How to calculate your employee retention rates
This is how you calculate your employee retention rate. The math is simple:
1. Divide the number of employees who’ve left by the total number of employees at the start of the period.
2. Multiply by 100 to get a percentage.
3. Subtract the result from 100.
For example. You have 200 employees. 12 quit within a period. Your retention rate = 100 - ((12/200) X 100) = 94%
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For specific insights about retention rates in your industry, location, and roles, send an email to the address below.
Email hello@praisidio.comHow to improve employee retention rates
On a positive note, retention rates showed a tendency towards improvement between Q3 and Q4 of 2022. This offers much-needed hope after a tumultuous last two years.
For most companies, however, retention rates are still lower than ideal and are likely to be impacting operating costs and employee performance.
At Praisidio, we help large corporations improve their retention rates at scale. From our experience, the first step is diagnosing retention risks (using talent intelligence), then systematically working to reduce those risks at all levels from departments to individuals.
Once you’ve diagnosed your retention risks, these are the strategies we recommend for improving your employee retention rates across locations and roles. We’ve organized the steps you can take by the retention problem they help solve.
Keep in mind that it’s often a mix of factors that cause a drop in retention rates, so you may need to implement strategies from multiple problem areas.
When management change is impacting your retention rate
Frequent changes in management can lead to instability and uncertainty for employees, which can increase the risk of resignations. These steps can help bring your retention rate under control.
- Communicate openly: Make sure they understand the reasons for management changes, along with how the change will affect them.
- Listen to concerns: Encourage employees to share concerns or issues they have about the changes, both before and after a change, being sure to take their feedback into consideration.
- Provide support: Offer your employees proactive support and resources they may need to help them adjust to the change, both before if possible, and certainly after.
- Offer stability: Help employees feel secure in their roles by providing assurance that their job requirements will not change. Or, if changes are anticipated or required, provide them with a clear job description along with new expectations.
- Check-in frequently: Check in with employees frequently, particularly during weeks following a management change. Schedule meetings with employees regularly to check in on their well-being and progress. Do not assume that “no news is good news.”
- Consider their future plans: Multiple manager changes might be affecting employees’ career development plans. Take their future plans and goals into consideration and work with them to build a clear career path.
- Evaluate the new management team: Do not assume a lack of complaints, or silence on the employees’ part is good news.
When workload or burnout is causing employees to quit
If an employee is feeling burnt out due to excessive meetings or demands, there are steps you can take to help alleviate their workload and reduce burnout.
- Assess the situation: Identify specific meetings and tasks that take away productive work time for the employee. Evaluate the importance of these obligations and make adjustments as needed.
- Prioritize: Prioritize the employee's tasks and meetings and create a schedule that allows them to focus on their most important responsibilities.
- Schedule: Periodically review employees’ schedules to determine if workloads are reasonable. Provide coaching or training to help employees sharpen time management and planning skills.
- Encourage speaking out: Meet with employees periodically and ask how they are doing, encouraging them to comment upon their workload.
- Provide support: Check in with employees and ask what additional support they need. If additional support is not available, explain why, and consider looking for opportunities to delegate or automate.
- Offer flexibility: Offer flexibility in the work schedule, such as remote work or flexible hours, to help reduce burnout and improve work-life balance.
- Promote self-care: Encourage your employee to take care of their physical and mental health by taking regular breaks, exercising, and practicing relaxation techniques.
- Monitor and adjust: Regularly check in with your employee to monitor their well-being and workload. Make adjustments as necessary.
When resignations are driving other employees to resign
If an employee's peers and collaborators have resigned recently, it can increase the risk of them resigning as well. These ideas can help minimize the domino effect of key resignations.
- Communicate clearly: Let them know that you are aware of the recent resignations and that you are committed to supporting them through this transition.
- Address reasons for resignations: Seek to understand the reasons behind resignations and take steps to address any underlying issues such as management or culture.
- Provide support: Offer employees the necessary support or resources they may need to help them adjust to the changes, such as training or mentoring from remaining team members.
- Help rebuild their network: Encourage employees to build new relationships with remaining team members and other colleagues in the company.
- Offer Stability: If an employee's work or responsibility changes after a resignation, help them feel secure in their role by providing a clear job description and expectations.
- Check in frequently: Meet with your employee regularly to check on their well-being and progress. When resignations occur, the importance of leadership presence is critical.
- Evaluate team and management: Make sure that remaining team members are capable of handling the increased workload, and check if management is able to provide the guidance and support that is needed.
If other companies are offering more compensation
Compensation can cause resignations when your company is unable to pay as much as other companies. When your employees receive job offers with higher salaries, try these strategies.
