Employee tenure is the amount of time a person works for a company. It’s also known as job tenure.
Employee tenure plays a role in the human resources department within a company. This bit of data helps employers understand how well they are managing employees and retaining their talent long-term.
What is the average employee tenure?
The US Bureau of Labor Statistics (BLS) indicates that, in 2020, the average tenure across all employers in the US was just over four years.
An employee’s age and industry play a major role in their tenure. Older employees typically stay with companies for longer periods of time. Some industries produce more tenured employees, while in others—such as the service industry—turnover is high.
Employers can determine their average internal employee tenure by calculating the difference between an employee’s start date and the current date (or the employee’s date of termination). Repeat for all employees. Find the average by dividing the total amount of days by the total number of employees (past and present).
Knowing your average tenure can tell you how well your company is doing at meeting employee needs, providing growth opportunities, or providing workplace perks.
Types of employee tenure
Human resource teams may establish their own guidelines for categorizing employee tenure. Typically, though, they categorize employees as long-tenured employees or short-tenured employees based on the length of time they work for the employer.
Long tenure: This indicates a person works (or has worked) for a company for a long period of time, typically around four years or more. By the US average, five years or longer could be thought of as long tenure. The criteria for long-term tenure is subjective as it’s typically based on the average tenure within the company
Short tenure**:** Employees who work for a company for under the average number of years are considered short-tenured employees. In this case, the US average would indicate short-tenure employees work for the same employer for less than four years. Within most companies, though, short tenure refers to two years or fewer
Why is job tenure important?
Determining job tenure provides valuable information about how long a person is with their current employer. Understanding the median tenure within an organization can provide employers with a great deal of insight. Some examples of how a company can utilize this HR metric include the following:
Tracking employee engagement
Engaged employees typically remain with a company longer. Longer tenure may indicate employees are more likely to say they are engaged with the company and may even feel as if they are contributing to the company’s success.
Increasing job satisfaction
Particularly in the private sector, long tenure indicates employees are happy with their job. It may also indicate they appreciate job security, which can help companies achieve their long-term objectives. For example, instead of onboarding new hires, a company may wish to put more time and money towards retaining existing employees and helping them learn new skills.
Improving company culture
In remote work environments, company culture can be difficult to gauge. Having a high turnover rate (and more short-tenured employees) could be a sign of poor work culture. But if your average number of years of tenure is high, this could indicate that your workers are aligned with your company culture and values.
Identifying opportunities for improvement
Working to understand why employee tenure is low can help companies make valuable internal changes. A shorter tenure average can be a reflection of poor management, a lack of learning and development opportunities, or not hiring for culture add.
Advantages and disadvantages of employee tenure
Long job tenure offers numerous benefits for companies and employees, including:
- Employee loyalty and dedication to the company’s success
- More refined expertise and experience with the company’s products, services, and culture
- Cost savings—companies with long-tenured employees spend less on hiring and training new workers
- A proven track record that the employee is motivated and engaged with the company
- More potential for promotions within the company
There are some disadvantages associated with longer tenure for employees and employers, including:
- Potentially limited growth and advancement for employees in some positions or companies
- Complacency—especially when employees lack engagement or change within their position
- Burn out if the employee loses interest in their work