Ultimate Performance: Measuring Human Resources at Work

Retention

Defining retention as the percentage of the total workforce who leave the organization every year can create misleading conclusions about an organization. For some time, the objective was to aim for the lowest possible turnover. Then came the movement to eliminate the bottom 20 percent of performers. However, in today’s tight labor market, the concern has shifted to retaining employees as long as possible.

Like quality, retention is best understood in the context of an organization, since measuring retention out of context is of little value. If an organization reported that its 1999 retention rate was 85 percent for all employees, what does that mean? Is 85 percent good, bad, or indifferent? There is simply no way to tell without further insight into the organization’s goals and business strategies. If the 1998 retention rate was 80 percent, did this organization improve or worsen in 1999? Again, without more information, it is impossible to know. The following questions must be addressed to place retention into a useable context:

•	Who is leaving? Are clusters of employees accounting for your turnover? What is the level of employees who are leaving? Are they long-term or short-term employees? Do particular sections of your organization produce disproportionate turnover? Are those leaving among the employees you want to leave or vice versa?
•	Why are they leaving? “More money” and “an exciting opportunity” are the most common answers when employees are asked the reason ...