What is Employee Retention?

Employee retention refers to an organization's ability to prevent employee departures and maintain a stable, experienced workforce. It is the inverse of turnover — while turnover measures who left, retention measures who stayed. Retention rate is calculated as the percentage of employees who remain with the organization over a specified period, most commonly expressed annually. A company with 200 employees that retains 170 over the year has an 85% retention rate.

Retention strategy recognizes that not all departures carry equal weight. Organizations focus most intensely on retaining high performers, employees in critical roles, and those with scarce skills — often referred to as regrettable turnover when they leave. Non-regrettable turnover (the departure of underperformers or employees in non-critical roles) may actually benefit the organization. Effective retention strategies therefore require understanding who is most at risk of leaving, why they might leave, and what interventions would be most effective.

The drivers of retention mirror the drivers of engagement: meaningful work, strong manager relationships, competitive compensation, growth opportunities, recognition, work-life balance, and cultural alignment. Research consistently shows that employees rarely leave for a single reason — departures typically result from the accumulation of unresolved dissatisfiers over time. This means retention is not a single program but a systemic outcome of how well the organization delivers on its employee value proposition across every dimension of the employee experience.

Replacing an employee costs 50-200% of their annual salary when factoring in recruiting, onboarding, lost productivity, and knowledge loss. Beyond direct costs, high turnover disrupts team continuity, damages customer relationships, and erodes institutional knowledge. For HR leaders, retention is a key indicator of organizational health and a primary lever for controlling costs, maintaining productivity, and building the experienced workforce that complex business challenges require.