Employee Retention Rate Calculator
Measure how well your organisation holds onto its existing workforce over any chosen period. Use it during annual HR reviews or after significant organisational changes to benchmark stability.
About this calculator
Employee retention rate expresses the percentage of original employees who stayed throughout a given period, excluding voluntary departures. The formula used here is: Retention Rate = ((startingEmployees − voluntaryTerminations) / startingEmployees) × 100. Only voluntary terminations (resignations, retirements by choice) are subtracted, because involuntary exits such as layoffs or dismissals reflect different organisational dynamics. A retention rate of 90% or above is widely considered healthy across most industries, though benchmarks vary. Tracking retention alongside the ending headcount and new hires gives a fuller picture: high retention with low ending headcount signals that hiring is not keeping pace with growth, while low retention despite high new-hire numbers points to a leaky pipeline that inflates recruitment costs.
How to use
Imagine your company started the year with 200 employees. During the year, 18 people resigned voluntarily. Step 1 — Apply the formula: Retention Rate = ((200 − 18) / 200) × 100. Step 2 — Numerator: 200 − 18 = 182. Step 3 — Divide: 182 / 200 = 0.91. Step 4 — Multiply by 100: 0.91 × 100 = 91%. Your annual retention rate is 91%, meaning 91 out of every 100 original employees chose to stay for the full year.
Frequently asked questions
What is a good employee retention rate for most industries?
Most HR benchmarking surveys place a healthy retention rate between 85% and 95%, but this varies significantly by industry. Technology and finance firms typically target above 90%, while retail and hospitality often see rates closer to 70–80% due to higher natural turnover. Comparing your rate against your industry average gives more actionable insight than comparing it to an absolute number. SHRM and the Bureau of Labor Statistics publish annual industry-level benchmarks that are worth consulting.
What is the difference between employee retention rate and turnover rate?
Retention rate measures the proportion of employees who stayed, while turnover rate measures the proportion who left. They are not simply inverses of each other because turnover calculations often include both voluntary and involuntary separations, whereas many retention formulas count only voluntary departures. A company can have a 91% retention rate alongside a higher turnover rate if involuntary separations and short-tenure new-hire exits are counted separately. Understanding both metrics together gives a more complete workforce stability picture.
How often should HR teams calculate employee retention rate?
Most organisations calculate retention rate annually to align with fiscal-year planning and compensation reviews, but quarterly tracking is increasingly common in fast-growing or high-turnover environments. Monthly calculations are most useful during periods of rapid headcount change — such as post-merger integration or large-scale restructuring — where waiting a full year masks early warning signals. Consistent measurement periods are essential: always compare like-for-like (e.g., Q1 this year versus Q1 last year) to avoid seasonal distortions.