7 Employee Retention Metrics to Better Understand Why Employees Stay

Think about any past employer you committed to long-term, let's say — more than two years. What influenced you to commit to that particular company for a longer time?

These organizations probably did an excellent job of providing you with energizing and inspiring work culture, and personal and professional growth that went beyond just a paycheck. You probably worked alongside intelligent and inspiring people that you admired and connected with, not only as professionals but people, too.

These are just some pieces that make up the employee retention puzzle.

Many people have experienced a wonderful work environment, and probably poor ones as well. In short, we all know from our anecdotal experience what makes for a happy and positive work environment, why is it then, that HR and executives so often face retention issues?

Put simply, employee retention is about enticing and motivating your staff to stay with your company long term. It's about building strong relationships — filling workers with a sense of accomplishment, pride, and mutual respect that drives long-term loyalty.

What about turnover?

That said, you can't talk about employee retention without mentioning the opposite phenomenon: employee turnover. Also known as employee attrition or churn. In short, the number of people that leave your company per given period, for whatever reason.

Knowing how many people are leaving your company — in short, standard employee turnover rate — is an excellent start to understanding analyzing how churn is affecting your organization.

However, the absolute turnover rate doesn't tell us anything about who and why people are leaving.

Employees quit for all types of reasons. So gaining a granular understanding of employee turnover in your company starts with familiarizing yourself with more nuanced turnover metrics.

Let's take a look…

7 Types of Employee Retention Metrics

Employee Happiness

Keeping your finger on the pulse of employee satisfaction is key to retaining employees. Early intervention is critical when problems and dissatisfaction arise.

Although we don't generally think of work as a place to let our emotions get the best of us, we are all human, and people experience human emotions like frustration and contempt in their professional lives as much as in their private lives.

You're probably asking yourself how you can measure and monitor something abstract as employee happiness?

Employee Engagement software like Applauz Recognition is designed for HR and managers to do precisely that: Keep their finger on the pulse of employee happiness with tools like anonymous Polls and Pulse Surveys.

Involuntary Turnover

This type of turnover results from an employee who is terminated due to poor job performance, excessive, unjustified absenteeism, or grave violation of workplace policies. It is considered Involuntary because the departure wasn't a decision made by the employee, and is also referred to as employee "termination" or more colloquially understood as being "fired."

An employee layoff due to unfinished work, a slow down in business, or departmental restructuring, can also be considered as involuntary turnover, although turnover caused by any of the reasons above are handled very differently compared to a termination.

While layoffs can have some federal, provincial, or state provisions that help the employee out, not all of these provisions apply to someone who was fired due to poor business performance and not meeting their job requirements.

Voluntary Turnover

Voluntary turnover occurs when an employee leaves a company on their own volition. In short, they quit.

When employees don't feel fulfilled or impressed by a company's offerings, high voluntary turnover is usually the first symptom. Or they might be unfairly compensated or challenge, and as a result, have eyes for organizations offering a higher salary and more challenging position.

This turnover is feared most by businesses. When you lose out on valuable talent, HR may need to investigate deeper to find the root cause of the departure, as other members of your company may be experiencing similar levels of dissatisfaction as well.

On the other hand, the cause may be entirely outside the organization's control. The employee may be unable to work due to personal issues, which can be rectified, depending on the situation. Still, voluntary turnover is generally presupposed with either written or verbal notification of at least two weeks.

Desirable Turnover

While turnover generally has a negative connotation, it can sometimes be positive. Firing an employee whose performance has fallen well below what's expected of them, and already have a new employee who begins meeting those expectations and surpassing them is referred to as positive or desirable turnover.

This type of turnover is beneficial because the reasons that lead to the dismissal of the employee, such as absenteeism and presenteeism, are very costly to organizations.

Top talent turnover

On the other hand, when an organization loses its top performers, the business can take a significant hit. Organizations should have a solid grasp of whether they are losing top talent or not.

If the answer is "yes," some deeper digging must be done to get to the bottom of the underlying reason and fix the issue as quickly as possible. Attrition of top performers is sure to negatively impact a business's bottom line.

New employee satisfaction rate

The people walking into your company today may become the top talent of tomorrow. But most won't blindly offer their loyalty. They first need to feel respected, valued, and welcome.

That said, starting a new job usually sparks a natural boost of energy and enthusiasm. A new environment, faces, and responsibilities can be very stimulating and motivating.

So⁠ — if a new employee is feeling disengaged, it's not a good sign. It means it's time to question the employee experience your organization is providing and possible gaps and transparency issues in your recruiting process. Moreover, early intervention is vital as you could potentially be looking at more significant problems down the road.

Retention rate per department/manager

Keeping an eye on the turnover rate for individual managers and departments is wise. A high turnover rate with a specific manager or department can signal an underlying issue that could be affecting the entire team or department, and some investigating on HR's side is required.

On the other hand, identifying managers with very low turnover rates can also be helpful. You might find some principles for successful employee retention that you could transmit to the rest of your organization.

Final Thoughts

Employees should be viewed as prized long term assets. Resources should be dedicated to improving their engagement and satisfaction in the workplace.

With the right combination of systems in place, you will increase your employee engagement, and reduce your overall turnover.

Remember: Turnover in and of itself isn't intrinsically harmful to a business. As can be seen above, several types of turnover can be beneficial, but the ones which cost billions of dollars a year are incredibly hurtful to businesses. So, be sure to invest in the right initiatives to stave off those negative forms.