A complete guide on how to create an employee retention strategy to find and keep top performers, reduce recruiting and training costs and improve business performance

What Is Employee Retention? How to Find and Retain Top Talent

CIPD reports that the average turnover rate for UK workers is 35%, with 26.9% of employees moving to new employers. This high turnover can result in significant costs for organisations, including recruitment expenses, training investments and lost productivity.

Retaining top talent is vital for organisations to maintain a competitive edge. By prioritising employee retention, organisations can build a high-performing workforce, foster a positive company culture and achieve long-term success.

In this article, we will explore the concept of employee retention and its importance in organisations. We will discuss the benefits of retaining top talent and the disadvantages of high employee turnover. We will provide practical strategies and tips on how to find and retain top talent in the workplace, including information on how to calculate employee retention rate with a practical example. 


What Is Employee Retention? 

Employee retention is a critical aspect of human resource management that focuses on an organisation’s ability to retain its employees over a prolonged period. It goes beyond simply hiring and attracting top talent; it encompasses the strategies and practices implemented to keep employees engaged, satisfied and committed to their roles within the company.

Employee retention involves creating a work environment that encourages individuals to stay with the organisation, fostering a sense of loyalty and commitment. It requires understanding and addressing the needs and motivations of employees to ensure their long-term satisfaction and tenure.


How to Calculate Employee Retention

Find out how to calculate employee retention

Calculating employee retention is essential for organisations to assess their ability to retain employees over a specific period. By tracking and analysing retention rates, companies can identify trends, measure the effectiveness of their retention strategies and make informed decisions to improve employee retention efforts. 

Here’s a step-by-step guide on how to calculate employee retention:


1. Determine the Time Period

Measuring employee retention on an annual basis provides a comprehensive and meaningful overview of workforce stability over a longer period. It allows organisations to identify trends, assess the effectiveness of retention strategies and make informed decisions to improve employee retention over time. 

Using a consistent annual time frame also simplifies reporting and aligns well with most organisations’ long-term goals.


2. Define the Retention Rate Formula

The most common formula for calculating employee retention rate is:

[(Number of Employees at the End of the Period – Number of Employees who Left during the Period) / Number of Employees at the Start of the Period] x 100

This formula provides a percentage value representing the proportion of employees who stayed with the organisation during the specified period.


3. Gather the Required Data

Collect the necessary data to calculate the retention rate. You’ll need the following information:

  • Number of employees at the start of the period: This includes all employees who were employed at the beginning of the chosen time period, such as the first day of the quarter.
  • Number of employees who left during the period: Count the number of employees who voluntarily resigned, retired or were terminated during the selected time frame. For example, if five employees left the company during the quarter, this number would be used in the calculation.
  • Number of employees at the end of the period: This includes all employees who remained with the organisation until the end of the chosen time period, such as the last day of the quarter.


4. Apply the Retention Rate Formula

Using the data collected, apply the retention rate formula mentioned in Step 2. Subtract the number of employees who left during the period from the number of employees at the start of the period. Then, divide this result by the number of employees at the start of the period and multiply by 100 to get the retention rate percentage. 

For example, if there were 100 employees at the start of the quarter and 95 employees remained at the end while 5 employees left, the retention rate would be [(95-5)/100] x 100 = 90%.


5. Interpret and Analyse the Results

Once you have calculated the retention rate, interpret the findings. A higher retention rate indicates that more employees are staying with the organisation, which is generally a positive sign. 

It’s important to analyse the trends, compare the rates across different periods or departments and identify any areas of concern or improvement. For instance, if the retention rate has significantly decreased compared to previous quarters, it may indicate a need to investigate and address underlying issues affecting employee satisfaction and engagement.


6. Take Action

Based on the analysis of the retention rate, develop strategies and initiatives to improve employee retention. Address any identified issues, such as improving employee engagement, providing growth opportunities, enhancing compensation and benefits or addressing concerns related to work-life balance. 

For example, if the analysis reveals a higher turnover rate in a specific department, additional focus can be given to understanding and addressing the challenges faced by employees in that department.


