Unit 3.10 - Employee Retention

Question 1

How do you measure retention rate?

Answer 1

Retention rate demonstrates the proportion of employees who remain employed during the entire period of time being analyzed.

employees who remained employed / # employees at the start of the period
x 100

Replacing an employee can cost 6-9 months of their salary

Question 2

How do you measure turnover rate and cost of turnover? *often shows up on PHR exam

Answer 2

Turnover Rate accounts for employee who left the organization during a given period, including newly hired employees.

separations during the period / average # employees on payroll during the period
x 100

Cost of Turnover accounts for all associated with the loss of an employee.

(Separation costs + replacement costs + training costs + lost performance costs) * (total # of employees * annual turnover rate) == annual cost of turnover

Question 3

What are retention strategies?

Answer 3

• Improved recruitment and selection decisions
• Increased employee engagement during orientation and onboarding
• Ongoing investment in employees - training & development and career development
• (Re) Designing jobs to provide meaningfulness
• Attractive total rewards package
• Provide alternate work arrangements, where possible
• Rewards and recognition
• Strong leadership and management