6 key HR metrics you should be measuring to retain the topmost talent in your company

“To win the marketplace, you must first win the workplace” - Doug Contant


Higher employee retention is a true reflection of higher satisfaction and engagement of employees in an organization. A higher retention rate also tells how likely your employees are willing to stay in the organization for a long time and how aligned they are with the organizational goals. Most of all, it reflects that the employees being hired by the human resource department, are suited to the organizational culture and their designated roles.

Henceforth, it becomes important for you to have a retention management plan in place to reduce employee turnover and ultimately improve employee retention and engagement. For developing an effective management plan, you need to define certain metrics that can assist you in determining the retention rate in your organization.

Why does employee retention matter?

If you want to boost the profitability and productivity of your business, the employee retention rate is a key marker.  A good retention rate leads to a low employee turnover which can save the organization ample time and resources. Because of the fact that there are direct as well as indirect costs related to new employee hiring, considerable time and resources have to be invested. Employee turnover can also have a debilitating impact on organizational output further leading to an uncanny burden on other departments and roles. When you hire someone new, he will have to go through a rigorous training process which may consume a lot of time that can be attributed to other major responsibilities.

Thus, it becomes a matter of foremost concern, to assess where your organization is standing in terms of employee retention. Some key metrics which can help you to analyze as well as improve employee retention are as follows:

1. Retention rate

The retention rate is an important metric for measuring employee retention. It can be estimated as the number of employees staying with the organization during a period of time. Therefore, before calculating the retention rate, it is important to calculate the time period. Usually, retention numbers on annual basis is not a good strategy as it can lead to missed trends and other factors such as performance reviews, renewal of contracts/ benefits, etc. can boggle results. Therefore, to stay on top of retention trends, it should be done on a more regular basis. Also, it is better to first estimate the cost of hiring to maintain the budget for retention. For example, for an employee that has to be retained for a period of 3 years, retention time can be estimated as total employees during that period minus the ones that leave divided by total employees.

If you invest in retention, it shows that you care about your employees which can be revealed in the form of a more engaged workforce, higher profits, and more chances of innovation. Therefore, it is important that you look for leadership skills in your managers, are they capable of building trustable relationships with the employees? According to Forbes magazine, about 79% of resignations are due to a lack of recognition. So, finding the underlying reason why employees in your organization might be leaving is valuable in measuring employee retention. Comparing which departments of your organization have a higher turnover rate than the others, can be a strong determinant of employee retention. A higher turnover rate may indicate that the department is void of resources that can let the employees work effectively. Therefore, identifying the main cause of an employee’s departure is crucial.

2. Employee satisfaction

Every organization aims to build a contented and thriving team. It is observed that when the employees are engaged, the company can benefit in terms of lower turnover and higher profits. Therefore, in order to get maximum input from the team, you need to make sure that your employees are happy with their jobs. There are different ways to estimate employee satisfaction such as surveys, one-on-one meetings, employer net promoter score (ENPS), and estimating the rate of absenteeism. You can choose the one most suited to your organization.

Interestingly, there is much optimism and positivity regarding job satisfaction in the KSA market. According to the Hays GCC salary guide, about 64% of the employees are satisfied with their jobs and about 58% of the employees feel positive about their future career prospects. Presently, KSA is soaring high in terms of hiring and the employer market is expected to hire new workforce to 80% capacity till the year 2023.

Voluntary vs involuntary turnover

Every employee in your company holds value and an employer should know what their leaving can cost the organization, which determines the talent turnover rate. For an employee who is leaving voluntarily or involuntarily, a value can be assigned based on the role they fit in the organization. Voluntary turnover is started by the employee himself such as quitting from a job in order to take another job while involuntary turnover is started by the organization on the basis of compromised work performance, absenteeism, or as part of organizational restructuring. An in-depth understanding of the reason an employee wishes to leave or stay on the job as well as a strategic plan to manage the valued employees are both important to manage the voluntary talent turnover rate.



3. Average employee tenure

How effective your HR strategy is, can be determined through an estimate of the average employee tenure. Average employee tenure is the time frame for which an employee stays in the company. Employee tenure can provide sufficient information about employee satisfaction and loyalty to the company. It can be calculated as the total of all tenures (past and present) divided by the number of full-time employees. The metric can be used to compare employment length data with other organizations which can give a clear picture of employee retention in your company.

4. Cost of employee turnover

You must be really concerned about the true costs of employee turnover as losing an employee can cost about twice the salary of the leaving employee. Other than dedicating time and resources after an employee leaves, your organization suffers as the new recruitment takes time to upgrade and become fully capable in the new role. However, the most significant effect of turnover is not the monetary cost but the harm done to the rest of the team. Employees play an important role in a team’s success. Without them, additional responsibilities are delegated to the current team and the organization may have to postpone its plans that are in line. Therefore, your business will suffer in terms of low productivity, low employee morale, and damage to brand reputation which significantly leads to a higher turnover.

5. Retention rate by groups

According to Forbes magazine, companies that have an “inclusive culture” have better retention rates. If your organization has a diverse workforce, it becomes quite important to extend the retention efforts towards the group so that they feel that they are treated equally in an organization.  Sometimes, certain ethnic groups feel discrimination in terms of salaries, gender bias, or favoritism. Therefore, low retention in these groups can significantly affect the organization if the employees quit their job collectively. Treating diverse groups on equal grounds is the best strategy to diminish feelings of unfairness. Maintaining a monthly scorecard that estimates how many female or minority employees go through hiring, retention, and promotions can be a good parameter to determine retention rates among diverse groups.

All in all, tracking the right metrics for employee retention can help you build a strong retention plan. It is surprisingly true that retention plans are less costly than replacement plans. This way, you will create the workforce which is right for your business and your employees will also feel productive, engaged, and satisfied.