Employee Retention Statistics

Employee retention is a measure of the rate at which employees remain at a firm over a given period. It can be problematic for a firm if it has low employee retention due to employees voluntarily leaving. This requires the firm to spend extra money hiring and training new employees.

Retention rates are correlated with unemployment rates. When unemployment is high, employees are more likely to stay at their current job because it is difficult to find work elsewhere.

Calculating Retention

Calculating retention for a period is relatively straightforward. First, determine the average number of employees for the period. Second, determine how many employees were still working at the firm at the end of the period. Third, divide the number of remaining employees by the average number of employees.

Turnover

Another way of looking at employee retention is turnover. Turnover is the rate at which an employer adds and drops employees.

In other words, retention shows how many employees are staying and turnover shows how many are leaving.

To calculate turnover, an employer must first calculate the average number of employees for the period. Second, he must calculate the number of departures for the period. Then divide the number of departures by the number of employees. The result is the turnover rate for the period.

Cost

The U.S. Department of Labor has estimated that it costs 33% of a new hire's annual salary to replace a lost employee.

High turnover and low retention can have significant costs. New employees must be found and trained. There are also many costs that are not immediately obvious, like lost business because of "green" employees.

Lower morale is another example of a hidden cost. One study estimated that 85% of the costs of employee turnover come from the hidden items like these.

Separations Rate

One way of looking at employee retention on a national level in the United States in the separations rate tracked by the Bureau of Labor Statistics. Total separations includes quits (voluntary separations), layoffs and discharges (involuntary separations), and other separations (including retirements).

The below chart shows the separations rate from December of 2008 to October of 2009. The separations rate is the total separations as a percent of total employment. Employee Retention Statistics

Turnover By Industry

Employee turnover and retention can vary widely by industry. Below are turnover rates by industry gathered by Compdata for 2008.

2008 Voluntary Turnover

  • All Industries 12.5%
  • Utilities 7.8%
  • Manufacturing 10.4%
  • Not-For-Profit - 12.6%
  • Real Estate/Construction 13.8%
  • Services 14.0%
  • Financial Services 14.0%
  • Distribution/Warehouse 14.9%
  • Healthcare 15.7%
  • Other 15.9%
  • Technology 17.2%
  • Hospitality 27.2%

2008 Total Turnover

  • All Industries 18.7%
  • Utilities 11.1%
  • Not-For-Profit 16.4%
  • Manufacturing 16.5%
  • Financial Services 19.0%
  • Services 19.8%
  • Healthcare 20.8%
  • Technology 21.7%
  • Real Estate/Construction 21.9%
  • Other 24.0%
  • Distribution/Warehouse 24.4%
  • Hospitality 36.9%

 

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