The Ultimate Guide to Employee Retention Metrics: What Should You Track?
May 26, 2023
Do you have a problem with significant staff turnover? Do you want to discover how to keep your best employees and foster a supportive work environment? The secret is to monitor the proper KPIs for staff retention. In this comprehensive guide, we'll look at the most crucial employee retention metrics to track and how they might aid in your data-driven decision-making to raise retention rates. Whether you work in human resources or management, or operate your own company, our guide will give you practical advice on how to keep your staff members satisfied, involved, and dedicated to your firm.
Let's dive in and see what metrics you need to monitor to improve your attempts at staff retention!
Why Employee Retention Matters More Than Ever
Without a doubt, finding and hiring great employees is hard work. It takes time, money, and effort to attract, screen, interview, and onboard new talent. And just when you think you've found the perfect candidate, they decide to leave after a few months or a year. Sound familiar? If you're nodding in agreement, you already understand how annoying and expensive employee turnover can be. What if, however, you could retain your finest workers longer and create a devoted and loyal team that is the foundation of your company's success? In this situation, staff retention is important.
Employee retention is the capability of an organization to hold onto its staff and lower turnover rates. For a number of reasons, it's critical to keep your best employees. First, it saves you time and money. You can concentrate on enhancing and upskilling your current personnel rather than continuously hiring and training new employees. Second, it increases productivity and morale. Employees are more likely to be interested, motivated, and committed to their work when they feel valued and supported. Third, it improves the reputation and more specifically, employer branding. Happy employees are your best ambassadors, and they may draw in new clients and talent.
To measure and improve employee retention, you need to track the right metrics. By using these metrics, you may evaluate your performance in comparison to industry norms, pinpoint areas for development, and use the information to inform decisions on staff retention. Turnover rate, retention rate, engagement score, absence rate, and time-to-fill are a few of the most crucial employee retention metrics.
We'll now delve deeper into each of these employee retention metrics mentioned in this comprehensive guide, and we'll also explain how to calculate and analyze them. You'll have a thorough understanding after going through these employee retention metrics examples. We will also share tactics to create a happy and devoted workforce. So, let's get going!
Key Employee Retention Metrics to Track
Are you tired of constantly losing and replacing employees like a game of hot potato? Any organization may experience the frustrating and expensive issue of losing outstanding employees. But don't worry! We'll teach you how to end the cycle and keep your finest staff around for the long haul in this section by exploring the metrics for employee retention.
Employee Turnover Rate
It's important to note that "retention rate" and "turnover rate" are not interchangeable terms, as they have different meanings. While turnover rate measures the frequency of role refills, retention rate tracks the overall number of employees gained or lost by an organization.
Think of it like a game of Jenga. When too many components are removed, the entire structure collapses. Similar to this, losing too many staff can hurt your company's production, talent, and knowledge.
But don't worry, not all is hopeless! You may identify the reasons why employees are departing and take steps to rectify them by tracking your turnover rate. Perhaps there aren't enough chances for job advancement, or there is a demand for greater pay and perks. You can work on resolving the issue and enhancing your retention efforts, whatever it may be.
And when your turnover rate is low, you can give yourself a pat on the back! It means you're doing something right, and your employees are sticking around for the long haul. So, keep on tracking that turnover rate and building a strong and happy workforce.
Time to Fill Vacancies
When a position goes unfilled for too long, it can feel like a black hole sucking up time, resources, and productivity. That's where the time to fill vacancies metric comes in. It measures the average number of days it takes to fill a vacant position in your organization, from the day the position becomes available to the day the new hire starts.
A long time-to-fill can be a warning sign to potential candidates, who may view it as a reflection of disorganization or a lack of engagement among current employees. Not to mention, it can be frustrating for your team members who have to pick up the slack while waiting for a replacement.
But fear not! You can decrease the time it takes to fill positions while also enhancing candidates' experiences. Start by optimizing the hiring procedure, locating bottlenecks, and removing extra procedures. To automate operations like screening resumes, scheduling interviews, and sending reminders, for instance, you may utilize hiring software.
Have potential employees ever experienced working there? Do they know what sets you apart from other employers? Be sure to showcase successful employee experiences as well as your company's culture, beliefs, and benefits on your website and social media sites.
Finally, salaries and benefits may also have an impact on how quickly a position is filled. Do you offer competitive salary, healthcare benefits, and retirement plans? These advantages may attract top candidates and hasten the recruiting procedure.
Consider a scenario where your marketing department has a long time to fill a position. In that situation, to keep your campaigns on track while you look for a full-time employee, you might think about working with a staffing agency or hiring freelance marketing specialists.
