How 15Five Can Help Improve Your Employee Retention Rate

Employee retention encapsulates all the efforts an organization makes to retain its employees. Note that this doesn’t mean an organization tries to hang on to every employee as long as it can. Some employee turnover (i.e., when people leave an organization, whether voluntarily or involuntarily) is natural and even healthy. But organizations actively work to improve employee retention to avoid high turnover rates, losing top performers, or struggling to fill leadership positions.

Employee retention is closely related to employee engagement, which measures how passionate employees are about their day-to-day work and how aligned they are with your mission. According to Gallup’s 11th employee engagement meta-analysis, businesses with the lowest engagement scores experience 21% to 51% more employee turnover than businesses with high engagement scores. That’s why employee retention often involves employee engagement initiatives.

The success of these efforts is measured using an employee retention rate. This is calculated by:

1. Determining the time period for your retention rate. Typically, this covers a single year.
2. Define which group of employees you’ll measure. This can be a single department, an entire division, or the entire organization.
3. Get the total number of employees from the beginning of your defined period and the end of it.
4. Calculate the employee retention rate.

The formula for this calculation is:

(# of remaining employees ÷ number of starting employees) x 100 = Employee Retention Rate

So if, for example, you wanted to measure the retention rate of your marketing department, you’d do the following:

1. Pick “last fiscal year” as your time period.
2. Pick “the marketing department” as your group of employees.
3. Get the headcount for the marketing department at the beginning of the last fiscal year (say, 85).
4. Get the headcount for the marketing department at the end of the last fiscal year (say, 72).
5. Plug your numbers into the formula.

(72/85) x 100 = Employee Retention Rate

0.847 x 100 = 84.7%

By calculating this rate and tracking its evolution over time, you can spot trends before they become problematic (e.g., uneven rates across departments) and measure the effectiveness of your retention efforts (e.g., improving your benefits package).

In this guide, you’ll see the impacts employee retention can have on your organization, as well as how 15Five’s performance management platform can improve your retention efforts.

Key Takeaways:

• The business case for improving your employee retention rate
• Proven employee retention strategies
• How 15Five’s platform supports engagement and development
• Best practices for managers to improve retention
• Insights from industry benchmarks (e.g., what is a good employee retention rate)
• Real ways to increase employee retention using 15Five

The business impact of retention: Why it should be a priority

Before diving into the business impact of employee retention, let’s set a baseline for employee retention rates by looking at industry-wide data. Most data focuses on turnover rather than retention, but since an employee retention rate is essentially the inverse of a turnover rate, we can still use this data to benchmark retention rates by industry.

Industry	Turnover Rate	Retention Rate
Technology	60%	40%
Manufacturing	28.6%	71.4%
Retail and Wholesale	32.9%	67.1%
Banking and Finance	19.8%	80.2%
Healthcare	22.7% – 53.3% (Depending on the type of healthcare facility)	46.7% – 77.3%
Construction	56.9%
Public Education	16%	84%
Leisure, Hospitality, and Food	6.3%	93.7%
Mining and Logging	4.2%	95.8%

Employee retention rates vary wildly depending on your industry, with some (like tech) being inherently more volatile than others (like logging). That means your retention strategies—and the effort put into these strategies—will vary based on your industry. What doesn’t vary? The impact of poor retention.

That impact in two words? Productivity and profitability. It affects recruitment, as you burn through budget to continually replace employees as they leave. It creates brain drain, as your top performers leave for greener pastures and you scramble to document and spread the knowledge they had. It affects productivity in the teams that suddenly lose crucial collaborators.

While you could technically recruit your way out of low retention, it’s far from an effective strategy in the long term. You’ll lose time and money to recruitment and onboarding without reducing the financial impact of turnover. According to Gallup data, a 100-person organization with an average salary of $50,000 can lose between $660,000 and $2.6 million to turnover each year.

How employee engagement fuels retention

Employee retention involves a combination of efforts, and many of them overlap naturally with employee engagement initiatives.

Employee engagement describes the level of passion, drive, and motivation employees have for their work and for your mission in general. There are three levels of employee engagement:

1. Actively engaged: These employees are active participants in your company culture, go above and beyond, and are solid collaborators.
2. Not engaged: These employees don’t show much enthusiasm for their role and rarely take on additional tasks.
3. Actively disengaged: These employees are especially critical of company decisions, may be consistently absent, and miss important deadlines.

The further down this scale an employee is, the more likely they are to leave. Employees leave a job for a variety of reasons, from finding a better role elsewhere to dealing with low pay or having little opportunity for advancement. But the less engaged they are, the less compelling that reason needs to be. Even a minimal pay bump would be enough to make them leave, whereas an engaged employee might need a serious increase to even consider it.

Employee engagement can be contagious, with actively engaged employees creating a more positive work environment for their direct collaborators, other teams, and even their leaders. Similarly, actively disengaged employees harm the engagement of employees who work with them regularly.  So if employee engagement is steadily decreasing, and a disengaged employee leaves, then there’s a higher risk of turnover with anyone who once worked with them.

