---
title: "Employee Retention"
description: "Employee retention is an organisation's ability to keep its people. Learn the retention rate formula, a worked example, and what actually keeps people."
url: "https://sageo.ai/glossary/employee-retention"
source: "Sageo (sageo.ai)"
---


# Employee Retention

Employee retention is an organisation's ability to keep its employees over time. It is tracked as retention rate: the percentage of employees who were on the payroll at the start of a period and are still there at the end. Retention is the flip side of attrition, but it is measured on a fixed starting group, so new hires do not inflate it.

**Also known as:** retention rate, employee retention rate, talent retention, staff retention

## Key takeaways

- Retention is the share of employees who stay over a period.
- Formula: (employees at end − new hires) ÷ employees at start × 100.
- High retention is not always good if it keeps the wrong people; focus on keeping the right ones.
- The biggest levers are manager quality, growth, fair pay, and meaningful work.

## At a glance

- **Formula:** (End headcount − new hires) ÷ start × 100
- **Good range:** Varies by industry; track your own trend
- **Measured:** Annually, and by cohort
- **Related:** Attrition, turnover, eNPS

## Why does employee retention matter?

Replacing people is slow and expensive. Retention also protects the less visible things: customer relationships, team knowledge, and the trust that makes teams fast.

## How do you calculate employee retention?

Retention rate = ((employees at end − new hires during the period) ÷ employees at start) × 100

## Worked example

You start the year with 200 employees. You hire 30 during the year and end with 210.

Retained from the original group = 210 − 30 = 180. Retention rate = 180 ÷ 200 × 100 = **90%**.

## What drives employee retention?

Exit and stay interviews tend to point to the same few drivers: the relationship with the direct manager, growth and career progression, fair pay, flexibility, and recognition.

## Frequently asked questions

### Retention rate vs attrition rate?

Retention measures who stayed from a starting group. Attrition measures who left as a share of average headcount. They are related but not exact mirror images.

### What is a stay interview?

A conversation with a current employee about why they stay and what might make them leave. It is an exit interview held while you can still act.

### What is a good employee retention rate?

It varies widely by sector and role. Compare against your own trend and industry benchmarks, and watch retention of your strongest performers specifically.

### How do you calculate retention rate?

(Employees at the end of the period minus new hires) ÷ employees at the start × 100. Of 200 starters, 180 of the original staying is 90%.

### How do you improve employee retention?

Invest in manager quality, offer clear growth, pay fairly against the market, and act on stay-interview and engagement signals before people leave.

### What is regrettable turnover?

The departure of people you wanted to keep. It is the number that matters most, more than the headline rate.