What is Staff Retention Rate?
In this day and age, recruiting highly talented workers can be tough. And that’s an understatement. That is why so much emphasis is being placed on how to keep key employees. Whether they are new to the company, or they’ve been around for a couple of years, hanging on to your talent should be a top priority for your business.
What is staff retention rate and how can businesses keep key employees?
Staff retention rate puts a number to an organization’s ability to retain employees. Companies looking to offset their turnover rate will need to look at their staff retention rate and analyze the data for any trends that can be used to combat the issue.
When considering what is staff retention rate, this can mean calculations by determining the percentage makeup of the total number of employees who quit over a given period of time while factoring in new hires. The first step to finding your staff retention rate is determining a time period for analyzing your data.
Set your timeline
For example, you may want to analyze your employee retention over the course of a calendar or fiscal year. Let’s choose the former for this example and determine an employee retention rate from the dates of January 1, 2020, to January 1, 2021.
How many employees did you have on day one?
After solidifying our timeline, we want to find out the number of employees we had on the first day of our term. In our case, that would be January 1, 2020. This information can be obtained by checking payroll data. So, let’s say we have 140 employees on January 1, 2020.
How many employees did you have on the last day?
From here we want to determine the number of employees as of January 1, 2021, the closing date of our defined term. In our example, we have 132 employees on January 1, 2021.
Don’t forget to subtract new hires!
Lastly, we must subtract any employees hired between January 1, 2020 and January 1, 2021. So we went from 140 to 132 employees and 12 of those employees were hired during our defined time period. This means we retained 120 employees.
Divide and multiply by 100 to find your retention rate (as a percentage).
From here we simply divide the number of employees on the last day of the specified time period, minus our new hires by the number of employees on the first day of our time period. In our example, we come up with a staff retention rate of about 86 percent in a one-year time frame.
The average staff retention rate in America, for one year, is about 81 percent. A retention rate of 86 percent would be considered slightly above average. Keep in mind that some amount of turnover is always inevitable and perhaps even healthy for a business. Still, there are those employees that you just can’t afford to lose. Knowing how to keep key employees is a hallmark of any good business.
If your retention rate is falling anywhere below 80 percent, you are likely looking for information on how to keep key employees. As mentioned, turnover in and of itself is not a bad thing, but a high turnover rate, or low retention rate, can make your business look bad. Furthermore, you are likely losing some of your key employees.
Regularly analyzing your employee retention rate and data performance is the first step in addressing staff retention issues. What measure do you have in place to track performance, job satisfaction, and employee morale? If you can’t answer this question, it is time to take a serious look at the culture of your company.
Conduct a Climate Survey
Hiring consultants can be a costly endeavor, but when it comes to employee surveys, it is absolutely imperative that employees feel like their identity and any information they share will be handled with a great deal of discretion and they will not face any backlash from managers for shining a light on any potential internal issues.
Third-party surveys can help your company get an accurate look at exactly how employees feel about the company. Just remember the key to a successful climate survey is action and follow-up. Too many surveys that don’t lead to any action or systemic change can lead to discontent and lowered morale.
Perform 360 Degree Evaluations
Too often, great employees feel pushed out of a company due to ineffective leadership and lack of transparency. Effective managers and senior staff are knowledgeable and approachable. Managers should foster employee engagement, recognize their efforts, and find ways to challenge their skillset. Companies that know how to keep key employees are likely already aware of the benefits of performing 360-degree evaluations.
Evaluation periods should be an opportunity for employees to be evaluated by their employer and managers to be evaluated by the members of their team. Fostering this type of two-way communication is a great way to keep key employees happy in their jobs.
Evaluations also give employers a chance to recognize and reward high-performing employees and it should go without saying that recognition and compensation are among the best ways to keep key employees.
Need more support in assessing your retention rate – and improving your organization’s ability to keep the employees who will drive it to the next level? Contact AMB Performance Group today.