.
Offer growth & career development opportunities
There’s nothing more beneficial for an aspiring professional than to bump into a workplace that encourages steady growth and offers multiple learning opportunities. If your workers feel motivated and inspired to enhance their skills and masteries, they’re far more likely to stay at their jobs (and do them phenomenally). Today, there are countless options to explore and offer to your staff. You can grant them anything from online courses, meetups, conferences, or workshops to actual financial help with certain types of formal education. So before you take a leap of faith in an endless learning curve, ask them what they need. Remember – every team member has unique necessities, aims, and ambitions. Meet them halfway and keep their personal goals aligned with the company’s objectives.
Focus on the salary & benefits
This step is pretty straightforward. Still, some companies fail to understand its importance and go for more generic approaches. First, it’s invaluable to bust a myth that’s been busting our brains (and countless hiring processes): the term competitive salary makes us cringe. So, be sure to actually do meticulous market research and offer your hard workers the compensation that they deserve. Because – words travel fast, and if you’ve been spreading fake news about how “competitive” the pay in your firm is, brace yourself for massive turnover & public backlash. Then, ensure to offer the right set of benefits. Possibilities here are endless. The perks talents appreciate range from extra paid time off through flexibility and remote work to healthcare benefits with bonus points for parents. So, the smart thing to do is have an open conversation with your team about what they’d really like to receive.
Prioritize employees’ well-being
Taking care of employees’ general well-being and helping them achieve healthy, balanced lives matters more than ever. Of course, these elements and topics were always essential. But these days, everyone is paying (more) attention. So, the first step to take is to establish a precise (and realistic) scope of work. Help your teammates understand and complete their tasks. Don’t pile up assignments and try not to push their boundaries. Let them know how they can contribute and show appreciation for each extra effort they make. Moreover, do your best to prevent the most devastating occupation-related syndrome – employee burnout.
So, in this domain, it’s crucial to spot the early signs. And because chronic workplace stress leads to this dangerous condition, do everything you can to prevent it (or stop it from getting worse). But burnout is not the only physical and mental issue to take into account. It’s vital to destigmatize the problems that impact mental and behavioral health. So it would be smart to continuously learn about the good policies and practices and build a strong culture of care and psychological safety.
Hire through referrals
If you want a short and smooth recruitment process that will save you lots of time & money plus – bring amazing results in the long run, you should definitely think of hiring through referrals. In simple terms, this means recruiting the most skilled industry professionals through their peers’ recommendations. One way to do it is by setting up an efficient employee referral program. By doing so, you’ll get in touch with qualified talents in no time. Because – your reliable and skillful squad knows exactly who you need on board. And they’ll be happy to recommend a friend, former colleague, or someone from their network whose knowledge and experience match your hiring needs. So, all you need to do is establish a clear way of asking for employees’ referrals and an easy process of receiving them.
How will referrals impact your employee retention metrics and results? Well, studies show that people hired through this kind of program tend to stay with the company longer than those who were sourced and welcomed aboard by using an agency or any other traditional method. To be more precise, referred candidates are likely to stick around for four years – and longer! Plus, engaged employees are 80% more likely to continue working within a firm (and progress in the meantime). By letting them take part in the hiring process and giving them financial and non-financial rewards for the successful hires they’ve made, you’ll take the engagement strategy to a whole new level.
Bonus tip: Use a recruitment affiliate software
Now, it probably seems like there are very few recruiting tactics that can actually outrank employee referrals. And that’s true. However, there is one tested solution that will shorten and ease hiring processes & have a positive impact on all employee retention metrics. It’s called recruitment affiliate software, and it’s your most effective option ever. It is also referral-based, but the circle of your potential recruiters and referrers is much larger. And so is the talent pool. By using it, you can promote your open positions and referral links and receive resumes from countless industry professionals quickly. This simple tool helps companies crack the code on how to hire developers easily, and it ensures that candidates who enter your pool have precisely what it takes to join the team – and stay!
Use these metrics to measure employee retention & create a smart tactic effortlessly
Learning about employee retention metrics and grasping the ways to track them continuously is imperative. So make sure to follow this brief guide and base your future actions and tactics on our proven tips. Be sure to promote a healthy, engaging environment. Mind the employees’ well-being and give them enough room to grow and amplify their skills and knowledge. Offer them the right sets of benefits, and ensure that they are paid adequately. That way, they will stick around for sure and be happy to advocate for your brand. More importantly, they will bring in new, qualified candidates who will boost your results and strengthen your company long-term.
If you need a good place to start renewing your recruitment & retention strategies – take a sneak peek at our referral-based platform.