Skip to content
Back to eduMe Blog

How to Calculate and Improve Your Employee Retention Rate

Isidora Markovic
Isidora Markovic

Retaining employees is fundamental to a company’s success. A consistent, engaged and productive workforce is the key to providing the best quality service, and staying ahead of the competition.

That’s why calculating and tracking your employee retention rate is paramount. Understanding what influences your employees to leave helps you to put the right retention strategies in place to keep hold of them, and having access to the right data will help you do just that.

Read on to find out how to measure employee retention, and what to do in order to improve it.

Quick navigation:

  1. What is the employee retention rate?
  2. Employee retention rate calculator
  3. Why employee retention matters
  4. How to improve your employee retention rate

Employee retention rate

What is the employee retention rate?

A company’s employee retention rate simply refers to the percentage of employees who remain at the business over a given time period.

Employee attrition (also known as ‘turnover’ or ‘churn’) is the opposite of retention. Voluntary attrition can indicate issues with culture or simply an aging workforce. A high level of terminated employees may point to problems with compliance, knowledge or training.

Businesses may use a few employee retention rate formulas to get a full picture of their business and the challenges they face. Employee retention rate calculations can be used to identify hiring cycles, to give an overall indicator of employee engagement throughout the business, to assess the kinds of employee turnover being experienced, or to identify if a particular department is losing staff faster than another.

Employee retention rate statistics vary from industry to industry. What may be considered high in one sector could be average or even a low employee retention rate for another. Currently, the retail and hospitality sectors have higher turnover rates than healthcare and pharmaceutical sectors.

Employee retention rate calculator

In order to calculate your own retention rate, you first need to determine:

  1. The period of time which you want to measure (a quarter, 6 months, a fiscal year…)
  2. How many employees you have at the start of that period
  3. How many employees you have at the end of that period

Divide the number of employees who were still with you at the end of a specified period by the number of employees you had at the beginning. Then multiply this figure by 100 to give you the employee retention rate percentage.

If you’re interested in more granular detail of employee retention, simply restrict the figures to the period, department, or type of turnover you’re interested in knowing more about.

Want quick answers? Try out our simple retention rate calculator below.



Once you have the employee retention rate calculated, it’s important to compare it with the benchmark for your industry.

A 70% retention rate might seem good, but if you’re operating in the consumer goods sector this would be 8% below the industry average. Putting your retention rate in context allows you to gain a better understanding of your current performance, and where you need to improve.

Why employee retention rate matters

Employee retention rates indicate the health of your business. After all, your company is only as strong as the people within it. Employee retention rates can signify workforce engagement levels, how effective your hiring and onboarding processes are, and also influence your company’s success.

Some employee turnover is unavoidable and people will always move onto new roles or retire. However, losing your top talent or turning over staff faster than you can replace them has wide-ranging impacts on a business.

The average cost per hire is $4,129 - meaning that before a new employee can even begin to contribute to your business’ profit, you must invest significantly in hiring, onboarding and training them. If that employee then leaves your company later down the line, it could cost you 33% of their annual salary.

This estimate doesn’t even take into account the full ripple effect of losing your best performers. Over time, employees become more valuable and contribute more to your bottom line than they detract from it. In other words, they are an ‘appreciating asset’. Losing these employees disrupts the rest of your workforce, lowers team morale, impacts customer relationships and limits future innovation. These losses can’t be quantified in dollars.

Ultimately, the higher your employee retention rate, the stronger your business and the more effective your processes and workforce as a whole.Employee retention rate

How to improve your employee retention rate

Struggling to keep your retention rate high? Here are some simple but effective strategies to boost employee retention.

1. Make the right hire

Great employee retention begins with thoughtful recruitment. Begin by identifying candidates that are a good match for a role and company culture. Culture and a candidate’s aspirations are just as important as ensuring they have the skills needed to perform.

The longer someone is with your business, the more value they are able to provide. Matching candidates for the business, as well as the role, will improve longer-term retention.

2. Invest in continuous learning and development

Opportunities to learn and upskill are now a top priority among jobseekers. Millennial and Gen Z talent view career development as one of the most important benefits a company can offer, while 91% of employees who leave a role say they were looking for opportunities for growth. 

Outlining a clear path for employees to advance in their career helps them to visualize a long term future within your company, and motivates them to perform better in the meantime. Learning ultimately engages and motivates your workforce - opportunities to expand knowledge and advance in a career differentiates one employer for the next, breeds innovation and keeps current employees loyal.

3. Improve internal communication

Clear and ongoing communication between employees and their managers is crucial to retaining employees. Transparency and the breakdown of siloed work, achieved by effective communication, helps employees to feel valued and satisfied.

Regular check-ins are a great way to keep in touch with employees, address concerns and build relationships within the workplace. Mentoring between senior and junior employees can also support workplace friendships.

Businesses with effective workplace communication demonstrate 4.5 times higher employee retention rates.

4. Align people with your vision and mission

What is your company’s reason for being? The answer to this question is your unique selling point (USP) as an employer, and should be imparted on employees from onboarding onwards, and reinforced at repeated intervals in all cross-company communications thereafter.

Humans are purposeful by nature - it’s what gets us out of bed each morning. We need a ‘why?’ before we take action, so it follows that without a strong and consistently communicated purpose for employees to rally behind, they won’t be motivated to perform, or drive your success. Employees who are motivated, on the other hand, are 87% less likely to resign and show 17% higher productivity.

“The majority of employees in the corporate world feel “disengaged”; they are agitating for decisions and behaviors that they can be proud to stand behind and gravitating toward companies that have a clear, unequivocal, and positive impact on the world.” - McKinsey Institute

5. Leverage technology

In order to improve communication, instill a sense of purpose, check-in with employees, deliver ongoing training to improve overall employee wellbeing, and by extension, your retention rate, you need to first be able to reach them.

Not having access to the right technology can be extremely frustrating and demotivating for your employees. 52% have reported becoming dissatisfied at work due to missing or mismatched software which impacted their ability to do their job. 

Implementing the right technology ensures that your employees have access to the information they need to be successful at work. When your workforce is empowered to perform at their best they feel more engaged, they achieve better results, and are more likely to stay. 

Looking for a simple way to increase employee retention? eduMe’s mobile learning solution has already helped companies like Uber, Marriott and Vodafone to onboard, upskill and engage their frontline workers, leading to increased retention rates. Our seamless technology allows you to surface bitesize training content within your existing tech stack, meaning that employees can access relevant and timely learning whenever they need it. 

Get in touch now to see how eduMe can help you retain your workforce 👇