How to calculate the employee retention rate and why do you need to care?

Employees are the most valuable resource in any organization. Team cohesion, skills, and motivation are the main factors that contribute to the company’s success. You can have efficient processes and automated manual activities but without staff productivity and creativity it will be quite difficult to accomplish the best results and generate high revenues. 


However, many businesses believe that anyone can be replaced. It may be so but it generally takes 6-12 months to find a professional with the required expertise. You spend not only the time of HR managers but money on interviewing, recruitment, and onboarding.

Why does employee retention rate matter?

The Work Institute revealed that an organization has to spend 33% of the employee annual salary to replace him or her with a new expert.

Since the median wages in the United States is nearly $45,000, the average turnover costs per specialist are $15,000.

Well, imagine what expenditures you will have in case of losing 5, 10, 15 workers per year. Therefore, your task is to build team loyalty and provide a high employee retention rate.


What is the employee retention rate?

The employee retention rate means the company’s ability to retain the team members over a certain time period. It also implies internal efforts the organization makes to engage specialists and grow their loyalty.

Various perks, social benefits, team building activities, types of projects, work-life balance, relationships with workers are just a few of many factors that influence their decision to stay with you. 


A common question is “What is a great employee retention rate?”. Generally, it is 90% or higher. However, you should take into account that this metric varies from sector to sector.

For instance, education, insurance, banking, and legal services have the highest employee retention rate while it is lower in the food and catering industries.

How to calculate employee retention rate?

Employee retention rate shows the percentage of workers who stay with your organization during an indicated period, for example, from the company’s foundation until now. For this purpose, you need to do the following: 


  1. Choose a time period — Companies often calculate the employee retention rate once per year to analyze results of their human resource management strategy. However, you can take any time to track this metric.

    We recommend that you estimate it every 6 months. Compare the employee retention rate for different periods to get a clear picture of how it has changed over time, what activities help you build team loyalty, etc.
  2. Define the number of specialists on the first data of the required period — Check out the payroll and see how many people worked in your organization on a certain date.
  3. Calculate the number of retained specialists — Here you define the percentage of employees who remained in your company during the indicated period, from the first until the last day. Therefore, here you don't count workers whom you hired within a specified time. 


Now, to calculate how many people stay with you during a given period, you need to apply the employee retention rate formula:


Divide the total number of specialists on the last day of the required period by the number of specialists who worked in your firm on the first day of this period. Multiply this number by 100.

calculate the percentage of employees image

Example. A healthcare organization managed to retain 95 out of the 125 doctors and nurses during the first half of 2020. Let’s apply a math formula to calculate the employee retention rate:

  • 95 / 125 = 0.76
  • 0.79 x 100 = 76%

To save your time, we created an employee retention rate calculator that contains pre-built formulas that will let you make estimations for any periods. You can use it for free.




Retaining employees with Teammy, a web app for HRM

Teammy is a web application that helps human resource managers and business executives build employee loyalty, improve engagement, and retain specialists. Using advanced algorithms and data analytics, Teammy allows you to:

  • track staff performance
  • collect team feedback and define problems
  • obtain timely employer policy insights
  • set up an effective communication strategy
  • develop the best motivation strategy
  • monitor the performance of each employee and define leaders
  • analyze various metrics such as job satisfaction for different periods

Providing you with the most detailed data insights, Teammy helps you improve HR policies, meet employee needs, and reduce costs on each retained professional.


Teammy app for employee retention includes 3 modules:

1) A data visualization dashboard and analytics

Employing data visualization and real-time data insights, you will be able to monitor employee performance, view statistical reports, and collect team feedback with polls, surveys, etc. Ar a result, you will get a 360-view of each specialist.

2) Plugin and extensions

By using the Teammy plugin, workers rate their working days, supervisors, and other important metrics that help boost employee engagement. What’s more, Teammy will enable them to anonymously vote for different issues and suggest ideas to optimize workflows or enhance HR employment policies.

As a consequence, you will significantly improve communication with the team, understand their problems, and find out the best ways to resolve them.

3) API

Our custom web application development company provides an API, so that you can easily tailor Teammy to your business-specific needs, involving a set of data analytics parameters.


Leveraging the power of advanced algorithms, the Teammy employee retention app allows specialists to collect corporate points and change them for bonuses. We also incorporated a gamified mastering system to motivate your experts while ensuring an engaging user experience.

At YSBM Group, we have already used Teammy in our workflow.

Use Teammy to collect up-to-date HRM data, improve job satisfaction, retain employees, and reduce costs.

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