Why do you think some workers remain loyal to their employers for years, while others start interviewing for other jobs from day one? The question gets to the core of your employee retention strategy — and how you're answering it often determines both short- and long-term talent outcomes.
For insights, let's unpack the topic of employee retention in a bit more detail, starting with a few simple definitions, then moving on to the latest data points to give you a sense of where things stand right now — and where we may be headed next.
Given the backdrop of ongoing uncertainty, what can organizations do these days to keep high-value contributors from leaving? Here’s everything you need to know.
what's the difference between retention and turnover?
First things first: a few quick definitions, including the mathematical equations for calculating employee retention and employee turnover, just to make sure we’re all on the same page. Note that while retention and turnover are closely linked, there are some important differences that should stand out to you in the following definitions, as well.
- Employee retention measures the percentage of employees who stay with your company over a specific period of time.
- Mathematically, employee retention rates are typically calculated by dividing your headcount on the last day of that period by your headcount from the first day of that period, then multiplying by 100 to make it a percentage.
- If the first number is larger than the second — for example, your company started the time period with 50 employees, but had ramped up to 60 by the end — you would have an employee retention rate higher than 100 percent.
- Employee turnover measures the percentage of employees who voluntarily or involuntarily leave your company during a specific period of time.
- Mathematically, your employee turnover rate is typically calculated by dividing the number of employees who voluntarily left your company during that time period by your headcount at the beginning of that period, then multiplying by 100 to make it a percentage.
- For example, let’s say your company started a given month with 50 employees, then lost three employees to competitors by the end of that month, your one-month employee turnover rate would be 3/50 x 100, or six percent.
All clear? Good, because we’ll need to be able to use these terms with some precision going forward.
why retention matters — and what you can do about it
For starters, employee retention is a topic that couldn’t be more timely than it is right now. The quits rate in the U.S. — the number of people who quit their job as a percent of total employment — continues to hover around all-time high levels, for example.
That alone could explain why SHRM predicts that a “turnover tsunami” looms on the horizon.
With that in mind, now is the time to start thinking seriously about your employee retention strategy, and making changes where needed. Plus, the good news is that companies aren’t powerless to move the needle when it comes to employee retention — far from it. In fact, there are proven levers at your disposal today. Think: upskilling, reskilling and learning and development.
The latest stats strongly back this up:
- A whopping 94 percent of employees said they would be more likely to stay with companies that actively invested in helping them learn, according to one large-scale survey. This link between upskilling or reskilling initiatives and employee retention rates is something to bear in mind.
- Unfortunately, however, this is an area where far too many organizations are still dragging their feet. In fact, 80 percent of employees don’t think their current employers offer sufficient opportunities for growth through learning and development.
- Perhaps not surprisingly, then, the same study found that more than one in three employees believe the best way to advance their careers is simply to seek a different job with a new company. Fewer than one in 10, on the other hand, believe that talking to their bosses is an effective route to professional advancement.
Stats like these are plainly troubling, for it appears that misalignments around upskilling, reskilling and learning and development are being compounded by communication breakdowns between managers and direct reports. Whatever the case may be at your company, these findings are worth investigating, and soon. Otherwise, your best employees just might start leaving in droves.
We’ve broken down the distinction between employee turnover and employee retention, given you a sense of where things stand today (and where they might be going next) and indicated an area where you can start moving the needle on the employee retention strategy at your organization right now. At this point, you should have a clear idea of next steps — and it probably involves initiating the conversation around upskilling.
Looking for more hands-on support and solutions? Get in touch with Randstad today.