Employee retention

Employee retention is an organization's ability to prevent employee turnover, encompassing both voluntary and involuntary departures. In any dynamic working environment, retaining talent is crucial for organizational success and impacts the bottom line.

Retention rate is calculated by dividing the number of employees at the start of a period by the number of employees at the end of that period. For example, if a company begins the year with 100 employees and 15 leave throughout the year, the retention rate is 85%.

High employee turnover leads to significant costs, including:

• Financial burden: Replacing employees can cost anywhere from 0.5 to 2 times an employee's annual salary.
• Knowledge loss: Departing employees take valuable institutional knowledge with them.
• Decreased morale: High turnover can negatively impact remaining employees' morale and productivity.
• Damaged employer brand: High turnover can deter potential candidates.

Employees are more likely to stay with an organization when they feel:

• They have a future: This includes clear career paths and opportunities for advancement within the company.
• A sense of belonging: A strong sense of community where employees feel connected to their colleagues and the organization's mission fosters loyalty.
• Appreciated for their work: Fair compensation, recognition for their contributions, and a positive work environment are essential.
• Their work has purpose: Employees are more likely to stay when they find purpose in their work and feel it aligns with their personal goals and values.
• Supported in their roles: Access to support systems—like mentorship programs—aids in employee development, strengthens their connection to the organization, and encourages retention.

To improve retention, organizations need to implement strategies that address these factors, creating a positive and supportive work environment where employees feel valued, engaged, and motivated to contribute to the company's success.