Retention rate is the percentage of employees who stay with an organization over a set period, usually a year, counted against the people who were employed at the start of that period. It is also called the employee retention rate.
Employee retention is the wider practice behind the number: everything a company does to keep the people it wants to keep. The rate shows whether that works, and breaking it down by group shows where it does not.
How to calculate retention rate
The cleanest version follows the people who were on payroll on day one of the period and asks how many of them are still there on the last day. New hires made during the period are left out, because they were never in the starting group.
For example, a company starts the year with 200 employees, hires 50 during the year and ends it with 220. Of the 220, 50 are new, so 170 of the original 200 stayed:
You get the same result by counting leavers from the starting group: 200 at the start minus 30 who left, divided by 200. Use this version when you track departures directly rather than headcount snapshots.
Only count leavers who were in the starting group (someone hired in March who leaves in June counts toward turnover, not against retention), and compare periods of the same length.
Calculate it. Enter headcount at the start and end of a period and how many people left into the free employee turnover calculator to get your retention rate next to turnover and attrition. Your numbers stay in your browser.
Retention rate vs turnover rate
Retention rate measures who stays; turnover rate measures who leaves. They are related but not exact mirrors, because turnover is usually divided by average headcount and counts every departure, including people hired during the period.
Report both. A company that hires heavily can show high turnover and still keep most of its long-standing staff, which only the retention rate reveals. For the share of leavers who are not replaced, see attrition rate.
How to read your retention rate
What counts as a healthy retention rate depends heavily on industry: sectors with high job mobility, such as tech or retail, run lower. Your own trend over several periods says more than any single figure.
A low rate points to problems with pay, managers, growth or workload, often concentrated in one part of the business. A high rate is not always good news either: if low performers stay and strong performers leave, the overall number can look fine while the workforce weakens. That is why the rate is most useful broken down.
Retention rate by segment
Every breakdown uses the same formula, applied to one group at a time: people in the group at the start of the period who are still employed at the end, divided by everyone in the group at the start. Compare each group with the company-wide rate and with the other groups, look at the trend over several periods, and be careful with small groups, where one or two departures swing the percentage. Report demographic and survey-based cuts only for groups large enough that no individual can be identified.
By workforce structure
| Breakdown | What to compare | A low rate often points to |
|---|---|---|
| Retention rate by tenure | Bands such as under 1 year, 1–3, 3–5 and 5+ years | Weak onboarding (first year) or missing career progression (years 1–3) |
| Retention rate by department | Each team against the company rate, for example a marketing team that keeps 18 of 20 people (90%) | Workload, team leadership or department-specific market demand |
| Retention rate by job role | Roles with similar levels across teams | High-stress roles, limited advancement or pay below market for that role |
| Retention rate by managerial level | Junior, middle and senior management | Thin support or stalled progression, often among middle managers |
| Retention rate by manager | Teams of comparable size; a manager who keeps 9 of 10 people (90%) against one who keeps 5 of 10 (50%) | Management practices that need coaching or training |
| Retention rate by location | Offices, cities or countries | Local competition for talent, cost of living, commute times or local employment conditions |
| Retention rate by pay grade | Salary bands | Pay dissatisfaction or few promotion routes in lower grades |
| Retention rate by employment type | Full-time, part-time, temporary and contract staff | Fewer benefits, less security or less inclusion for non-full-time staff |
| Retention rate by work schedule | Fixed nine-to-five, shifts, flexible schedules | Rigid or unpredictable hours |
| Retention rate by flexible work arrangement | Remote, hybrid, flextime, compressed weeks, job sharing | Whether flexibility helps people stay, for example two remote days a week |
| Retention rate by remote work eligibility | Employees eligible for remote work against those who are not | Whether remote options matter for retention; if there is no gap, look at other drivers |
By demographic
Retention rate by demographic, sometimes written retention rates by demographic, applies the formula to groups defined by age, gender, ethnicity, education and similar attributes. The mirror view, turnover rate by demographic, divides departures in a group by the group's average headcount. Both are used to check whether the workplace works equally well for everyone.
Retention rate by age group. Younger employees, for example aged 18–25, often leave sooner than those aged 26–35. Early-career staff tend to value advancement and skill-building; longer-serving or older staff often weigh job security and work-life balance more. The breakdown also feeds succession planning, since it shows where experience is about to leave.
Retention rate by gender. A lower rate for women than men can point to limited progression, poor work-life balance or weak support for people returning from parental leave.
Retention rate by ethnicity. Gaps between ethnic groups can signal inclusion problems or bias; equal rates suggest that diversity, mentoring and employee resource group efforts are working.
Retention rate by education level. Shows whether, say, degree holders stay longer than employees with a high school diploma, and whether a group's rate is rising or falling over time.
Retention rate by diversity index. Compares the retention of employees from underrepresented groups with the company's diversity index (the share of employees from diverse backgrounds). If a company's index is 30% but those employees leave faster than others, hiring is adding diversity that the culture does not keep. See also diversity retention rate.
By performance and career history
Retention rate by performance rating and retention rate by performance level. Calculate the rate per rating band: if 45 of 50 high performers are still employed at year end, their retention rate is 90%. You want this band higher than the low-performer band.
Turnover rate of high performers. The same group seen from the other side: high performers who left divided by all high performers, times 100. A rate above the company-wide turnover rate is worth investigating, usually starting with pay, recognition, growth and the relationship with their manager.
Retention rate by promotion history. Promoted employees still employed after a set period, divided by all promoted employees. Low retention among people not promoted in, say, three years is a signal to review promotion policy.
