How to calculate and improve the employee retention rate

According to the Work Institute, a company has to spend 33% of the employee’s annual wages to replace him or her with a new specialist. As the median salary in the USA is about $45,000, the average turnover costs per worker are $15,000.

Turnover has increased by 88% since 2010. If the situation remains the same, businesses will have to make enormous investments to resolve this challenge.

That’s why it is so important to ensure a high employee retention rate.In this article, we will show you how to calculate the employee retention rate, estimate turnover, and boost job satisfaction. Let’s get started!

How to calculate the employee retention rate

Employee retention rate shows the percentage of workers who remain with a company during a certain time period, for instance, 6 or 12 months. When the majority of specialists are loyal to your organization and aren’t actively looking for other job opportunities, you save costs on recruitment and onboarding.

Divide the total number of employees on the last day of the chosen time period by the number of employees on the first day of this period. Then, multiply the received number by 100 to get the percentage. This will be the employee retention rate in your company.

Example. A digital marketing agency retained 105 out of the 135 employees during 2019. Applying the employee retention rate formula, we receive the following percentage:

  • 105 / 133 = 0.79
  • 0.79 x 100 = 79%

How to calculate the employee turnover rate

To get a full picture of workforce stability and loyalty, you should calculate the employee turnover rate, which indicates the percentage of specialists who leave your company during a giver time period.

* Turnover is the number of specialists that have to be replaced within a certain period.

To calculate it, divide the number of separations by the average number of workers over the same period. Multiply the received figure by 100.

Example. A logistics company has 80 specialists. During September, 3 workers from its supply chain management staff decided to leave and therefore were replaced.

(3/80) x 100 = 3.75%, which is a monthly employee turnover rate.

Combining the received number with employee retention rate and making benchmarks with different periods (e.g., month, quarter, year), you will define and resolve issues before they aggravate.

How to improve the employee retention rate

Employees are the most valuable resource in any company. Motivated and loyal specialists are capable of removing mountains, working hard and achieving great results. Although turnover is a common part of any organization, you should boost staff satisfaction to reduce costs associated with staff hiring and onboarding.

Analysts at Work Institute found the primary reasons for turnover:

– 22% of respondents left for career development
– 12% decided to leave because of work-life balance
– 11% said they decided to quit their job due to manager or supervisor behavior
– 9% of the survey participants left for compensation and benefits
– 8% of employees left for the well-being

According to the report, over 3 in 4 specialists who decided to leave could have been retained by their companies. Since the cost per quitted worker is 33%, the employer wastes $75,000 if the annual wages is $45000.

To increase the overall efficiency and generate revenues, your retention strategy should focus on boosting job satisfaction and retaining the best professionals. For the purpose, your organization needs to monitor staff performance, loyalty, and engagement rates.

How Teammy app can help you with employee retention

Teammy is a software solution for HR managers and business owners that allows calculating employee retention rate, tracking performance, estimating job satisfaction, and detecting issues.

This web application employs specific algorithms and analytics to make contextual data insights in real-time.

Teammy employee retention app has the following structure:

1. An admin dashboard to provide with insights and analytics

Using data visualization and contextual insights, it is possible to monitor staff performance, analyze data, create and manage polls, surveys, and discussions.

Communicating with workers and collecting their feedback, businesses will receive a 360-view of each employee.

2. Chrome extension to use on a daily basis

Thanks to this module, employees can rate their working days by multiple parameters, give feedback to their direct managers, as well as send kudos to team members.

Furthermore, the app allows them to submit ideas for process enhancement, vote anonymously, and use feedback forms. All that drastically improves communication and alignment within the team.


Companies can embed the application logic according to their needs, including multiple analytics parameters.

The product can be integrated into any corporate software that helps to improve employee satisfaction.

Powered by smart algorithms, Teammy app enables collecting and accounting corporate points and changing them for various bonuses. What’s more, this software solution for improving employee retention provides a gamified mastering system to motivate specialists.The product was created by YSBM Group, a trustworthy software development company that has already integrated Teammy into their workflow.

Start using our employee engagement system  Teammy to analyze real-time HRM data, increase job satisfaction, and reduce costs.

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