Employee retention is important in any company for a number of reasons.

Measuring the employee retention rate helps to make sure employees are happy and the company is running effectively and providing for employees. Putting strategies in place to improve employee retention has a range of benefits for the company. 

What is Employee Retention Rate?

Employee retention rate can be measured using the following formula and is measured as a statistic, which represents the percentage of employees that remain in the company for a fixed time period.

Employee Retention Rate Formula


A good employee retention rate is generally thought to be around 90%, which signifies that 90% of the company’s employees have remained in the company for the time period being measured.

However, employee retention differs within sectors, and it is usually more effective to compare your own employee retention rate with that of your competitors to determine how well you’re doing as a company; as opposed to an average that has come from a number of different companies and different circumstances. If your figure is above that of other companies similar to yours, then you’re doing well. If it’s lower, however, you might want to think about looking into why this is and consider putting some more strategies in place to improve your employees’ perception of the company. 

Another way to measure how your employee retention is going is to measure the turnover rate of your company, or in other words, measuring how many employees are changing over a period of time. 

This can be calculated by dividing the number of employees who left during a set time period by the total number of employees who were employed at the beginning of the time period and multiplying by ten to get a percentage.

A turnover rate of more than 10% is considered high, but again, this can vary in some sectors at different times. For example, data shows that in the tech sector, employee turnover rates are as high as nearly 14% on average and these are even higher in the computer games and internet industries, so it’s more effective to judge your company against competitors rather than against a general average.

The Cost of Employee Turnover


Why is Employee Retention Important?

Studies have shown that one-third of employees in businesses with a workforce of 100+ know in the first week of their employment whether they see it as a long-term job or not. It’s also been found that 30% of new members of a workforce leave within their first 6 months at a company.

It is undeniable that these two figures are linked. If employees decide within the first week that they are unhappy in the job, or they are not receiving the treatment they expected hen they will be the ones who decide to leave. 

Undoubtedly, sometimes a turnover rate will be inevitable and there will be nothing you can do to stop more employees from leaving at certain times, depending on how the company is doing. Turnover will always happen; some staff will want to change career paths, some will cope badly in a new job, and others may take issue with colleagues or management. These are inescapable.

However, for those who may have left because they felt disengaged, not valued, or found a job that gave them better perks, putting certain employee retention strategies in place can improve the employee wellbeing and keep employees in the company.

These are the employees we must work to retain.

A high employee turnover rate can also be detrimental to a company for a number of reasons.


It’s costly; the onboarding and training costs for each new employee can get out of hand if more employees are having to be hired than should be. Replacing high earners and high-performing workers can be especially difficult, cost-wise. To replace a CEO can be up to 200% of their annual salary, whereas an employee who earns just $10 an hour can cost less than 16% of their annual salary.

This doesn’t mean that lower-performing employees are expendable, however, as they still do cost money and should not be thought of as not needed just because it is less financially pressing. 

Hiring is a Pain

Hiring is a lengthy process; it needs HR departments to take chunks of their own time to advertise, interview, screen, and hire each new member of staff, and for jobs with a lot of applicants, it’s a tiresome activity and could be avoided.

Attrition Impacts All Employees

A high turnover rate means constantly changing employees, which gives a negative impression of the company, both internally and externally. Other employees might start to get suspicious of others leaving, and may decide it’s also the best path for them, which is a downward spiral, or they might become frustrated with the lack of cohesion that will arise if there is not a solid team in place.

The company can also gain a bad reputation from others if they’re known to lose employees frequently, which signifies a negative work culture and will lead to fewer people wanting to be a part of the workforce or potentially use products from the company.

Teams Will be Less Effective

Current employees will have to expend extra effort if the workforce diminishes, and will also have to help incorporate new employees often. This impacts their ability to work well together and have a coherent and cohesive workforce.

Employee Retention Strategies

There are a number of retention strategies that a company can do to improve its employee retention rate.

Employees are more likely to want to stay at a job if they are happy with the way they are being treated and the perks and benefits they are receiving and the employee turnover rate will likely decrease when this is the case.

Sometimes, it just takes a few changes to the way that a company works in order to retain their employees more successfully and avoid the downfalls that come with losing workers. We’ve put together some examples of employee retention strategies that might enable a company to do just that.

Put a Wellness Program in Place

Employee wellness is one of the most important parts of running a successful workforce these days, and while it’s not necessarily a new concept, the popularity of wellness schemes has taken off exponentially in the last few years.

Both mental and physical health is having more emphasis put on it and employers are catching on. They are including a number of effective strategies in their extensive wellness programs. Some companies offer guidance from trained professionals to help in all sorts of areas such as mental health, fitness, and even financial aid for the future to attract workers and motivate them to perform to the best of their ability. 

One thing that has worked as an employee retention strategy for companies such as Google and The Body Shop has been building gyms within corporate offices. While this isn’t possible for everyone, for both financial and spatial reasons, it might be an idea to consider how you can help your employees stay healthy. You can offer discounted gym memberships or allow longer lunch breaks so employees can go for a run.

Whatever it is, studies have shown that for every dollar invested effectively in a wellness program, a company can get up to a 200% return on their investment, so they definitely hold other perks on top of lowering your employee turnover rate. For more information on ideas and the benefits, these wellness schemes can have, check out this video from GoDaddy to inspire you. 

Update Your Employee Benefits Scheme

Employee benefits are a key part of any employee retention strategy, as they encourage employees to stay based on the perks they receive within their jobs. Corporate wellness schemes are closely linked with employee benefits, as are employee perks or ‘work perks’ which we will talk more about later.

