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Employment Retention Calculation Made Easy

Employment retention is a percentage that provides the number of employees who stay on staff instead of resigning or departing through termination. High retention rates indicate that employees have a high degree of job satisfaction. Although companies typically perform retention calculations at the end of each year, calculating them quarterly provides important information as well. All you need to get started are some basic payroll numbers.

 

Who Needs to Calculate Retention?

Although the human resources staff typically tracks a company’s retention rate, department managers should be interested in the numbers as well. Department managers or supervisors should also keep track of their own retention numbers, especially in departments with a large number of employees. Depending on your level within the organization, you may need to obtain permission to run the calculations.

Calculating the Retention Number

Pull a list of all current employees on the day that you are calculating the retention rate. You need the number of employees broken out by full-time, part-time and contract positions. Request the number of employees who have departed from the company starting on January 1 and running through the current date.

Examine the list and add up the total number of current full-time employees and part-time employees. Contract employees and temporary employees should not be included in employee retention numbers. Divide the total number of employees who have left the organization, voluntarily or involuntarily, since January 1 by the total number of current employees.

Multiply the decimal number by 100 to achieve the current employee loss rate. For example, if you have 1,000 current employees and 20 have resigned since the start of the year, the loss rate is 2 percent. Subtract the loss percentage from 100 to arrive at the retention rate. For example, 100 percent minus 2 percent is a 98 percent employee retention rate for the company.

Once you have the basic retention rate, you have a good idea of the turnover level in your department or organization. This number is a good starting point, but can be broken down even further if desired. The rate can be further refined based on age, length of stay with the company or other factors that can help you understand your workforce better.

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