What are the Benefits of a Healthy Employee Retention Rate?

There are great things that come from a healthy employee retention rate, like better customer experience, reduced turnover costs, and more.

Key Points:

  • Focusing on improving your employee retention rate can benefit your business in the long run. 
  • In order to improve your employee retention rate, you must focus on creating a culture that keeps your employees engaged.
  • There are a few ways that you can improve your employee retention rate, and they are easier than you think.

What is Employee Retention?

Employee retention refers to an organization’s ability to keep its employees. Your employee retention rate is a metric that tells you the percentage of employees that stay at your organization for a specific time period and it can give some insight into the overall employee experience. According to an article by The Great Game of Business, employee retention rates of 90% or higher are considered good. This blog post will detail how you can calculate your employee retention rate, how you can improve it, and why it’s beneficial to have a healthy retention rate. 

How to Calculate Employee Retention Rate

Calculating your employee retention rate is a simple equation. Your retention rate should be calculated annually at a minimum, in order to determine the overall experience of your employees.

Here’s an example:

# of remaining employees during a set period# of original employees during a set period # of remaining/# of original X100Employee Retention Rate

How to Improve Employee Retention

The following are some strategies that may help you improve your retention rate.

Create an Engaging Onboarding Experience 

Once you’ve hired the right person for the job, it’s time to onboard them. Your onboarding strategy should be unique, reinforcing a great first impression while also communicating all important information. Make sure your new employee knows what to expect on their first week, connect them with other employees, and sit down with them to discuss their future with the company. Be sure to answer any questions as well as share all important processes and tasks they will have to complete during an average work day. 

Offer Constructive Feedback 

Employees want to feel valued and heard. Making feedback a normal part of your workplace will allow you to connect with your team. Along with direct feedback, give your employees the opportunity to give you feedback as an employer. Ask them if there is anything they need you to improve on, increasing your credibility and employee trust. 

Recognize Milestones

Recognition lets your employees know that they are valued. Whether this is done publicly or one-on-one, it is important to take into account big and small milestones. Send out an employee spotlight post once a month, recognize employees for projects that they worked on, or just reach out and tell your employee that they are doing a great job. 

Offer Meaningful Benefits 

The benefits that you offer to your employees can help set you apart. Make sure your employees are receiving all basic benefits, like healthcare, paid time off, sick time, etc. And, if possible, offer some additional perks to your employees. Consider a pet friendly environment, employee discounts at local restaurants, performance bonuses, or any other fun and unique perks that you think your employees will appreciate.

Promote Flexible Work-Life Balance

A healthy and fair work-life balance is essential to employee satisfaction and mental wellbeing. Encourage your employees to take breaks in their workday, use paid time off for vacations, offer sick days, and give them the option to work remotely if needed. 

Benefits of a Healthy Employee Retention Rate 

A healthy employee retention rate means your employees are sticking around. This can benefit your organization in multiple ways:

Reduction in Turnover Costs

Though employee turnover happens at any company, high turnover results in a lot of time, money, and stress. Employers can spend up to 33% of an employees salary just to replace them, not to mention the amount of time that goes into finding, recruiting, hiring, and onboarding a new employee. Focusing on employee retention can save you from that hassle, giving you long-lasting employees and more money saved. 

More Experienced Employees

As an organization, it is important to focus on retaining your more long-term, experienced employees. Losing employees is not only expensive, but it can result in a loss of great knowledge and employee relationships. Employees that work at an organization for a long time accumulate a vast amount of knowledge and experience that is critical to your company’s success. 

Better Customer Experience

Customer satisfaction includes every moment of the experience beginning with their first interaction with your company to the post-service follow up. In order to ensure the best experience, you want to provide customers with happy, knowledgeable employees that can serve them. Having experienced employees allows for promising customer service, fewer customer service mishaps, and an overall better customer experience that can ultimately build strong customer loyalty.  

Improved Employee Experience 

When a company focuses on employee retention, they improve the overall employee experience. A positive employee experience fuels engagement and productivity, increases employee morale, and ultimately creates a culture of invested and trained employees.


Your employee retention rate is a great metric to track in order to better understand employee experience. There are great things that come from a healthy rate in the long run, like better customer experience, reduced turnover costs, and more. For more employee engagement resources, check out the SentricHR blog!


The Sentric Team

The Sentric Team

At Sentric, we help businesses make people management easier with industry-leading technology and standout support.

Sentric HR & Payroll Insights

Related Posts