A company’s employee lifecycle starts with attracting, hiring and retaining team members. The lifecycle naturally concludes when an employee leaves the organization, whether voluntarily or involuntarily. The number of employees who depart over a specific time period defines what is known as an organization’s employee "retention rate." When fewer employees leave, retention rates rise. When more employees leave, however, retention rates decline. And when they decline enough — and stay that way for long enough — that signals that an employer has a serious retention problem.
Many companies set benchmark employee retention rates as a way to track and measure the effectiveness of their retention efforts. A company aiming for an 80 percent retention rate, for example, hopes to retain eight out of every 10 employees over a given time period.
Goal retention rates vary from company to company and industry to industry. For example, if your business is impacted by seasonal fluctuations, you know your retention numbers will swing with seasonal highs and lows. Factoring in this type of variable allows you to build a retention strategy that works for your business.
However, when the number of people leaving causes your retention rate to drop below the benchmark over a sustained period, it’s time to pull back the curtain and examine why employees are exiting.
The U.S. Department of Labor reports that 38.2 million people voluntarily quit their jobs in 2017. While these employees all had their own reasons for resigning, there are general trends that occur across industries and within companies of every size.
Randstad’s Employer Brand Research 2018 identified the top-five reasons people left, or considered leaving, their employers.
Exit interviews can help you learn what’s behind employee retention rates, and sophisticated analytical tools can even help you predict employee turnover. However, maintaining open and ongoing communication with current employees remains the most effective way of identifying issues before they become larger problems that lead to turnover.
At first glance “employee retention rate” and “employee turnover rate” seem to measure the same thing: how many employees stay with or leave from a company. The two measurements are similar, but the Society for Human Resource Management explains there is a distinct difference between retention and turnover rates.
By reviewing both measurements, employers can better assess workforce dynamics and develop targeted retention strategies as needed.
At the end of the day, even the savviest employers don’t always see a resignation coming. But by knowing some of the common reasons behind employee departures, you’ll be better positioned to address issues proactively and strengthen your retention rate.
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