Calculating Retention Rate: Example

Let’s say a UK-based company, Inclusive Hiring Ltd., wants to calculate its employee retention rate for the year. Here’s an example:

  • Number of employees at the start of the year (1st January): 200
  • Number of employees who left during the year: 25
  • Number of employees at the end of the year (31st December): 180


Using the formula, we can calculate the retention rate:

  • Retention Rate = [(180 – 25) / 200] x 100
  • Retention Rate = (155 / 200) x 100
  • Retention Rate = 77.5%


In this example, Inclusive Hiring Ltd. has a retention rate of 77.5% for the year. This means that 77.5% of the employees who were with the company at the start of the year remained with the organisation by the end of the year.

By comparing retention rates across different periods and departments, Inclusive Hiring Inc. can gain insights into its employee retention efforts and identify areas for improvement.


Why is Employee Retention Important?

Discover the importance of employee retention

Employee retention is important for many reasons, mainly because it creates a stable, productive workforce that has a better understanding of your products and customers.

Companies with good employee retention can often build a strong employer brand, making people more inclined to work for an organisation where others choose to stay.

Here are some of the key benefits of employee retention: 


Continuity and Stability

When team members frequently change, it can disrupt the dynamics and cohesiveness of work teams. Building effective teamwork requires trust, communication and collaboration, which can be challenging when team members are constantly changing. This disruption can hinder collaboration, innovation and overall team performance.

Employee retention ensures continuity and stability within the workforce. When employees stay with the organisation for a longer duration, it reduces the costs and disruptions associated with frequent turnover. Retaining skilled and experienced employees allows for smoother operations and maintains institutional knowledge within the company.


Cost Savings

High employee turnover requires organisations to invest significant time and resources in recruitment efforts. These expenses can vary, ranging from 30% to 200% of an employee’s annual salary. The specific cost depends on factors such as the employee’s skill level and experience. 

Costs include advertising job vacancies, conducting interviews and performing background checks. Onboarding new employees requires training, orientation and integration into the company culture. These expenses can add up quickly and strain organisational resources.

By focusing on retention, companies can reduce recruitment and hiring costs and allocate resources more efficiently.


Positive Company Culture

High employee turnover can damage a company’s reputation as an employer. Potential candidates may perceive a high turnover rate as a red flag, questioning the organisation’s stability, work environment and employee satisfaction. A negative reputation can make it more challenging to attract and retain top talent in the future.

A strong employee retention strategy fosters a positive company culture. When employees feel valued, supported and engaged, they are more likely to contribute their best efforts and take pride in their work. This positive culture permeates throughout the organisation, leading to higher employee morale and satisfaction.


Increased Productivity

When employees leave, it often leads to a temporary decrease in productivity. New hires require time to become acclimated to their roles, learn company processes and establish effective working relationships. During this transition period, productivity may suffer, impacting deliverables, customer service and overall team performance.

Retained employees are familiar with their roles, responsibilities and company processes, which enables them to work more efficiently. They require less time for onboarding and can focus on performing their tasks effectively. This leads to increased productivity and output within the organisation.


Innovation and Knowledge Sharing

Long-term employees possess valuable institutional knowledge acquired through their experience within the organisation. When they leave, that knowledge may be lost or difficult to replace. This loss can disrupt workflows, hinder decision-making processes and impact the overall efficiency of the organisation.

Employees who stay with an organisation for a longer period develop a deep understanding of the organisation’s operations, customers and industry. Their experience and expertise can be invaluable in driving innovation and problem-solving. Retaining these employees encourages knowledge-sharing and collaboration, enhancing the organisation’s overall capabilities.


Competitive Advantage

Retaining top talent gives organisations a competitive edge. Skilled and experienced employees contribute to the development of competitive products and services, customer satisfaction and business growth. They can also serve as mentors and role models for newer employees, nurturing a culture of excellence.


Employee Engagement

Frequent turnover can negatively affect the morale of remaining employees. Witnessing colleagues leaving can create uncertainty, lower job satisfaction and decrease motivation. High turnover may also lead to increased workloads for remaining staff members, potentially causing burnout and dissatisfaction.

