Talent has become more mobile in the wake of 2020’s remote working revolution.
This means your best employees are no longer as limited by geography in their choice of employer, and HR leaders are right to focus on their employee retention strategy.
Retention rate is a simple calculation: It’s the number of employees who stayed for the whole time period, divided by your total employees number at the start of the time period. Multiply the result by 100 and that’s your retention rate.
What this doesn’t give us is the ‘why’.
Why are people leaving? How likely are people to leave? As HR professionals, we need more insight so we can shed light on the ‘why’ and propose targeted, strategic solutions.
Effective people data practices make this task less of a guessing game, but what are the basic areas you can track to give you the insight you need?
How do you tell if employees are happy? The obvious answer is to ask your people how happy they are.
An increasingly popular measure of employee happiness is the employee Net Promoter System (eNPS). Thought-leader organisations like Apple use eNPS one a quarter, measuring employee engagement and happiness via a confidential survey with questions like: “On a scale of 1 to 10, how likely are you to recommend this as a place for work?”
However, employee surveys are only a small piece of the puzzle. We live in a world where 58% of employees say they would trust a stranger more than their boss, so while surveys will allow you to take a snap-shot of sentiment among your people, they should not be solely relied upon as the basis for retention strategy decisions.
Bottom line, a happiness survey relies on respondents being truthful; it’s an emotive measurement.
How reliable is your data?
Building a clear picture of retention through (non-emotive) data analysis is made significantly more complex in most enterprise organisations where, according to Bersin by Deloitte, people data is collected across up to seven separate systems of record.
Where data sets are inaccurate or incompatible, they are often therefore ignored.
We talk a lot about delivering a ‘single source of truth’ with XCD. Using an HCM solution that incorporates all people data in a single database, users leverage sophisticated reports that highlight insights as the click of a button.
Data you already have:
Without reliable data and smart data processes, we’re left making recommendations based on gut instinct. When we talk about XCD’s reporting and analytics tools, we describe how they allow organisational leaders to take the gut out of people strategy decisions.
For instance, a common misconception for employers is that remuneration is a key driver of employee churn, where numerous studies suggest that other factors have a greater impact. The factors influencing employee retention span every element of the employee experience, so the more (reliable) data you can incorporate, the better.
Your HRMS will (hopefully) already collect much of the hard data required to deliver decent objective insights on retention. Benefits, promotions, pay history, sick days, combined with factors like commute time, department, manager, and performance review history – this is a broad and rich spectrum of information to get started with.
Let’s look at what we can do with data:
Voluntary vs involuntary turnover:
Whether someone leaves of their own accord is an important distinction and will help you nail down the ‘why’ in your retention investigation. A high voluntary turnover rate is an indication that something is going wrong within the employee experience. Conversely, a high involuntary rate suggests the issue may sit within recruitment.
The basic turnover rate calculation at the top of this article fails to answer this critical question. Are we holding on to our best performing people? If the answer is yes, then you’ve identified a big problem.
The first few months of employment are the most fraught when it comes to the risk of churn, so how effectively you support new starters is a key factory in retention. How does the rate of turnover among new starters differ from the rest of your workforce? It will always be higher, but if the difference is significant, it indicates an issue with your recruitment and onboarding process.
We all know the popular saying about how people don’t leave jobs, they leave managers. If your data indicates turnover with a particular manager is unusually high, there’s an obvious indication there.
Similarly, you can learn a lot from managers who show a low turnover rate. Their approach may be repeatable and could be applied more widely across your organisation.
Additional metrics for retention insight:
- Performance review
- Onboarding time to productivity
- Turnover cost
- Remuneration and benefits history
- Sick days taken
- Avg. employee tenure
- Promotion history and internal mobility
- L&D effectiveness
- Commute time
Analysis of these data will highlight trends. For instance, do poor reviews, longer commute times or stagnant pay history increase an individual’s risk of churn? The more reliable data you have access to, the less likely you are to miss a crucial causative factor in your employee retention investigation.
In our recent webinar on kickstarting people analytics, HR expert Zoe Wilson advised regardless of where you are on the data sophistication journey, you start with what you’ve got.
If you’d like to speak to one of our experts about how XCD enables sophisticated retention analytics, why not book a demo.