Metrics for Employee Retention: How to Hire and Keep the Right People

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Published On

December 23, 2022


Why did the computer part salesman quit his job?  He lost his drive. Ba-dum-tss!

While everyone appreciates a good joke, the sheer number of employees leaving the tech industry is no laughing matter. According to LinkedIn, companies in this specific sphere experience above-average turnover rates.

How can companies track who is leaving? And what can they do to combat this high voluntary turnover rate?

This article aims to answer those questions. We'll review why companies must measure employee retention and what metrics to use. Finally, we'll discuss why hiring top talent is key to retaining employees and show how using Talentcrowd helps you hire the right people from the start.


Why is it Important to Measure Employee Retention?


The Problem

The tech and media industry has the second-highest employee turnover rate at 12.9%. This turnover rate poses a problem to employers for a few reasons. Replacing an employee is expensive, disruptive, and time-consuming.



According to a Gallup poll, the cost of replacing an employee is one-half to two times the individual's annual salary. Let's break down this equation.

$10,000 annual salary = $5,000 to $20,000 replacement cost

$50,000 annual salary = $25,000 to $100,000 replacement cost

$100,000 annual salary = $50,000 to $200,000 replacement cost

As you can see, no matter how much an employee earns, companies lose money when they lose employees.

Gallup concludes that US businesses lose $1 TRILLION annually due to turnover costs and hiring expenses. Numbers don't lie and paint a clear message-- Employers can only afford to retain their employees.



Profits aren't the only thing that takes a hit when the talent turnover rate rises. Company cohesion and overall employee satisfaction are thrown into flux when employees leave their jobs consistently. Employee morale, happiness, and confidence take a hit when Joe from the cubicle next door replaces Sue, who replaced Ed. Before you know it, you're meeting your fifth new coworker this year, which can negatively affect employee morale.

Drastic turnover rates indicate a larger problem and cause employees to question the company's future and how they fit in. Employee happiness is essential for any business and its employees. According to Gallup, over half of those who are part of the tech world's voluntary turnover say their company could have done something to convince them to stay but didn't.



There's no way around it; it's time-consuming each time an organization replaces someone due to involuntary or voluntary turnover. Employee departures hurt businesses because the company must allocate extra time and resources to train new hires.

According to the Harvard Business Review, it takes a new employee eight months to become a fully productive team member. Integration takes time, and time is money. 


The Solution

So what can businesses do to combat detrimental turnover rates?

The key to improving employee retention is hiring top talent in the first place. Knowing what drives employees to leave (and stay) will help boost future retention rates. Talentcrowd can connect businesses with exceptional new hires who exhibit the necessary skills, are suited to the company culture, and have long-term goals they can achieve in-house rather than searching elsewhere.


Tracking Employee Retention

Now that we've discussed why it's in a company's best interest to measure employee retention let's review tracking employee retention metrics.


How do you measure retention rates?

Retention rate is the number of employees who stay at a company for a given period. This percentage is typically calculated annually. Companies can track overall retention or get specific and look into turnover rates broken down into categories such as job title, team, tenure, and experience.


What is an acceptable employee retention rate?

As discussed previously, retention rates vary by industry. Generally speaking, an acceptable employee retention rate sits at about 90%. Organizations should aim to keep employees happy and shoot for 10% or less of their talent jumping ship.

That being said, a 100% retention rate isn't exactly desirable either. Perfect employee retention could mean nobody is progressing to higher roles, and employees who aren't quite the right fit aren't making room for new talent.

While employee retention strategy differs with each company, choosing the right people for your team remains the crux of retention success. No matter what role or qualifications you are looking for, Talentcrowd can help you recruit top talent and simplify the hiring process.


Retention Metrics:

There are many ways businesses can measure retention rates. Take a look at the list below to read about some of the most commonly used employee retention metrics.


Overall Retention Rates

Breaking down retention data will help organizations better understand why employees choose to stay in their job. Employee retention is calculated by taking the total number of employees at the end of the given period divided by the number of employees with which you started. Then you multiply that number by 100 to provide a percentage representing your overall retention rate.

For example:

End of a given period (89 employees)/beginning of the same period (96 employees) x 100= 92.7% overall employee retention.

This simple formula can help you determine retention for any period, whether a month, quarter, or year.


Employee Satisfaction Rate

Satisfied employees don't leave their jobs; that's why companies need to measure employee satisfaction. Companies can utilize many tools to gauge employee satisfaction. Tracking workers' happiness can be done with surveys, regular check-in meetings, or something as simple as a suggestion box. No matter what combination of tools a company uses, communication is vital. For employee satisfaction to be tracked, there must be numerous opportunities for employees to openly and comfortably share how they feel about their position openly and comfortably.


Overall Turnover Rate

Overall turnover takes into account both voluntary and involuntary exiting. Employees leave because one or more of their needs are unmet (voluntary turnover) or management asks them to step away from their position (involuntary turnover).

