Employer Branding & Candidate Experience
Retention (employee retention)
Also: Employee retention · Turnover · Tenure
Retention is a company's ability to keep employees long-term. It is the flipside of turnover: Every unwanted resignation incurs costs for replacement, onboarding, and knowledge loss.
Key Points
- Retention starts with selection: a good fit and smooth onboarding lead to longer tenure.
- Turnover rate measures the proportion of departures in a given period; tenure refers to the average length of service.
- Unwanted turnover often costs several times a month's salary (replacement plus onboarding plus knowledge loss).
- Retention is therefore also a quality measure for matching and onboarding.
What does retention mean?
Retention (employee retention) describes how well a company succeeds in keeping its employees. It is usually measured indirectly through the turnover rate: the percentage of people leaving the company in a given period. A distinction is made between wanted turnover (e.g., separation from underperformance) and unwanted turnover, where a valued person resigns – the latter being the real issue.
Why is retention economically important?
Each unwanted departure triggers a chain of costs: The position must be re-advertised and filled (Cost-per-Hire), the successor must be onboarded, and in the meantime, performance is lacking. Additionally, there's a loss of experiential knowledge and customer contacts. Therefore, investing in retention often yields better returns than continually recruiting anew.
Retention is no accident
High turnover shortly after entry often indicates a mismatch or onboarding gap – not bad luck. Sustainable retention addresses exactly this.
What levers strengthen retention?
- Accurate selection: set realistic expectations during the process instead of embellishment.
- Structured onboarding with clear objectives for the first few months.
- Development prospects: further training, advancement, meaningful tasks.
- Leadership and appreciation: regular feedback, fair compensation, good team.
Frequently Asked Questions
- How do you calculate the turnover rate?
- Simply: number of departures in a period divided by the average number of employees, multiplied by 100. It's important to separate wanted from unwanted turnover, as only the latter is a warning signal.
- What does retention have to do with personnel selection?
- A lot: A large portion of unwanted departures is due to a lack of fit regarding role, team, or culture. Those who check matching more thoroughly reduce later turnover – retention is therefore a success measure of selection.
- What does an unwanted departure cost?
- Reliable figures vary greatly depending on role, but the total of replacement, onboarding, productivity gap, and knowledge loss often reaches several times a month's salary for qualified positions.