Employee Retention Rate Calculator

What is Employee Retention Rate?

Employee retention rate is the percentage of employees who’ve decided to remain in your organization over a given period. In other words, it refers to how well your company retains staff by meeting their needs and desires for staying with the organization.

Why does retention matter? It matters because it’s a key indicator of organizational health and defines the strength of employee engagement within your company. A higher retention rate means satisfied, stable teams with lower operational costs (investment in the right people). For instance, retaining employees helps you save money on recruiting new talent, reduces hiring time, and lowers training expenses.

Employee Retention vs Turnover

Retention rate and turnover rate are related categories but differ in their measurement metrics. While retention focuses on how many original employees remain in the company, turnover rates track how many depart. Both metrics are helpful, as retention highlights workforce stability, while turnover reveals patterns of loss.

How to Use This Employee Retention Rate Calculator?

Follow these quick steps to calculate retention for your company:

Step 1: Enter the number of employees at the beginning of the period.

Step 2: Enter the number of new hires during the period.

Step 3: Enter the total number of employees at the end of the period.

Step 4: Select Calculate Retention to see what percentage of your starting employees remained.

The calculator uses your inputs to estimate the number of team members who stayed and the percentage that represents. Tracking the value over time reveals whether your retention strategies are improving.

Employee Retention Rate Formula

Here’s how you can manually calculate the retention rate using the standard formula:

Retention Rate (%) = (Employees at end of period – New hires during period) ÷ Employees at start of period × 100

Example: If an X company wants to calculate the retention rate for the last year:

Employees at the start of the year: 100
Employees at the end of the year: 110
New hires during the year: 30

Retention Rate (%) = (110 – 30) ÷ 100 × 100 = (80 ÷ 100) × 100 = 80%

Therefore, it means that 80% of the original employees stayed throughout the year.

How to Calculate Employee Retention Rate

1. Set the period and count of your employees at the start of the period.
2. Count the number of employees who are still employed at the end of the period.
3. Count the number of new hires who joined during the defined period.
4. Subtract the new hires from the end count to get the number of original employees who’ve stayed.
5. Finally, divide by the starting headcount and multiply by 100.

If done correctly, you’ll get the retention rate you need to make informed decisions.

What is a Good Employee Retention Rate?

Generally, a higher retention rate is always considered better. Research suggests that a healthier range is around 80-90% or higher. For example, recent data indicate that U.S. companies have an average annual voluntary turnover rate of approximately 13%, resulting in a retention rate of around 87%. A score of 90% and above is generally considered excellent, while the 80-85% range is decent, and anything below ~70% signals a demand for significant reforms.

The True Cost of Low Employee Retention

When retention is low, you’re not just losing money; you're also losing customers. The direct costs include your time, effort, and money spent on recruiting, hiring, and training replacements. There are also hidden costs that add up, such as:

1. Replacement expenses: Advertising, new recruiter fees, interviewing time, hiring bonuses, and many others. Training and onboarding a new hire can take months of your time and effort.
2. Lost productivity: New employees take time to adapt to your culture and become fully effective, while existing staff may be stretched thin putting up with them. This can compromise team efficiency and the seamless workflow that took so much effort to establish.
3. Morale and culture: High turnover hurts the morale of remaining employees since teams with constant departures often see engagement and productivity slip.
4. Client and knowledge loss: The longer you stay, the more profound the institutional knowledge you build. Departing staff brings the risk of losing this knowledge and customer relationships with them, leaving the company with potentially disrupted projects.

The overall costs also vary by role, as one study found that replacing an entry-level worker costs roughly 30-50% of their salary, a mid-level employee is about 150%, and a senior or specialized staff member up to 400% of their salary. The Center for American Progress reports 20% of mid-level to around 213% for highly specialized roles.

How to Improve Your Employee Retention Rate

You can boost your company’s retention rate, identify the root causes of turnover, and take actionable steps to address them. Here are some effective strategies:

1. Strengthen Onboarding and Training

Give your new hires a great starting point. A structured onboarding program will help strengthen various aspects, including first-day orientation, mentorship, and comprehensive practical training. Make the new talent feel desired and welcomed to the new team.

2. Offer Competitive Pay and Benefits

Fair and competitive compensation helps keep employees from seeking other opportunities. In fact, even the perception of a pay gap can hurt retention, while good benefits encourage people to stay and be actually productive.

3. Improve the Manager-Employee Relationships

It’s not just about employees; managers can bring out their full potential through effective communication, training, providing feedback, and supporting their teams. Managers should hold regular one-on-one meetings more frequently, incorporating career discussions.

4. Invest in Development and Career Paths

Offer ongoing training, promotions, and clear advancement paths. Employees are more likely to stay when they see opportunities for professional growth. Recognize their achievements and provide leadership or skill development programs to amplify their voices and ensure they are valued.

5. Recognize and Reward

Acknowledge your employees’ good work in the form of bonuses, awards, and public praise to reinforce trust and loyalty. Showing your appreciation towards them will make them feel valued and increase their motivation and productivity.

6. Foster a Positive Company Culture

Build a work environment where people are willing to come and do beyond their pay grade. You can promote work-life balance through flexible hours, remote work options, and various wellness programs. A supportive work culture is one where employees are happy, engaged, and tend to stick around for a long time.

Understanding Related Retention Metrics

Tracking the corresponding metrics around core retention can help diagnose retention issues. Let’s explore them:

1. New Hire (90-day) Retention Rate: This metric measures the percentage of new hires who want to stay after their first 90 days. You can calculate this by using this formula:
(New hires still employed after 90 days / Total new hires) × 100.
A typical target should be around 90% or higher for 90-day retention. A lower percentage may indicate issues with your hiring or onboarding process.

2. Voluntary vs. Involuntary Turnover: You may encounter voluntary turnover when an employee quits by choice, while involuntary turnover occurs when the employer terminates the employee’s job.

3. Retention by Department/Role: Compute retention rates for each of your teams and/or job categories. This will reveal various problem areas; for instance, if retention is low in one department, you can focus on solving the issue by reducing your focus on that one.

4. Cohort Analysis: Gradually track the retention of specific hiring cohorts. This can reveal whether retention is improving in a particular group, revealing the effects of any changes to your process.

5. High-Performer Retention: Track the retention rates of your top talent. We mean separately calculating the top 10-20% high-performing staff since retaining them is critical. High-performing staff can be responsible for 4-8 times more productive work than average employees.

Turn Retention Data Into Actionable Insights

Use our Retention Rate Calculator to understand your employee turnover and identify opportunities for improvement. With Revaluate180’s expert guidance, you can analyze your retention strategy, uncover actionable insights, and implement data-driven solutions that strengthen engagement and long-term performance.

Contact us today to discover how we can help you build a smarter, more resilient retention strategy.