Cost of Turnover
Staff turnover is a costly issue as well as a pain. In addition to the indirect costs of lost productivity, low morale, and altered team dynamics, turnover costs also include the direct costs of recruiting and training new hires. Take into account the time and money spent on hiring, training, and onboarding new hires as well as the revenue lost from open positions and decreased productivity when calculating your cost of turnover.
Employee satisfaction is a key driver of retention, as happy employees are more likely to stay with your organization for the long haul. To measure employee satisfaction, consider conducting regular surveys or focus groups to gather feedback on your workplace culture, leadership, communication, and benefits. Use this feedback to make improvements and show your employees that you value their input.
Career Development Opportunities
Offering professional development chances can be a strong retention strategy because employees want to feel like they're progressing in their jobs. Track employee retention metrics like the proportion of employees who obtain promotions, the amount of training and development opportunities available, and the proportion of employees who take advantage of these opportunities to gauge career development.
Employee Net Promoter Score
In essence, eNPS is a metric that aids firms in assessing how devoted and engaged their workforce is. Its foundation is the same as that of the Net Promoter Score (NPS), a metric for gauging patron loyalty. To calculate eNPS, you simply ask employees how likely they are to recommend your organization as a great place to work. Those who answer with a 9 or 10 are considered promoters, while those who answer with a 6 or below are considered detractors. The percentage of detractors is then subtracted from the percentage of promoters to get your eNPS score.
So why is eNPS important? Well, research has shown that engaged employees are more productive, more likely to stay with their organization, and more likely to recommend their employer to others. By tracking eNPS over time, organizations can identify areas where they need to improve in order to increase employee engagement and loyalty.
For example, let's say you work for a company that has an eNPS score of 50. This means that 50% of employees are promoters, while 25% are detractors (assuming the remaining 25% are neutral). By tracking eNPS over time, you might notice that your score drops to 40. This could indicate that there are issues with employee morale or job satisfaction that need to be addressed. By taking action to improve these areas, you might be able to raise your eNPS score back up to 50 or even higher.
Overall, eNPS is a simple yet powerful tool for measuring employee engagement and loyalty. By regularly tracking your eNPS score and taking action to address any issues that arise, you can create a more engaged and motivated workforce that is more likely to recommend your organization to others.
Employee Retention Metrics: Diversity and Inclusion
Modern workplaces must prioritize diversity and inclusion, and making progress in these areas is key to fostering a supportive and equitable work environment. Monitoring metrics for diversity and inclusion is one way to do this. For instance, you can determine the proportion of diverse hires to make sure that your company is luring and hiring workers with a diversity of experiences and backgrounds. Similar to this, keeping track of the proportion of diverse managers and leaders can show you where there may be representational gaps.
You may also figure out what percentage of employees think their business promotes diversity and inclusion. Employee surveys or focus groups are a good way to get this done because they allow employees to voice their ideas about their workplaces. By actively seeking out employee input, you may identify areas for development and take steps to create a more welcoming workplace culture.
For example, suppose you notice that the percentage of diverse hires at your organization is low compared to the industry average. In that case, you can implement strategies to attract a more diverse pool of candidates, such as partnering with diverse organizations or attending job fairs focused on underrepresented groups. This can help improve diversity and inclusion within your organization and create a more welcoming workplace for all employees.
Compensation and Benefits Metrics
Benefits and compensation are crucial factors in retaining and attracting employees. By monitoring these measures, you can see how your company's salary and benefits stack up against industry norms and pinpoint opportunities for improvement. For instance, keeping tabs on average salaries will assist you make sure that your company is offering competitive salaries that attract and retain top employees.
You may assess whether your compensation plan is motivating employees to achieve objectives and deliver above-average performance by tracking the percentage of staff members who earn bonuses or other incentives. You can also spot areas where your benefits packages might need to be improved by measuring employee satisfaction levels with perks like health insurance, retirement programs, and vacation time.
Consider the situation where a large number of employees express dissatisfaction with their health insurance benefits. In that situation, you might want to think about providing more options or negotiating lower prices with your insurance company. Demonstrating that your company appreciates the health and well-being of its employees can help increase employee satisfaction and retention.
Keeping It Short on Employee Retention Metrics
Tracking employee retention metrics is crucial for any organization looking to maintain a high-performing and engaged workforce. By implementing the strategies and metrics outlined in this ultimate guide, you can not only reduce employee turnover but also increase productivity, morale, and ultimately, profitability. Don't wait any longer, start tracking your employee retention metrics today and take the necessary steps to improve your retention rates. Your employees and your business will thank you for it!
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