Measures to retain employees

 

 

 

 According to Alexander S.Gillis, Parm backer and Shaun Sutner (2023), Typical metrics used in the measuring of employee retention include the following:

• Employee satisfaction

This indicator informs firms about how satisfied employees are with their jobs. A low value for this measure may imply a low retention rate.

• Retention rate

This percentage-based metric serves as a basic measurement of a company's ability to retain employees over time.

• Retention rate per manager

This is a measure of retention based on rates per manager. With this indicator, a firm may look into potential management-related issues with staff retention.

• Voluntary and involuntary turnover rate.

These percentage-based metrics measure the rate at which staff members leave a company, either by choice or involuntarily due to terminations and layoffs.

• Turnover costs

These are the expenses of hiring, onboarding, and training. This statistic evaluates the cost of turnover and its implications for the firm.

• Average employment length

This metric measures the average time an employee stays at a company.

• Absence rate

This is the percentage of unscheduled employee absences due to illnesses or personal crises.

• Absence rate per manager

This is a measure of employee absenteeism based on the rates per manager. This statistic allows a corporation to analyze probable management-related absences.       

 

Employee Turnover and Retention Metrics and KPIs to Track and Measure

A state of David Luther (December 1,2023)Indeed, corporations that intelligently apply "people analytics," i.e., use employee data to assist improve business and management choices, produced a three-year average profit that was 82% greater than other firms. To correctly and completely assess employee turnover, firms should track a variety of measures, including:  

• Overall retention rate:

The retention rate is the inverse of the turnover rate, measuring the percentage of employees that stay with a company over time. It is calculated as the average number of workers minus the number who departed, then divided by the average number of employees again. Using the figures in the example above, where 10 employees out of a workforce of 150 left in the past year, the retention rate would be 93.3%. 

(150 – 10) / 150 x 100 = 93.3%

To be sure, not every employee will stay forever, no matter how great the organization. However, it is feasible to establish rules that improve employee pleasure and experience in order to promote retention. This involves providing a variety of professional development options and regularly updating employees about how their contributions assist the business achieve its objectives. 

• Overall turnover rate:

The total turnover rate is a starting point for determining how successfully a business retains its employees. The turnover rate equals the opposite of retention. It calculates the proportion of workers who have left the firm over a specific time period by dividing the number of employees who departed by the average employee number. In the example of a corporation with an average of 300 employees and 20 employees who leave each year, it would be computed as: 

20 / 300 x 100 = 6.7%

Assume this ratio exceeds the industry norm or what the organization has determined is acceptable. In that instance, management should investigate the probable causes of turnover, such as a lack of professional growth possibilities, a poor work-life balance, harsh manager conduct, and job requirements.
Turnover varies from attrition, which happens when individuals leave freely and the business chooses not to fill their jobs. 

• Employee happiness/satisfaction

Even before submitting their resignations, employees who consider leaving may lose motivation and behave adversely with coworkers or even customers. Their activities might have an influence on the organization's success and complicate the employment of other employees.

Management can intervene before employees depart if they see indicators of dissatisfaction. If several colleagues leave in a short period of time, HR should undertake surveys or interviews with members of that team to learn about their experiences. There are numerous measures leaders may take, including speaking with the employee to determine if it is feasible to fix a problem that is causing them to consider leaving, expressing gratitude for their work, and providing support. 

• Voluntary turnover

Voluntary turnover, as the name indicates, refers to individuals who leave an organization on their own initiative, whether for a position at another firm or to seek possibilities outside the workplace, such as returning to school. The same principle applies here, with voluntary departures: Voluntary departures split by the average total number of employees:  

Voluntary departures / average of total employees x 100 = Voluntary turnover rate

If employees routinely depart because they discover more rewarding opportunities elsewhere, management should reassess its recruiting, hiring, and promotion methods. Perhaps recruitment efforts focus on personnel who lack the requisite abilities or, conversely, are more experienced than the roles demand. More tenured staff departing in greater numbers than is deemed reasonable may indicate a lack of career options.

When employees with distinct ethnic, racial, sexual, or other identities resign in higher-than-average percentages, businesses should investigate the causes. In addition to the expenses involved with all turnover, implying that the firm fails to keep individuals from varied backgrounds might result in image issues and legal concerns.  

•  Involuntary turnover rate

 Involuntary turnover refers to employees who are fired, laid off, or otherwise dismissed. It is determined as the number of employees who departed involuntarily divided by the average number of employees for the time period. Assume that six of the ten outgoing employees departed involuntarily, based on the data provided above.

The involuntary turnover rate would be four percent:

6 / 150 x 100 = 4%

To be sure, few businesses are completely immune to the macroeconomic and geopolitical developments that might result in layoffs. However, measuring and monitoring involuntary turnover remains crucial. A rate that is out of line with comparable organizations or has escalated over time may indicate flaws in the organization's recruiting and/or on boarding procedures. For example, managers may be seeking for applicants whose talents do not properly match the positions for which they are recruiting.  

As such it can conclude that,The retention rate of customers is the percentage of people who continue to use your product after their original purchase. You may use it to analyze whether your product retains clients after they have been acquired for an extended period of time. 

References

Gillis A.S., Backer P. & Sutner S. (2003), Employee Retention [Online], Available at :https://www.techtarget.com/searchhrsoftware/definition/employee-retention [Accessed on 07th April 24]

Luther D.(December 1,2003), 12 Employee Turnover and Retention KPIs to Measure in 2024[Online], Available at :https://www.netsuite.com/portal/resource/articles/human-resources/employee-turnover-kpis-metrics.shtml [Accessed on 07th April 24]