HR Glossary  >   Employee Retention

Employee Retention

What is Employee Retention?

Employee retention is a function, way, and strategy that the employers implement to hold the existing employees for a longer time and retain them in the same organization. This strategy contributes highly to reducing the costs involved in hiring, training, and orienting, as well as lowering the employee turnover ratio significantly. Moreover, it helps in enhancing employees’ productivity and performance.

Importance Of Employee Retention In HRM

The basic and primary job of HRs is to manage the talents of the organization. From various functions to perform while managing the workforce, employee retention needs special attention. The efforts made and costs incurred while hiring a candidate and providing adequate training are always high. When an employee leaves the organization in a short duration of time, all the efforts and costs get useless.

Higher rates of employee retention have multiple adverse effects on the organization. Not only the cost and effort, but it also affects productivity. The responsibilities and work of the employee that leaves get disturbed and can create gaps in teams' working. Even it creates a lack of trust for customers when they need to deal with different people in a short span of time.

Therefore organizations have to implement a way of retaining the best talents and looking at their well-being and satisfaction.

Frequently Asked Questions

What is the employee retention rate and how is it calculated?

Employee retention rate (ERR) is the percentage of the employees that stayed in the organization over a defined period.

The formula to calculate ERR is:

(Number of employees retained/Number of employees on the first day) x 100


Number of employees retained= Total Number of employees on last day- Number of new joiners

What are the strategies to retain employees?

As per the organization, the ways to retain the employees can differ. However, here are some of the common techniques that organizations can apply:

  • Motivating the employees and giving constant feedback.
  • Appreciation, recognition, and rewards for excellent performances.
  • Providing some additional employee benefits like paid vacations and health insurance.
  • Performing different employee engagement activities.

How does the retention of employees benefit the employers?

The benefits of retaining employees are:

  • Reduced employee turnover
  • Productivity and balance in work
  • Enhanced customer experiences
  • Cost Reduction

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