When you prioritize employee engagement, you give every employee more of a reason to keep working with you, improving your retention rate.

Key features of 15Five that help improve your employee retention rate

15Five is a performance management platform that streamlines, optimizes, and automates this essential process. It can be used to improve engagement surveys, manage your one-on-ones, optimize your performance reviews, and more. As such, a tool like 15Five is essential for improving your employee retention rate.

Here’s why.

Engagement surveys and insights

Engagement surveys give your leaders everything they need to know what matters most to their teams. That way, you can diagnose any potential issues before they lead to engagement problems, make a plan, and act on them. And because 15Five centralizes your surveys in a broader performance management platform, you can use that data in other retention efforts.

One-on-ones and check-ins

One-on-ones and check-ins are essential tools for managers who want to get the pulse of their teams on important issues. In an employee retention context, they give managers essential information to know what their direct reports need to stay engaged and committed to their work. 15Five streamlines the one-on-one process, aligning managers and their direct reports on talking points, as well as making every meeting more productive.

Recognition and visibility

High Fives and similar features allow leaders, managers, and teammates to publicly recognize top performers. Not only does this help build a more positive culture around important work, but centralizing this kind of recognition lowers the barrier to giving out more of it.

Performance reviews and goal tracking

Performance reviews support career growth—crucial for keeping employees engaged—but not in their current, outdated format. The yearly review rarely helps employees set meaningful goals or managers track progress towards them. 15Five’s performance reviews create clear feedback loops that build trust between managers and employees, as well as chart real progress towards measurable goals.

Manager enablement tools

Every aspect of the 15Five platform generates data that managers can use to better manage their teams. Turn every effort into a metric you can track. 15Five also offers built-in manager enablement content, so organizations can upskill managers in employee retention strategies and other essential aspects of their responsibilities.

Career development frameworks

Retaining top talent means investing in their long-term growth. 15Five gives you access to career visioning and development path tools, meaning your one-on-ones, engagement surveys, and more always happen with long-term goals in mind.

Want to see how 15Five can help you boost employee retention at your organization? Book a demo here.

Best practices and strategies: How to retain employees using 15Five

Improving your employee retention rate is typically done by addressing issues that arise from some of the most common reasons employees leave, including low pay, difficult relationships with managers, and a lack of role clarity. But while these are some of the most common issues, they’re far from the only areas you’ll want to address to boost retention. Here are some strategies that can help you retain your top performers.

Fine-tuning your hiring (and onboarding) process

Your employee retention strategy starts the moment you first interact with a potential candidate. Not when they’re hired; from the first communication you have with them. Every interaction from that point onward builds expectations around the work they’ll be doing and what your company culture is like. Constantly work on improving your hiring process so it accurately reflects your company. Otherwise, you’ll see a spike in turnovers in those first few months.

Reviewing your compensation package

Compensation is, unsurprisingly, a large part of employee retention. But it goes beyond just offering competitive salaries. According to SHRM, 88% of employees review health benefits before accepting an offer. Do you think they stop valuing these benefits after you employ them? Most organizations have a plan for increasing salaries over time, but few proactively improve non-salary benefits.

Improve and propagate company culture

Your company culture can make the difference between an engaged employee and a former employee. Being more intentional about your company culture contributes to employee retention in multiple ways:

• It roots out poor fits earlier: A wishy-washy culture makes it difficult for a potential employee to know if they’re a good fit or not, which can result in them leaving soon after they’re hired. A clearly defined culture with clear values is better for everyone.
• It keeps current employees engaged: Your mission and your culture are essential to employee engagement. When employees see leaders and managers put culture into practice, that culture feels more real to them, and they’re more likely to live in alignment with it. This helps make your workplace feel like everyone is working towards a common goal.

Chart clear paths for career development

Few employees enjoy working the same job, day in and day out, for years at a time with no hope of advancement. While you might not be able to offer short-term advancement to every employee, you should proactively work with all of them to build a development path that makes sense for them and for the organization. That can involve upskilling assistance, lateral career moves, or temporary responsibilities ahead of a promotion.

Use employee feedback loops

Feedback is crucial for employees to perform their best and for managers to know what their teams need. A tool like 15Five allows you to turn occasional, manual feedback processes into a feedback loop, which continually improves performance throughout your teams.

Keep more of your top performers

Your employee retention rate is the clearest indicator of how effective your organization is at keeping employees satisfied over the long term. It can tell you how you can expect recruitment budgets to change, which aspects of your organization need improvement, and even which departments are experiencing the highest turnover. Employee engagement is an essential element for this, as engaged employees are less likely to leave.

15Five’s performance management platform gives managers and leaders everything they need to boost retention, while employees are empowered to surface essential feedback and communicate engagement issues with their own powerful tools.

Want to explore 15Five’s full suite of engagement and performance tools? Book a demo.