Retained employees are more likely to be engaged in their work and committed to the organisation’s goals. Engaged employees are motivated, enthusiastic and dedicated to achieving high performance. Their passion and loyalty positively impact team dynamics and contribute to a positive work environment.


How to Find and Retain Top Talent 

Finding and retaining top talent is crucial for organisations seeking to build a high-performing workforce. 

Here are nine key strategies to attract and retain top talent:


1. Effective Recruitment Practices

Implementing effective recruitment strategies is essential to attract the right talent. This includes crafting compelling job adverts, utilising various recruitment channels, conducting thorough interviews and assessing candidates’ skills, experience and cultural fit. Leveraging technology and data-driven approaches can also streamline the recruitment process.


2. Positive and Inclusive Work Environment

Creating a positive and inclusive work environment helps attract and retain top talent. This involves fostering a culture of respect, diversity and equal opportunity. Encouraging open communication, providing opportunities for collaboration and valuing employee feedback contribute to a supportive workplace culture.


3. Competitive Compensation and Benefits

Offering competitive compensation packages is vital to attract and retain top talent. This includes providing information on salaries and benefits in job ads. Conducting regular market research to ensure salaries remain competitive helps retain employees who might otherwise be enticed by better offers elsewhere.

Based on our recent statistics for all jobs throughout 2023, we have observed significant trends in job postings on Get Staffed. Listings that include an exact salary experience a considerable 17% increase in application numbers compared to those without any salary information. 

What’s even more striking is that when job listings provide a salary range, we noted a staggering 52% increase in the number of applications received. These findings highlight the importance of transparent salary information in attracting a higher volume of qualified candidates for job openings.


4. Career Development and Growth Opportunities

Providing opportunities for career development and growth is essential for retaining ambitious employees. Employees who perceive growth potential within an organisation are more likely to stay and contribute long-term. 

By showcasing potential career paths and growth prospects within your company you demonstrate your commitment to employees’ long-term development. This can help attract ambitious candidates seeking opportunities for growth and advancement. 

Here are some strategies that organisations can employ to enhance their recruitment campaigns:

  • Highlight success stories and testimonials from current employees who have experienced career growth with your organisation to inspire potential candidates.
  • Promote mentorship programmes and learning initiatives that support employees’ professional journeys. 
  • Clearly communicate the training, workshops and educational support available to enhance their skills. 
  • Discuss advancement opportunities during interviews and job descriptions to show candidates that hard work is rewarded. 
  • Encourage candidates to ask questions about career growth, signalling your organisation’s dedication to employee development.


5. Recognition and Rewards

Recognising and rewarding employee achievements is crucial for employee retention. Implementing effective performance management systems, providing regular feedback and acknowledging employees’ contributions through rewards and incentives create a positive work environment and foster a sense of appreciation.


6. Work-Life Balance

17% of employees cite work-life balance as a contributing factor to leaving a job. 

Promoting a healthy work-life balance is essential for retaining top talent. Offering flexible work arrangements, promoting employee wellness programs and encouraging a supportive work-life integration demonstrate a commitment to employees’ overall well-being. This helps reduce burnout and promotes job satisfaction.


7. Employee Engagement

When employees feel valued and empowered, it creates a positive work environment where they are more likely to thrive and feel motivated to contribute their best efforts. When they perceive that their opinions are heard and their ideas are taken into consideration, they feel a sense of validation and appreciation. This can lead to increased job satisfaction and commitment to the organisation’s mission and goals.


Regular Feedback Loops

Regularly providing feedback is essential for employee growth and development. Constructive feedback helps employees understand their strengths and areas for improvement, allowing them to make necessary adjustments and progress in their roles. Positive feedback reinforces their achievements and efforts, boosting their morale and sense of accomplishment. An ongoing feedback culture promotes continuous learning and enhances employee performance, which contributes to overall engagement and retention.


Variety in Roles

Offering a variety of roles and responsibilities can also keep employees engaged. Employees often seek opportunities to learn new skills, take on challenges and diversify their experiences. Providing chances for employees to explore different roles or take on additional responsibilities can prevent monotony and contribute to their professional growth. Employees who feel they have room to grow and advance within the organisation are more likely to remain committed and loyal.


