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Employee retention is one of the biggest challenges facing HR departments in the 21st century, and it's not a problem that will be going away anytime soon. To understand what we're up against, it's helpful to take a look at employee retention statistics to see what they tell us about turnover rates, attrition, and retention.
Employee turnover is the term given to the rate at which employees leave an organization. Employee retention is a term that describes how much of your current workforce stays with you over time. So when we talk about employee retention rates, we're also talking about employee turnover rates: whether your workforce stays or goes.
This article will explain employee retention statistics and employee turnover numbers you need to know, in order to make informed decisions about employee retention.
Employees leave for a wide variety of reasons, many of which might seem personal, and thus difficult to anticipate. But when it comes down to it, employee turnover is usually caused by one of four things:
Employee retention statistics are important to take into account when you're planning how to allocate human resource funding. Every level in your organization is affected by employee turnover, and it can be expensive to replace employees who leave for job openings at other companies.
The employee retention statistics below will give you an idea of just how much employee turnover costs your business:
The estimated cost of replacing a salaried worker in the U.S. is 16-213% of that employee's annual salary or a minimum of around one-sixth of their yearly pay. This figure varies depending on how high-level your employee is. Checking out the low end of this spectrum, replacing a $10/hour retail employee would end up costing the company about $3,330.
It only goes up from there. Replacing a 50 K employee costs $16,500, or 33% of their annual salary. Higher-level employees cost even more when they leave, with executive replacements costing 200% or more of the employee's salary and taking around 120 days to replace. So, need to find a replacement for your 150K salaried CEO? It’ll likely cost you a tidy 300K, possibly more.
U.S.-based voluntary employee turnover rates are about 20%. This means that almost 1 in 5 American employees will resign from their job each year. This number varies a bit by industry and the type of employee leaving, but anyway you slice it it's a significant amount of staff turnover.
The stats tell us that a new employee is especially vulnerable. For every 100 new employees, 30 will resign within the first 6 months. So if your company hires 300 employees in a year, you can expect around 90 employee turnovers or employee retention rates of only 70%. The solution? Thorough employee training and a better onboarding process. You'll see more productivity too: stats tell us that companies with a standardized onboarding process see 50% more productivity from employees.
Voluntary turnover costs are often measured in employee resignation rates, which are defined as the amount of voluntary employee turnover divided by the number of hires. So, for example, an employee who leaves their job voluntarily will impact your employee retention statistics if they're replaced within a year.
An employee retention strategy will take into account both employee turnover statistics like the above, and specific metrics from your company, working to bring down high employee turnover by increasing employee morale, employee satisfaction, and employee engagement. Engaged employees are employees who stay, and improving the employee experience can bring your employee turnover rate down. In one survey, 91 percent of respondents said that a culture of recognition made a company attractive to work for, so get the employee recognition strategies out! It doesn't have to cost a fortune; simply adding an app like Matter to your team's Slack pages can lead to less employee burnout and increase the net employee happiness in your work environment. Another key retention strategy has to do with remote work options.
If you’re wondering whether or not to let your employees work from home, here are a few related employee retention stats for you:
If that isn’t enough of a hint, here’s an employee retention quote from Gallup that you might want to see:
A work-life balance matters. If you don’t want your top talent quitting their job to go enjoy their life, you need to find a way to let them do both.
You might miss seeing your employees around the office, but the likelihood is that they won’t miss you. 72% of employees report that working from home makes them less stressed. Stats also tell us that 77% of remote workers are more productive than their office counterparts.
You can calculate your employee retention rate by dividing the number of employees that stayed with your organization over a given time period by the total number of employees on the first day of that period. One year is a reasonable time frame to work with. Multiply this by 100 to get a percent.
Finding a turnover rate is similar: simply divide the number of employees who left by the average number of employees you had during the time frame in question. Again, multiply by 100.
Employee turnover rates for non-management employees hover around 18-22%. If your numbers are much less than that, give yourself a high five. If the average describes your company, or you have even higher rates, you will need to run an employee retention survey and take a look at your employee retention policies.
Employee feedback can give you the info you need to determine whether your HR leaders should focus available resources primarily on employee development, employee recognition, or the employee experience and your company culture.
The more you know, the better you can do, and stellar employee retention numbers are within your reach, if you work at it.