Retention rate by internal mobility. How many people who changed roles internally are still employed a year later; for example 20 internal movers still employed in a company of 100 is 20% of the workforce kept through internal moves. Track it next to the internal mobility rate.
Retention rate by succession plan inclusion. Retention of employees named in succession plans, usually high-potential staff on development tracks. Losing them means losing the pipeline for key roles.
Retention rate by performance improvement plan participation. Employees still employed after a PIP divided by all who were placed on one: if 35 of 50 remain, the rate is 70%. A low rate can mean the plans lack support, clear goals or realistic targets, although not every PIP is meant to end in retention.
Retention rate by disciplinary action history. Retention of employees with warnings or suspensions on file. High retention here can be positive when discipline corrected the behavior; it is a concern if repeated issues are never resolved.
By program participation
For programs, compare participants with similar employees who did not take part. Participants are often more engaged to begin with, so a gap shows association, not proof that the program caused it.
Retention rate by career development program participation and retention rate by training completion. Participants or completers still employed after a set period, divided by all participants or completers. A drop right after training can mean people are building skills for their next employer because they see no path internally.
Retention rate by mentorship participation. If 90 of 100 mentees are still employed a year later, the rate is 90%. Mentorship helps at mid-career and senior levels too, not only for new starters.
Retention rate by recognition program participation, retention rate by wellness program participation and retention rate by employee resource group membership. The same participant formula shows which offers, such as stress-management workshops or ERGs, are linked to people staying longer.
Retention rate by stay interview feedback and retention rate by exit interview feedback. Stay interviews ask current employees why they stay and what might make them leave; exit interviews ask leavers why they went. Use the themes to pick changes, for example a stronger remote work policy if flexibility comes up repeatedly, then compare retention before and after the change.
By survey score
For any score-based breakdown, group employees into bands from the survey taken at the start of the period (for example high, moderate and low, or 1–5) and calculate retention for each band. Do not multiply the retention rate by the score: the two numbers measure different things, and the band comparison is what shows the link.
Retention rate by employee net promoter score (eNPS). eNPS asks how likely employees are to recommend the company as a place to work on a 0–10 scale: 9–10 are promoters, 7–8 passives and 0–6 detractors. Compare the retention of promoters with that of detractors.
Retention rate by employee engagement survey score and retention rate by engagement level. Highly engaged employees usually stay longer; a big gap tells you where to focus engagement work.
Retention rate by job satisfaction score, retention rate by compensation satisfaction, retention rate by benefits satisfaction and retention rate by work-life balance satisfaction. For example, if 160 of 200 employees are satisfied with their benefits and 150 of those 160 stay, the retention rate of satisfied employees is about 93.75%; compare it with the rate of the 40 who are not satisfied. High satisfaction with low retention points to outside pulls such as better offers elsewhere.
Retention rate by leadership trust score, retention rate by psychological safety score and retention rate by inclusion index. These link retention to how people experience leaders and teams. A company with 85% retention and a leadership trust score of 70 out of 100 has room to gain by improving trust; teams with low psychological safety (often scored 1–5) tend to show higher turnover.
Retention rate by organizational commitment score. A company with 85% overall retention may find that employees scoring above 80% on commitment retain at 90%, while those below 50% retain at 60%.
Retention rate by cultural fit score and retention rate by job fit score. If people hired with low fit scores leave early, the fix usually sits in recruitment and role design rather than in retention programs.
How to improve retention rate
Start with the segments that trail the company rate, find out why through stay and exit interviews and surveys, and fix the specific cause rather than launching a general program. The levers that come up most often:
Pay that is competitive for the role and location, reviewed regularly against the market.
Visible career paths, fair and transparent promotions, internal moves and training.
Managers who give regular feedback and recognition; coach those whose teams retain poorly.
A first year that is planned: onboarding, early check-ins and a mentor, since early turnover is common.
Flexible work and workloads that leave room for life outside work.
How it works in Skailer
In Skailer, the Retention report in HR analytics shows retention together with turnover, attrition, tenure and age, from the hires and terminations HR records. Split it by department, division, location, job profile or job role to compare teams, and use People analytics to group employees by any profile field, including custom fields. For a quick calculation from three headcount numbers, try the free employee turnover calculator.
What is a good retention rate?
A good retention rate varies by industry and role; sectors with high job mobility run lower. Compare yourself with your own trend and with companies in the same industry rather than with one universal number.
How is retention rate different from turnover rate?
Retention rate measures how many employees from the starting group stay over a period. Turnover rate measures how many employees leave, usually divided by average headcount, and includes people hired during the period. A company can have high turnover and still retain most of its long-standing staff.
Is employee retention rate the same as retention rate?
Yes. Employee retention rate and retention rate are the same metric. Employee retention is the broader practice of keeping employees; the retention rate is how you measure it.
How do you calculate retention rate by department or tenure?
Apply the standard formula to one group at a time: employees in the department or tenure band at the start of the period who are still employed at the end, divided by the number in that group at the start, times 100. A marketing team that starts with 20 people and keeps 18 has a 90% retention rate.
Can a high retention rate be a bad sign?
Yes, if the wrong people are staying. If low performers are retained while high performers leave, the overall rate can look healthy. Break the rate down by performance rating and track the turnover rate of high performers alongside it.
How often should retention rate be measured?
Most companies calculate it annually and review segment breakdowns quarterly, so shifts in a department, tenure band or demographic group show up before they become a pattern.