As the economy continues to recover from the aftermath of COVID and hiring picks up, employees have more opportunities than ever to explore their market value, making employee retention an even more crucial component of your company’s success.
Retaining and developing existing employees is almost always the better option for employers, as replacing employees is an expensive and disruptive process. In fact, the Society for Human Resource Management (SHRM) reported that on average it costs a company 50%-60% of an employee's salary to replace them. And it can then take up to 2 years for a new employee to reach full productivity.
Here are four employee retention metrics to keep track of to minimize turnover and maximize returns:
1) Employee net promoter score
The employee net promoter score (eNPS) was developed from the concept of Net Promoter Score, which measures customer experience and loyalty. eNPS is measured by asking employees one question: “On a scale of 0-10, how likely are you to recommend our company as a place to work?”
Employee responses are then placed into the following three groups:
Promotors (rating of 9-10): most enthusiastic and loyal employees.
Passives (rating of 7-8): employees that are generally satisfied.
Detractors (rating of 0-6): disengaged and dissatisfied employees.
A company’s eNPS score is calculated by subtracting the percentage of detractors from the percentage of promoters, with scores ranging between -100 and +100. There are several factors, including the size of your organization to keep in mind when evaluating eNPS results. Generally, a score over 20 can be regarded as excellent.
An HCM can not only help you measure eNPS, but can help improve it. HCMs make it quick and easy to conduct eNPS surveys as often as needed, so you can identify potential issues early and take the necessary steps to address them. HCMs can easily incorporate survey feedback into goal tracking, learning and development plans, and performance management. And with the ability to conduct more frequent surveys, you can confirm whether those identified issues have been successfully addressed and improved the employee experience.
2) New employee satisfaction rate
New employee satisfaction is a particularly helpful metric when it comes to boosting retention and minimizing unnecessary turnover. Since onboarding sets the tone for your new employees, that’s a great place to start when trying to understand how happy your new hires are with the process. In fact, research has shown that new employees who are unsatisfied with their onboarding experience are twice as likely to seek other job opportunities.
When seeking to measure new employee satisfaction rates, it’s important to ask questions that address how satisfied they are with how their role contributes to the organizational goals, and how well their experience matches their expectations of the role they were hired for. Once again, an HCM makes it easy to survey new hires and get the input needed to measure and understand new employee satisfaction rates. Captured in time, an organization can identify opportunities to refine the onboarding process and integrate learning and skill development in order to close skill gaps and improve outcomes for the business and individual employees.
3) Retention of top performers
While it may not hurt your company when low performers leave, losing star employees certainly will. Not only does it affect productivity, but it’s also difficult to replace the institutional knowledge and cultural fit of those top performers. In spite of this, a recent poll revealed an alarming 47% of high-performing employees left their companies in the previous year. And since many organizations view retention as a single data point, they may not even be aware of how many top performers they are losing.
Using an HCM can help companies capture the data needed to not only identify who your high-performing employees are, it can also combine that data with other metrics in order to identify a top-performer retention rate. A high top performer turnover can often signify underlying problems such as insufficient learning and development, lack of career growth opportunities, and issues with manager performance.HCMs can help organizations get to the ‘why’ behind the turnover and provide a system that makes it easy to identify competencies that can further employee career development, recognize achievements, and increase retention of your valuable high performers.
4) Voluntary vs. Involuntary churn rate
Churn rate refers to the overall turnover in an organization, typically calculated as the percentage of employees leaving the company over a specified time period. Involuntary turnover is usually defined as employees leaving a company due to layoffs or being let go for unsatisfactory performance, while voluntary turnover is defined as employees choosing to leave their positions.
While it’s not uncommon for companies to experience some employee churn, a high rate of churn can be costly. And if an organization’s voluntary churn rate is high, it can indicate there is a larger cultural issue. Conducting exit interviews is a good way to gain invaluable insights on the reason for the churn, so it’s important to make sure you ask questions that address these topics:
Why the employee chose to leave.
What the organization could have done to prevent them from leaving.
How their departure will impact the organization.
Not only will an HCM facilitate the exit interview process, but you can also utilize an HCM to help reduce voluntary churn by seeking ongoing employee input on engagement and satisfaction, gather 360-degree feedback for both individual and team performance, as well as conduct performance coaching and job mentoring.
Measure employee retention metrics with your HCM
As the business landscape continues to become even more competitive, employee retention is imperative to continued success. Organizations that utilize an HCM to capture data needed to measure and understand these four key employee retention metrics will be well-positioned to address employee satisfaction, engagement, and increase their retention rates.
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