Employee Involvement

Encouraging opportunities for input and ownership in their work further strengthens employee engagement. When employees have a say in decision-making processes, it instils a sense of pride and ownership in the outcomes. This involvement fosters a deeper connection to their work and the organisation’s success. Employees become more invested in achieving positive results, knowing that their efforts directly impact the company’s trajectory. As a result, they are more motivated to stay and actively contribute to the organisation’s long-term success.


8. Psychometric Testing and Personality Profiling

Incorporating psychometric testing and personality profiling into your recruitment process can provide valuable insights into candidates’ suitability for your company culture. 

Psychometric tests are designed to measure various aspects of an individual’s cognitive abilities, personality traits and emotional intelligence. These assessments help you gain a deeper understanding of a candidate’s strengths, motivations and working styles, allowing you to make more informed hiring decisions.

By administering psychometric tests, you can assess a candidate’s problem-solving skills, communication style, leadership potential and other critical attributes that are crucial for success within your organisation. Understanding how candidates handle stress, communicate with others and approach problem-solving can give you a clear picture of how they may fit into your existing team and contribute to the overall dynamics of your workplace.

Psychometric testing can also aid in predicting a candidate’s potential job performance and job satisfaction. By identifying candidates whose personalities align well with your organisational values and work culture, you increase the likelihood of attracting and retaining individuals who are genuinely enthusiastic about their roles and are more likely to thrive in your environment.


9. Partner with a Flat-Fee Recruitment Agency

By partnering with a professional flat-fee recruitment company, like Get Staffed, businesses can mitigate the challenges associated with high employee turnover. 

With access to the largest network of UK job boards, Get Staffed offers unparalleled opportunities for businesses to connect with a larger pool of qualified candidates. Our comprehensive approach provides a diverse range of choices, ensuring companies have a better chance of securing top-notch candidates that align perfectly with their business needs.

Through our expertise and resources, we streamline the talent acquisition process, enabling companies to secure the right candidates from the start and optimise the efficiency of their hiring practices. 

The advantages of working with Get Staffed as a flat-fee recruitment partner extend beyond initial candidate selection. With our assistance, organisations can expedite the filling of vacant positions, effectively reducing downtime and minimising disruptions to operations.



Employee retention is a critical aspect of building a successful organisation. By understanding the importance of employee retention, companies can take proactive steps to create an environment that attracts and retains top talent. 

Implementing effective employee retention strategies, such as providing competitive compensation, offering growth opportunities, promoting work-life balance and fostering a positive work culture, can help minimise turnover rates and alleviate the associated challenges. 

By focusing on recruiting and retaining top talent, organisations can enhance stability, productivity and employee satisfaction, ultimately contributing to their long-term success.


Article Highlights: A Quick Overview

  • Employee retention is essential for organisations to reduce costs associated with turnover, maintain stability and foster a positive work environment.
  • High staff turnover can result in increased recruitment and onboarding costs, decreased productivity, loss of institutional knowledge, decreased morale among remaining employees and damage to a company’s reputation.
  • Retaining top talent provides benefits such as continuity and stability, cost savings, positive company culture, increased productivity, innovation and knowledge sharing and competitive advantage.
  • Strategies to attract and retain top talent include:
    • Effective recruitment practices
    • Creating a positive and inclusive work environment
    • Offering competitive compensation and benefits
    • Providing career development and growth opportunities
    • Recognising and rewarding employee achievements
    • Promoting work-life balance
    • Fostering employee engagement
    • Partnering with a professional flat-fee recruitment company 
  • Calculating employee retention rates helps organisations assess their ability to retain employees, identify trends and make informed decisions to improve retention efforts.
  • Taking action based on retention rate analysis, such as addressing underlying issues, developing initiatives and monitoring trends, can improve employee retention.
  • Employee retention is a critical factor in building a successful organisation and implementing effective strategies can contribute to long-term success, stability and employee satisfaction.