To calculate the overall turnover rate, divide the number of employees exiting by the number of individuals employed at the beginning of the period.

For example:

Eight employees left during a given period/ 30 total people employed at the start of the same period x 100 = 26.6% overall turnover rate.

In general, businesses should shoot for a turnover rate of 10% or less during any given period.


Voluntary Turnover Rate

Voluntary turnover is when a team member leaves of their own volition. There can be many reasons talent chooses to find a new job. Maybe they found a position that better fits their long-term goals, or their employee experience differed from what they expected. No matter the reason, it's a good idea for companies to track how many employees leave on their terms.


Involuntary Turnover Rate

Involuntary turnover is when employees are forced out of their position. This includes everything from layoffs and firing low-performing employees. A high involuntary turnover rate indicates a big problem. If your company's involuntary turnover rate is high, you're hiring the wrong people, or it's time to look into new management strategies to see what level things need to be improved.


Retention Rate per Category

We've talked about overall retention, but tracking how many people stay and breaking it down into specific demographics is also essential. There are many ways businesses can achieve this. Retention can be categorized by the rate per manager, position, skill level, race, gender, age, etc. Is a particular manager forcing out employees? Is it low performers or the team's most talented employees who are leaving? Finding the answers to such questions can help businesses decide how to improve their work environment and company culture and increase their retention rate.


Average Employee Tenure 

Why is it essential to determine the average length of time an employee works for your company? Average employee tenure will give you an insight into how long it takes for an individual to no longer fit the role and expectations of the position. Tracking employee tenure will also tell you how employees adjust at every stage of working-- from new recruits to experienced employees.


Cost of Employee Turnover

Employee turnover cost is a combination of pre-departure costs plus departure costs plus replacement costs, offset by unpaid salary and benefits costs of the person who left.

Pre-departure costs consist of factors that cost the company money leading up to the exit, such as loss of productivity. Departure costs include termination costs and filling an open position. Replacement costs include recruiting, onboard training, and the time it takes the new hire to become fully productive. This total cost is offset by any unpaid salary and benefits the exiting person has forfeited. Calculating this cost of employee turnover is crucial to keep business spending under control.


New Hire Retention Rate

Companies who want to track retention would do well to pay attention to their recruits. How satisfied are the new employees? Do they regret taking this job? How long does it take them to feel fully incorporated and accepted? Did they receive adequate training, onboarding, and communication? The new employee satisfaction rate is an excellent indicator of the health of an organization.


Why Maintaining Top Talent Takes Priority 

We've learned the importance of retention metrics and discussed how to track employee turnover, retention rate, employee satisfaction rate, and more. The tools we've mentioned are great ways to help you keep track of the top talent you already have at your company.

The most important tip to improve employee retention starts before you shake a new hire's hand in congratulations. The key to maintaining top talent is finding the right people in the first place. You reduce turnover by hiring people who are a good fit for the position and company culture.

Maintaining top talent saves you time, money, resources, and company cohesion. Without restating previous sections, each time a company loses an employee due to involuntary or voluntary turnover, they lose out in one or all of those four aspects. The best employees do the best work; it is that simple.

In fact, research shows that in complex industries such as tech and engineering, highly qualified candidates are 800% more productive than less skilled employees.

Not only will retaining top talent save you money, but it will also give you a competitive edge, combats turnover rates, increase retention, and overall create a team that cares about their job and the success of the company for which they work.


How Talentcrowd Can Help You Hire Top Talent

The simplest way to skip the headache of vetting candidates is to let our hiring team do the sifting for you. To get started, simply let us know what position you’d like to fill and what qualifications are required. Talentcrowd will provide you with pipelines of highly-vetted, senior-level tech experts and on-demand engineering resources.

Talentcrowd helps employers scale their technology teams at lightning speed. We're tech agnostic, cost-competitive, and will help you fill every position on your team-- from quality assurance to SDLC management. With over 600 capabilities from A to Z, we've got you covered.

Because Talentcrowd operates on a digital platform, our team can instantly filter top recruits to your business needs. Teaming up with Talentcrowd connects you with the best tech talent available while saving you time and effort spent on the hiring process.



Tracking employee retention rates is vital because turnover is expensive, time-consuming, and disruptive. Knowing what drives employees to leave (and to stay) will help boost retention rates and create a healthier company culture and environment.

Standards for tracking employee retention include employee satisfaction, overall retention, overall turnover, voluntary and involuntary turnover rates, retention rate based on category, average employee tenure, cost of employee turnover, and new employee satisfaction rates. 

The key to maintaining top talent is to hire the right people from the get-go. Maintaining top talent saves you time, money, and resources and preserves company cohesion. Talentcrowd can help you hire the right team and maintain positive employee retention. Click here to get started, and let Talentcrowd connect you to top talent today!

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