What Is Employee Turnover and Employee Retention?

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When we talk about employee turnover, we mean the number of employees who leave an organization over a specified timeframe, typically one year. On the other hand, employee retention is number of employees an organization keeps during a given period.

Many companies track turnover closely because it can be a huge cost to replace employees. Like customer retention, investment in employee retention has a higher return than investment in acquisition.

Retention is also a key sign of employee sentiment and engagement—it can even be a competitive advantage! After all, when a company is hemorrhaging employees, that’s typically a sign of something wrong. Compare this to a company with a team with a proven history of skills, knowledge, and relationships built long term within the company.

Which company would you rather work for or invest in?

That’s what we thought, too. 😉

But before we dive deeper into the who, where, and when of turnover and retention, let’s clear up some definitions.

Glossary of terms

Retention is the percentage of employees who stay at an organization over a set period. It can also be measured in terms of the average or median tenure; the number of years that employees remain with an employer.

Turnover is the percentage of employees who leave an organization over a set period. It is often reported monthly and annually.

💡 You may also hear terms like attrition, churn, or separations for turnover. Attrition can sometimes be used to refer to voluntary turnover, often in the context of a hiring freeze where employees leaving through natural attrition are not replaced in order to reduce the size of the workforce.

Voluntary turnover is when the employee decides to end the employment relationship—it’s the employee’s choice to leave. Generally, the primary focus of retention efforts is to reduce these resignations.

Retirement is technically voluntary turnover, however companies often report retirement rates separately because they are not a focus for reducing turnover.

💡 You may also hear terms like quits, exits, departures, or leaves for voluntary turnover.

Involuntary turnover is when the employer decides to end the employment relationship—the employee did not choose to leave. This could be for reasons of poor performance or […]

Source: Bonusly Blog

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