Employee retention rate is the percentage of employees who stay with an organization over a specific period, reflecting workforce stability and organizational health.

Key Insights

Organizational health indicator: Retention rates signal employee engagement, satisfaction, and alignment with company values and goals.
Strategic business impact: High retention reduces turnover costs, preserves institutional knowledge, and supports long-term performance.
L&D leverage point: Learning and development initiatives, such as career growth opportunities and manager capability building, play a critical role in improving retention.
Data-driven action: Combining retention metrics with qualitative insights enables targeted, effective interventions to address the root causes of turnover.

What is employee retention rate, and why does it matter?

Employee retention rate measures the percentage of employees who stay with an organization over a defined period, usually a year. It’s a key metric for assessing workforce stability and organizational health. High retention often reflects strong engagement, positive workplace culture, and alignment between employee needs and company offerings. Conversely, low retention can signal deeper issues like dissatisfaction, burnout, or lack of growth opportunities. Since replacing employees is costly—both financially and in lost knowledge—monitoring retention rates helps organizations safeguard productivity, morale, and long-term success.

How is employee retention rate calculated, and what’s a good benchmark?

Retention rate is typically calculated by dividing the number of employees who remain employed at the end of a period by the number of employees at the start, then multiplying by 100. For example, if you start the year with 100 employees and 85 remain at year’s end, your retention rate is 85%. Benchmarks vary by industry, role type, and region—tech companies may face higher turnover than public sector organizations, for example. Rather than chasing external benchmarks, it’s often more useful to track internal trends over time and segment by team, location, or demographic to spot meaningful patterns.

What factors influence employee retention, and how can L&D impact it?

Retention is shaped by multiple drivers: career development opportunities, fair compensation, supportive leadership, work-life balance, and organizational purpose, to name a few. L&D plays a pivotal role by offering growth pathways, upskilling programs, and career mobility, which enhance employee engagement and loyalty. Equipping managers with coaching and feedback skills further boosts retention by improving the everyday employee experience. By aligning learning initiatives with employee aspirations and business needs, L&D teams help create an environment where people want to stay and thrive.

How should organizations use retention data to improve outcomes?

Tracking retention isn’t just about watching numbers—it’s about diagnosing causes and informing action. Organizations should combine quantitative retention metrics with qualitative insights from engagement surveys, exit interviews, and stay interviews. Analyzing this data helps pinpoint risks like lack of advancement or manager effectiveness. Targeted interventions, such as leadership development, reskilling programs, or recognition initiatives, can then address specific gaps. Importantly, L&D should partner closely with HR and business leaders to ensure solutions are integrated, measurable, and tied to both employee experience and strategic goals.