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Assessing Your Company’s Capacity to Retain Employees

Becoming the Employer of Choice for the people who already work for your company is another challenge. For some employees, the company they now work for is one they would want to stay with for a long time.  Others may wish to pursue a different career path or seek an employment environment with a better work/life balance, find an opportunity to learn something new, increase their pay and benefits or achieve other goals.

Indicators that you may be having problems retaining employees

How do you know if you are having trouble getting people to stay with your company? The most common quantitative measure is “employee turnover”.

Calculating Turnover

The most common method of calculating turnover is to count the number of employees at a given date and determine what percentage of those employees is new in comparison to the previous year.  To illustrate: there were 100 employees at the beginning of last year, and 100 employees at the beginning of this year.  Out of 100, 84 are the same employees.  The turnover rate is 16% by using the following equation: 100 minus 84 = 16; 16 divided by 100 = 16%.

Some Complications

The above method will work for most situations. It will not, however, indicate the fact that one of the 16 who has left has been replaced more than once, for instance. 

Another complication that can make the numbers difficult to compare across companies or time, is fluctuations in the size of the workforce. Suppose the work force is 100 at the beginning and 90 at the end of the year. Perhaps 16 people have left, but only 6 have been hired during the year, while 2 more were hired and retired within the same year.

In addition to looking at overall rates, you might also consider which jobs are the most difficult to fill, and to keep filled. If a key job requiring specialized or difficult-to-find skills is frequently turning over, it might indicate a larger problem than frequent turnover in a job that is easily filled.

Is your company doing a good job retaining employees? Find out now!