However, benefits schemes are not always extras so to speak, and it’s important to make sure you’re including the basic benefits that would be expected from employees in order to keep your employee retention rate up or improve it. These can be things such as medical insurance, accident insurance, and life insurance, and can stretch to include pet insurance and childcare help as well. The better your benefits scheme is, the more content staff members will be and will be more likely to stay.

A lack of employee benefits can mean workers may find other, better companies that can provide for them which increases a company’s turnover rate and can mean bad business. However, a good benefits scheme will never outweigh a bad working environment and a lack of coordination in the workplace and is not enough to make employees stay in a situation that they’re uncomfortable with.

Employee retention is about more than just providing gym memberships and snacks at work.

Give Employees Better Work Perks

Similar to employee benefits, but slightly different; work perks are the added extras that can make a staff member’s experience in a company better. While generally, benefits are the basic support that employees can provide for their staff, perks can be a little more extravagant, and can often encourage employees to work hard. These can be things such as gym memberships, free snacks and meals at work and discounts on products, and restaurants right up to company holidays for high achievers and earners, or more time off.

Work perks are a great initiative when implemented properly as they create a healthy competitive environment within the workplace and can hugely increase productivity and happiness within a company. 

Data suggests that 48% of people will take into account the perks of a job while searching for a new one, which means if other companies are offering better perks, you’re probably more likely to lose your employees and have a high turnover rate. In fact, 67% of employees who get free food at work say they are ‘very happy’ with their current employment situation, and this figure is similar among those who get an extra few days of paid leave.

By looking at how you could improve your work perks, you can increase productivity in your workplace and improve your employee retention rate.

Common Work Perks

Narrow Your Screening Process

Making sure new additions to the workforce are properly suited for the job they’ve been given is a key element in improving your employee retention rate. In some cases of those who drop out as they are overwhelmed by the work or unable to keep up, it can be avoided by proper interviewing and thorough screening. Collecting references from previous employers can help you assess the work ethic of the candidate and work out if they are properly suited to the job. 

Provide Sufficient Training For New Employees

Following on from carrying out proper screening, training new employees during their onboarding period can also help with retention efforts. When given the proper training, employees are more likely to remain in a job as they will feel more comfortable with their role and more likely to stay in it if they are prepared properly, which reduces employee turnover rates. When they lack proper instruction, employees can feel a bit lost and unsure where to turn to, which can be detrimental to their wellbeing, health, and productivity, which inevitably, in turn, has a negative effect on the company’s employee retention rate. 

It’s also important to make sure that the workforce is working well together to ensure employee retention, and group training days can be a great employee retention strategy. When there is the tension of friction between members of the workforce, they are less likely to feel happy and comfortable in their job which can lead to them looking elsewhere.

It is also important to ensure that the management is professional and there is solid leadership coming from them, otherwise employees may feel aimless or frustrated with the lack of leadership within the organization. Companies such as Docebo can help provide training for the whole company in order to reduce the turnover rate and save time for HR departments trying to organize it themselves. There are a number of external events and services which can help build teamwork and relationships within a company, like Jenius, which provides cooking classes for team building and to bring people together. 

Ask Your Employees What They Want

The best way of finding out what works for your company in terms of employee retention is to survey your employees and find out what they would prefer to see initiated within the company. It might be that they feel their leadership isn’t strong enough, or perhaps they feel overworked without sufficient breaks between shifts. Whatever it is, a simple questionnaire or survey sent out to staff via email can just provide the information necessary to go about changing certain aspects of the company so that they’re more efficient and reduce turnover rates. 

You can also use tools like Pep to send out more frequent pulse surveys and preempt attrition.

Use Technology Efficiently For Your Company

These days, there’s almost nothing that can’t be achieved using technology, and improving employee retention rates are no exception. Most organizations have a lot of employee data available from frequent surveys and HR research, so it can be put to use using AI systems currently in place. It’s so much more useful to utilize your own employee data to look at the trends in your company and put measures in place to combat any issues you find than using national or global data to try and fix things. Issues will not be the same in every company, and just because one survey says January is the month most employees are likely to leave on average, doesn’t mean the same trends will appear in your own company. 

There are also online tools that can help you work out what the issues within your company are, such as Pep which surveys your employees and collects employee retention data, saving HR time and effort. It shows your employee averages compared to industry averages and areas you’re achieving highly in, and those you could work better in. It also measures onboarding figures through different weeks and months, and can certainly help improve employee retention rates with its strategies. 

Be Flexible

Turnover is always inevitable, and it’s important to be prepared for it, especially at times when a company or economy is struggling and people will be likely to look elsewhere. By taking every measure possible, you can prepare for these circumstances and be aware of the steps you can take when they happen. 

Measuring employee retention is important for any company in order to stop employees from leaving, assess what’s working and what’s not within a company, and keep the business running smoothly.

Employee retention rate is a good indicator of how you’re performing as a company when compared with competitors but it is important not to get hung up on how you’re performing compared to national averages, and focus more on trends within your own workforce and those similar to yours. A high turnover rate can have negative effects for a whole company as it can decrease morale, give a business a bad reputation and lose the company money.

There’s a range of things that can be done to combat higher turnover rates, and most of these include bettering the environment in your company, which can bring with it benefits for everyone, even outside of employee retention, so it’s worthwhile to keep a close eye on your performance.