- Communicate with employees: Be transparent with employees about the company's financial constraints and explain why it is not possible to pay as much as other companies.
- Offer other benefits: While you may not be able to offer a higher salary, you can still offer other benefits that are important to employees, such as flexible work hours, remote work options, professional development opportunities, or additional vacation days.
- Create a positive work culture: Make your work environment a place people enjoy spending time. Use recognition and praise that is genuine, specific, and real-time to keep things positive.
- Make staying interesting: Implement programs to keep employees engaged and motivated, such as recognition and rewards, mentorship programs, or new types of projects.
- Be competitive: Regularly review your company's compensation package and adjust it accordingly to be as competitive as you can with market standards.
- Provide a clear career path: Offer your employees a clear career path, with opportunities for growth and development, to ensure that they feel they can advance in their careers while working with your company.
- Make them feel valued: Make sure your employees feel valued and respected, and show them that their contributions are important to the company.
- Offer regular feedback: Employees appreciate feedback, both positive and corrective to help them learn. On balance, try to provide a ratio of 5:1 (Positive: Negative).
If micromanagement is driving your retention rates down
Too much micromanagement and too many manager 1:1s can be triggering for a lot of employees. Keep the following strategies in mind if too much manager intervention is triggering resignations.
- Understand the reasons: Determine why micromanaging is happening. It could be a lack of trust, unclear expectations, or a fear of failure. Once understood, explain the reasons to the employee and work together to remediate.
- Provide clear expectations: Clearly communicate the expectations, guidelines, and procedures that the employee and manager should follow.
- Give autonomy: Provide employees with the autonomy to make decisions and complete tasks within guidelines and expectations. Trust them to complete their work and hold them accountable for their decisions.
- Provide feedback: Provide the employee with regular feedback on their performance and progress. Share your observations, both positive and constructive, and work with them to set goals and improve their performance.
- Encourage open communication: Ask for the employee's feedback on how you can support them better.
- Review and adjust: Regularly review your management style and make adjustments as necessary to ensure that employees feel supported and empowered, rather than micromanaged.
- Coach the manager: Supervising and managing is a learned skill. Coach on effective management techniques, and how to provide constructive feedback without micromanaging.
When disconnection is hampering retention
If an employee is not having regular one-on-one meetings with their manager, it can make them feel disconnected and unsupported. Here are a few steps you can take to address this issue.
- Schedule regular meetings: Schedule regular one-on-one meetings with the employee to check on their progress, discuss any concerns or issues they may have, and provide feedback and support.
- Make meetings productive: Ensure that the meetings are productive and focused on the employee's work, progress, and development.
- Set clear objectives: Make sure that you communicate an agenda prior to meetings and that they align with the employee's goals and the company's goals.
- Follow up: At the close of each meeting, paraphrase what was discussed, ensure alignment on decisions, and review follow-up steps for all parties.
- Review and adjust: Regularly review the effectiveness of one-on-one meetings and make adjustments as necessary.
- Be flexible: Make sure that employees know that they can request a one-on-one manager meeting if they need to. Make space to meet when unexpected issues arise.
- Evaluate manager's availability: If a manager is not able to schedule regular one-on-one meetings, evaluate their time demands, availability, and schedule. Provide coaching or training to help better scale their time.
When a lack of vacation time is burning out employees
If employees don’t take vacations frequently enough, it can lead to burnout and negatively impact their productivity and job satisfaction.
- Encourage time off: Encourage the employee to take a vacation, and remind them of the company's vacation policy and the importance of taking time off for rejuvenation.
- Make it easy: Provide employees with clear instructions about how to request and plan for a vacation, and ensure that there is adequate coverage for their responsibilities.
- Help them refresh: Ensure employees come back refreshed by scheduling their vacation at a time that allows them to fully disconnect and relax.
- Provide support: Give employees support and resources to help them plan and prepare for their vacation.
- Monitor and address burnout: Working hard doesn’t cause burnout; working hard without the satisfaction of making progress does. Regularly monitor your employee’s workload, the results they are achieving, and their pipeline of unfinished tasks.
- Lead by example: Encourage managers and other employees to take their vacation time, and foster a culture that values and promotes work-life balance.
- Make it mandatory: In some cases, it might be necessary to make vacations mandatory.
Make an impact on your retention rates for 2023 and beyond
If you’d like any help addressing retention rates in your organization, Praisidio can help. We are the experts in diagnosing talent risks and finding the right solution for your situation. We’ve helped other companies reduce attrition costs by as much as $10 million for every 2,000 employees. We’d like to do the same for you.
Book a demo to discuss the level of retention you’d like to achieve in 2023 and how we can help.
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