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How to Track Employee Retention -- and Why You Should

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Tracking can help your company increase retention rates

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Tracking can help your company increase retention rates

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Career Resources

HR: Employee Retention

Tracking can help your company increase retention rates

By Sarah Sutherland

Every company wants its best employees to stay. Human resources professionals spend countless hours creating the perfect job listing, screening candidates, conducting first and second multi-step interviews and, eventually, choosing the candidate that they know will fit that position perfectly. However, it might not be until they realize that they're posting new job openings every month that they recognize their company's employee retention rates have plummeted.

It's clear that employee retention is a pivotal part of a company's success. Once those rates drop, though, how can a company get them back up? If its retention rates are already high, how can human resources professionals make sure that they stay that way? There are numerous methods used to increase and maintain employee retention, but organizations need to start smaller. Before strides can be made towards maintaining a high employee retention rate, organizations must calculate and track their recent rates to determine what next steps to take.

Technically, the process of calculating a company's employee retention rate is relatively simple. Tim Tolan, CEO and managing partner of The Tolan Group, an affiliate of the Sanford Rose network, and Bill Graves, senior search consultant of The Tolan Group, provided ADVANCE with the following formulas used to determine both rates of retention and turnover. 

Retention Rate: (# of separations during the measurement period / average # of employees during the measurement period) x 100

Turnover Rate: (# of separations during the measurement period / average # of employees during the measurement period) x 100

Even if a company has a high turnover rate, that doesn?t necessarily mean employees are leaving voluntarily. Terminations also factor into this equation -- but if a company is terminating employees frequently, it can be even more problematic than if employees were leaving on their own.

Women at Laptop"High involuntary turnover means that you're either making major screening or hiring mistakes, or management is overreacting to workforce issues and instead of working through the issues, they choose the route of termination," Tolan and Graves explained. "That situation warrants a much deeper dive to isolate the real problem."

Calculating and continuing to track these rates are only the first steps in retaining employees and increasing company productivity -- but they're steps that cannot be skipped. "These rates are critical measurements in healthcare," Tolan and Graves said. "You should slice and dice the data across gender, title, department and department leaders to see if there are any trends that stick out. It's particularly important for clinical roles that provide patient care, as many of those positions are more difficult to fill, and the talent gap makes it more challenging to replace employees that leave the organization."

In addition to providing critical data to human resources professionals, Tolan and Graves noted another major benefit to tracking employee retention: A high retention rate can be a great selling point to candidates.

"Usually, a high retention rate means that there is higher than average employee satisfaction, a phenomenal culture or the organization has great leadership," they explained. Calculating and sharing a high employee retention rate should attract more candidates to an organization, increasing that organization's chances of finding the ideal person to fill an open position.

Just as having a high employee retention rate can help attract potential employees, as leaders of an executive search firm focused on healthcare, Tolan and Graves admitted that seeing a low rate discourages them from working with a company. "Nine times out of 10, we would choose to walk away from a client with bad retention numbers," they said.

Of course, simply tracking your company's retention rate won't be enough to ensure that your employees are happy enough to stay. Still, it's a critical step: Once you find your organization's retention rate and compare it to your ideal retention rate, you can begin to make the necessary changes to reach that goal. Unsure of what your next step should be? Try some of the ADVANCE Healthcare Network's other employee retention tips.

Sarah Sutherland is on staff at ADVANCE. Contact: ssutherland@advanceweb.com


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