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Employee retention in 2025

Last updated December 2024

Employee retention and turnover is set to continue to be one of the most significant challenges for people in HR.

In fact, more than a third (36%) of HR professionals have said employee retention will be their number one focus for the year – followed by recruitment and engagement.

According to HR Grapevine – “Recruiting and retaining employees has overtaken the cost-of-living crisis as the industry’s biggest obstacle for the coming year…”

  • What is employee retention?
  • Retention rate vs turnover rate
  • How to calculate retention rate and turnover rate
  • Why employee retention matters
  • Top drivers of successful employee retention
  • What is a good employee retention rate?
  • Five benefits of good employee retention
  • Five downfalls of bad employee retention (high turnover)
  • How to tell if your employees are looking to leave
  • Improving employee retention with HR software (and staff turnover surveys)

What is employee retention?

In simple terms, employee retention refers to the strategies and efforts employed by companies to retain their valuable team members over an extended period.

However it is so much more than just keeping staff on board, it’s about creating a workplace environment where employees feel engaged, supported, and motivated to stay with the company for the long term.

 

Retention rate vs turnover rate

Employee retention rate is the percentage of your workforce that stays at your organisation. Whereas turnover rate is the percentage of employees that leave your organisation.

Retention rate alone is limited in what it tracks, so calculating both the employee retention rate and employee turnover rate is more useful in getting an overview of employee movements at your organisation.

 

How to calculate retention rate and turnover rate

To calculate your organisation’s retention rate, simply divide the number of staff who have remained employed during a specific period of time by the initial number of employees for the same period of time. Multiply that number by 100.

stribe_yellow image describing formula_how to calculate employee retention rate

Your company’s turnover rate provides insights into the proportion of employees leaving the company relative to the average number of employees.

stribe_yellow image describing formula_how to calculate employee turnover rate

 

Why employee retention matters

Employee retention isn’t just a metric or KPI. It directly influences the overall success and growth of a company. A high staff turnover rate can be costly and will inevitably disrupt the stability of a business. Retaining talented, motivated and experienced employees not only saves on recruitment and training expenses but also contributes to a more knowledgeable, happier, and cohesive team.

 

Top drivers of successful employee retention

People stay at their jobs for many reasons, but there are clear common denominators that contribute. The top drivers of successful employee retention include a focus on wellbeing and respect, frequent two-way feedback, autonomy and trust, competitive pay, work-life balance and career development.

  1. A focus on wellbeing
  2. Frequent two-way feedback
  3. Autonomy and trust
  4. Competitive pay and benefits
  5. Work-life balance
  6. Career development

 

What is a good employee retention rate?

It is commonly accepted that a retention rate of 85% – 90% is considered good. (That’s a turnover rate of 10% – 15%).

However, many factors including location, industry and company size contribute to what is considered ‘good’ – so we recommend only using this as a rule of thumb.

According to Office of National Statistics – the average turnover for UK workers is 35%. That’s more than one third of UK employees leaving their jobs each year – so keep this in mind when setting your own retention goals and KPIs for your organisation.

 

Five benefits of good employee retention

  • Happier and healthier employees: Happy and satisfied employees are productive employees – it’s that simple.
  • Stable work environment: Reduced turnover leads to less stress and a steadier, more established workplace for everyone.
  • Deeper expertise: Long-term employees bring valuable skills and knowledge to their roles.
  • Cost savings: Individuals save time on job searching, while businesses cut recruitment and training expenses.
  • Positive employer branding: A content workforce enhances the company’s reputation, attracting top talent and minimising recruitment challenges.

 

Five downfalls of bad employee retention (high turnover)

  • Disrupted team dynamics: Teams face constant disruptions with departing and incoming members, affecting cohesion and collaboration.
  • Loss of expertise and knowledge: Valuable long-lasting knowledge and skills leave with departing employees, impacting overall productivity.
  • Increased recruitment costs: Frequent turnover leads to higher recruitment, onboarding, and training costs as the cycle repeats.
  • Negative impact on morale: Continual departures create a sense of instability and lower morale among remaining employees.
  • Diminished employer brand: High turnover negatively affects a company’s reputation, making it challenging to attract and retain top talent.

 

How to tell if your employees are looking to leave

Let’s face it – it is inevitable that people will quit their jobs and change their career paths. But if you know the signs to look out for, you will be able to equip your workplace with strategies to potentially keep your talented employees around for longer!

Here’s the behaviours and signals to look out for:

  • Performance dips and productivity drops
  • Less enthusiasm and engagement
  • Frequent absences and unplanned time off
  • Isolation and less social interaction
  • Voicing frustrations more often
  • Lack of interest in development
  • Discussing career aspirations unrelated to role
  • Noticeable, prolonged negative shift in attitude

If you notice an employee expressing one or more of these behaviours, it may be worth having a gentle and authentic chat to them about how they’re feeling at work.

 

Improving employee retention with HR software (and staff turnover surveys)

Improving employee retention is a strategic and ongoing effort, not an overnight task.

Seeking the support of employee engagement software is key to achieving long-term success and crafting data-driven decisions.

At Stribe our platform is designed to empower HR managers and decision-makers with the tools and surveys needed to enhance employee satisfaction, workplace culture, and implement authentic and long-lasting retention strategies.

With features tailored to achieve comprehensive and holistic employee engagement, Stribe is your way forward to building a motivated and loyal workforce over time.

 

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stribe youtube thumbnail with a happy employee on yellow background_webinar about employee retention strategies

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