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Employee retention by the numbers

A wealth of statistics suggests how companies should focus efforts to retain top talent

While many companies struggle with employee churn, the good news is that it’s within their reach to reverse the trend. For example, more than 75% of employees who quit their jobs say they’d still be on the job if their employer had done the right thing. Armed with the right data, companies can figure out how to retain more employees, reduce the costs of turnover, and realize the broad business benefits of a happy workforce.

Workers don’t just consider pay when choosing an employer, according to a report by Hays: 23% of employees would take a new job without a pay increase, and 71% of employees would take a pay cut for their ideal job.

Other key factors include:

Feedback and growth
Culture
  • 47% of employees cite company culture as the primary reason they are looking for new jobs.
  • Companies can reduce employee turnover by 57% when employees participate in corporate giving and volunteering efforts.
  • Just 38% of employees say their company offers sponsored or coordinated volunteer programs.
Burnout
  • 46% of HR leaders, according to Kronos, say employee burnout is responsible for up to half of their annual workforce turnover.
  • Those HR leaders say burnout was caused by:
    • Unfair compensation (41%)
    • Unreasonable workload (32%)
    • Too many overtime hours (32%)
    • Insufficient technology for employees to do their jobs (20%)
Management
  • 61% of employees cite trust between workers and senior management as very important to their job satisfaction.
  • Employees who say their manager clearly explains roles and responsibilities are 23% more likely to stay at a company.
  • Employees say the most frustrating thing a manager can do is to have unclear expectations.

What does an effective employee retention program look like in action? Here are three examples:

Ramsey Solutions

The company boasts a low turnover rate for a company of its size. In a recent Inc. interview, the company’s executive director of human resources highlighted steps they’ve taken to retain employees:

  • They have a company mission of “helping others and extending hope.”
  • Job candidates undergo multiple interviews to help ensure there’s a good fit.
  • Underperforming employees are provided more than one point of engagement and discussion to help them improve.
  • Employees are encouraged to be present both at work and at home. Ramsey tries hard to ensure workers don’t feel pressured to work at home after hours.
Read more about the Ramsey Solutions approach to retaining employees.
Google

Google turned to coaching to improve its retention strategy. After researching the most common traits among its best managers, it found that being a good coach topped the list. It then embedded coaching into its employee experience with the launch of Career Guru in 2010.

The program gives employees a way to receive individualized support from a pool of internal coaches, or “Gurus.” Employees have given the program a 4.8 out of 5 satisfaction rating, and it’s often cited as a reason employees enjoy working at Google.

Read more about Google’s Career Guru.

PepsiCo

The major consumer brand developed a retention strategy based on helping employees grow, giving them creative license, and creating a clear sense of purpose. It includes:

  • Defining the company’s mission as “making healthier foods, protecting the planet, and empowering people.”
  • Letting employees act like entrepreneurs by giving them license to tackle problems that range from reducing plastic waste in factories to inventing localized flavors for potato chips, such as tikka masala in India and seaweed in China.
  • Offering flexibility to improve work-life balance. Concrete benefits include flextime, day care centers, and parental leave.
Read more about PepsiCo’s approach.

FAQ

While retention rates can vary by industry, a good employee retention rate in the United States is roughly 90%. That’s 10% to 20% above the U.S. average, according to the Work Institute’s 2019 Retention Report.

To calculate retention rate, divide the total number of employees at the end of the year by the total number of employees at the beginning of the year. Make it a percentage by multiplying that figure by 100.

In December 2020, the United States Bureau of Labor Statistics reported an employee turnover rate of roughly 3.5%. That includes employees who left voluntarily, as well as those who were laid off or discharged.  

The best way to measure employee retention is to calculate your company’s yearly retention rate, and track it over multiple years. Plotting multi-year retention out on a line graph can give you a clear indication of whether your organization has gotten better over time at reducing churn.

Determining a good monthly turnover rate can be difficult to assess, as it varies widely by industry. The best approach is to create an internal benchmark by calculating your own monthly turnover rate and tracking that number over time.