An Ultimate Guide To Employee Turnover and Retention

This article is an ultimate guide about employee turnover and employee retention. Read out to find two of these organizational aspects

What is Employee turnover?

What is Employee turnover

Employee turnover, while it is an easier concept to be understood, is sometimes confused with the retention capability of a company. It is simply the number of employees leaving a company over a specific period. For example, measuring the turnover of employees for a year can give a company an idea of the number of employees it lost to other companies and those that it successfully kept employed.

Employee turnover typically has the following types:

Voluntary Employee turnover: When the employees leave a company by their own consent and choice, then such retention is referred to as voluntary. It can occur when an employee has to pursue a better opportunity or due to dissatisfaction with the employer company.

Involuntary Employee turnover: As opposed to voluntary turnover, this type of employee turnover takes place only due to the decision of the company because of the employee-performance issues, downsizing, etc.

Avoidable employee turnover: As with its name, an avoidable turnover is when an employee leaves a company voluntarily due to the issue(s) that could’ve been addressed, consequently avoiding the turnover. A company can come up with such strategies that can help avoid employees leaving due to such reasons.

Regrettable Employee turnover: Regrettable turnover, as the name suggests, takes place when a company has lost its valuable employee. By losing such employees, a company finds it difficult to find a nearly-equally good substitute, if not an equal or better substitute. If a company wishes to avoid such a turnover so it could prevent its worthy employees from leaving, it’s extremely important that it investigates and works on the reasons that led the previous hardworking employee(s) to quit.

Healthy employee turnover: A healthy turnover refers to a situation where an exit benefits both the company and the leaving employee.

Retirement: To some, retirement is not really a turnover but completion of the tenure for that an employee was supposed to serve. However, since it leads to hiring new individuals, which is a time taking process, thus resulting in decreased workplace productivity along with the recruitment expense, it is considered a turnover to some.

What is Employee Retention?

What is Employee Retention

Employee retention can be simply understood as the ability that an organization/ company possesses to retain its employees. The Oracle Netsuite defines Employee retention as the following:

“Employee retention refers to both the rate at which people stay with a given company over a period of time and the strategies employed to keep them there.”

Over the period while an employee is working with a company, there come several instances where this employment, more precisely the employee loyalty, is challenged by the in-competition companies in the form of better pay, job title, benefits, etc. However, it is when employee retention plays a role in keeping the worthy employees of a company to keep working for it.

The ability of a company to retain also keeps the employees employed with it for a rather long period. But to keep the rate of employee retention high requires a company to formulate and implement certain relevant strategies.

There are several approaches that help a company counter the offers made by its rival companies. Some of the significant retention strategies include pay raises, a better working environment, better job description, additional and better perks and benefits, etc.

Read: What is Employee Retention? An Ultimate Guide

Why are Employee turnover and retention important?

Why are Employee turnover and retention important

Retention and turnover of employees can help a company understand where it stands in terms of employee satisfaction and employee loyalty. It also helps present a picture of how employees perceive working with the company.

If a company has a lower turnover and higher retention, it may be an indicator of employee satisfaction along with a positive work environment. It can also additionally suggest that managers and the leader are doing well. Lastly, it can also be indicative of a rather efficient recruitment procedure. On the other hand, increased turnover and decreased retention may be due to ineffective hiring procedures. It may also be due to the employees not being satisfied with the company altogether.

Working towards these two employee-related aspects that are discussed, a more secure working environment can be ensured, which leads the employees to have a sense of job security and build better workplace relationships. Besides this, keeping a check on turnover and retention can help a business reduce its expenses in regard to hirings as well.

All in all, we can conclude that employee retention and turnover are interrelated and that suitable and desired levels can help an organization achieve its goals by placing its workforce on the right track.

How can a company calculate its employee retention?

If a company requires to calculate its employee retention, it can simply make use of a formula that is used to calculate the retention. Simply, to calculate the retention rate for a year, divide the number of employees who remained with the company for the entire year by the number of employees that were employed at the beginning of the year and multiply the result by 100.

It is important not to include the newly hired employees in this calculation for accurate results. The formula in discussion is below:

Rate of retention= (no. of employees by the year-end ÷ no. of employees by the year start) x 100

How can a company calculate its employee turnover?

Just as calculating the retention rate, you can easily determine the turnover rate as well.

A company can calculate its turnover for a particular month by dividing the number of employees that exist in the month by the total number of employed employees and multiplying this result with 100.

Employee turnover rate = (no. of employees exited ÷ total no. of employees) x 100

Some companies take a more precise and restricted approach to calculating their retention by excluding terminations, involuntary turnovers, and retirement.

How can you improve Employee turnover and retention?

How can you improve Employee turnover and retention

As learned so far, retention and turnover constitute an important part of an organization’s success. Thus, the following tips can be used to improve these two organizational aspects:

Reconsidering your recruiting and employee onboarding approach

The retention of an employee goes back to the day they were recruited and onboarded. Thus, employee retention gets an impact from the employee recruitment approach. This being the reason, a company should always be mindful of how it is making new hires and should reconsider if it finds it to be negatively affecting retention in the longer run.

There are several ways to improve your approach to recruiting and onboarding employees. One of the ways to better hire, leading to stronger prospects of retention, is to make the expectations of the company clear with the employee being hired. Moreover, what the employee expects from the company should also be clear. Also, the extent a company is and will be able to meet the employee expectations should be made clear to the prospective employee.

Learning why employees left

Employees leave, and it is a part of every organization, including the most successful ones. However, if the number of employees leaving exceeds the acceptable threshold, then it is a good idea to understand the reason behind the increasing number of employees exiting the company.

One of the effective ways to learn why your employees are leaving is to learn the perception they truly hold for the company. However, achieving this may appear as simple and straightforward, but it is not.

It is important to ensure that there is sufficient communication between the organization and its workforce to grasp the reason why your employees are leaving your company. One of the effective ways to make effective communication is to carry out surveys. And while conducting feedback surveys is, most often than not, helpful, many times, employees are reluctant to participate so as to avoid any organizational conflict.

To receive maximum feedback from employees, a company can carry out anonymous surveys that, on the one hand, help avoid any controversy and, on the other, enable organizations to learn the true perception of its employees.

Surveys and feedback are to know the views of your current employees. However, to find out why an employee left, the exit surveys are made to use by the companies.

The exit surveys help to have a better understanding of why employees are leaving. As opposed to the surveys for the exiting employees, generally, there is no concern of the feedback not being honest as the employees who are leaving have no particular stake in sharing their thoughts and opinion.

Using Employee rewards

One of the best ways that you can use to control employee turnover and improve employee retention is by using rewards and recognition.

Recognizing and rewarding employees is an excellent way to acknowledge the contribution of employees, which subsequently makes employees happier, and subsequently, their performance level remains satisfactory. And all of this leads to help in retention and turnover.

Typically, to recognize and, thus, reward employees, a relevant platform is used. Pertinently, Bravo is one such (online) tool that makes it easier to make employees satisfied with their organization, which leads to restraining employee turnover and improving employee retention.


Employee turnover, along with retention, are two of the most important areas that organizations should care about. They have become pretty much a necessity today due to the role that they play in the overall success of a company.

Turnover and retention can be improved by having a good look at the employee recruitment and onboarding approach. Along with that, using a rewards and recognition platform for rewarding the employees for their notable performance can also better the retention and turnover rates.

In conclusion, employee turnover can leave an organization in an unwanted place. Therefore, retaining the employees is important.

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