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Why employee retention is important

Employee retention metrics

How employee turnover affects retention

What is employee retention

Employee retention is the goal of reducing employee turnover and ensuring talented employees remain within an organization.

It is measured and monitored through the employee retention rate, which can be calculated by:

  1. Taking the number of employees that stayed with the organization over a determined period of time
  2. Dividing the resulting number by the number of employees you had at the beginning of the observed timeframe
  3. Multiplying the result by 100

Why employee retention is important

Each departing employee carries an increase in costs and resources required to fill the position again. Moreover, it can mean a loss of specialized knowledge and experience. Lastly, it can have a negative impact on your team’s culture.

Measuring and working to increase your retention rate is a way to reduce costs, improve productivity and efficiency, and build a thriving culture.

Employee retention needs to be a core pillar in any human resource management strategy, ensuring the best employees are motivated to stay, and that new hires join a positive and enthusiastic environment.

Employee retention impacts many aspects of an organization, from employee morale and well-being to the productivity of the work environment, to your company’s bottom line.

Implementing effective employee retention strategies will improve aspects such as:

  • Cost per hire
  • Onboarding process costs
  • Technical know-how and knowledge sharing
  • Company culture buy-in
  • Employee engagement rate
  • Employer rating

Employee retention metrics

To effectively work on improving your organization’s employee retention, should understand what data to look at to inform your strategies.

Metrics that help effective employee satisfaction benchmarking, analyzing, and improving employee retention include two data sets.


  • Employee retention rate
  • Cost per hire
  • Employee engagement rate


How employee turnover affects retention

High employee turnover results from low retention rates and can have many causes. Often, it’s a mix of factors that compound to drive your top talent away. 

Insufficient rewards

There is a higher attrition risk when employees perceive a discrepancy between the value they provide and how they are rewarded for it.

The main triggers include:

  • Poor compensation
  • Lack of perks and employee benefits
  • Lack of incentives (critical for top performers)
  • Below market-standard benefits package

Professional development

Career advancement opportunities are essential for people to stay motivated and deliver their best work. An organization’s ability to provide answers to these employee needs can have a significant effect on employee experience and retention rate. Employees often voice the need for:

  • A clear career path
  • Career development opportunities
  • Mentorship programs
  • Horizontal development

Company culture

Employees often look for a work environment that promotes values they believe in and can relate to. These can include social responsibility and environmental initiatives, but also the fostering of a work environment that takes care of its employees when they are at work. Cultural reasons that can increase employee turnover rate include:

  • Not having a clearly defined company culture
  • Not taking burnout seriously
  • Not promoting wellness initiatives
  • Not pushing for a connection between values and actions
  • Not valuing transparency
  • Not focusing on culture when onboarding new employees

Personal life

Challenges, opportunities, and changes in your employees’ personal lives can impact their motivation to stay or leave the company. When addressing high turnover, keep employee personal needs in mind and introduce benefits such as:

  • Good health insurance
  • Flexible schedules
  • A healthy work-life balance
  • Hybrid or remote working
  • Sufficient PTO
  • Personal development initiatives
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