Retention Rate

7 Key excerpts on "Retention Rate"

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  Retaining Your Best Employees (In Action Case Study Series)

  • Patricia Pulliam Phillips(Author)
  • 2023(Publication Date)
  • Association for Talent Development

    (Publisher)

  It also dispels some of the myths about turnover and sets the stage for the remainder of the book. Definitions Highlighting the basic distinctions involved in retention, turnover, and other related topics will help clarify the concepts dis- cussed in this book and establish the appropriate framework for that discussion. Retention relates to the percentage of employees remaining in the organization. High levels of retention are desired in most job groups. Turnover, the opposite of retention, refers to the percentage of employees leaving the organization for any reason. Avoidable turnover is distinguished from unavoidable turnover so the proper emphasis can be placed on the avoidable portion. Turnover rate refers to the rate at which individuals leave. Sev- eral formulas are discussed in this chapter. Tenure is the length of time an individual is employed by the or- ganization and is usually related to the concept of employee loyalty. A loyal employee usually remains with an organization for a long pe- riod of time. In many organizations it is desirable to have long-tenured employees, although this situation taken to an extreme can also cre- ate problems. 2 Retaining Your Best Employees Experience levels are often defined as the months or years of ex- perience in a particular job or functional area of the organization. Average levels of experience are critical issues in some job categories and knowledge industries. Retention Has Become a Critical Issue Recent publicity underscores the critical issues surrounding re- tention. Articles on the subject are regularly included in such mag- azines as Fortune, Forbes, and Business Week, sometimes as cover stories. Books describing the competition for talent and suggesting solutions for retaining employees are readily available; workshops and seminars are regularly conducted on the issues of retention and turnover. They have become mainstream topics in business and professional literature.

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  Retaining Employees

  • Harvard Business Review(Author)
  • 2010(Publication Date)
  • Harvard Business Review Press

    (Publisher)

  Retaining Employees: The Basics An Overview of Employee Retention 3 4 Retaining Employees T he subject of employee retention gets a lot of attention within organizations and in the business press. But what is it, exactly? Why is it more important than ever for today’s busi-nesses? And what enhances—and what discourages—retention? In the following pages, we explore these questions. What is retention? Retention refers to a company’s ability to keep talented employees— people who will help their organization remain competitive in a world of rapid change. From an organization’s point of view, retention doesn’t mean trying to hang on to every employee for-ever. It means keeping good employees for the most appropriate amount of time for their particular function or level . For example, with some jobs, such as entry-level computer programming, the ideal tenure may be just two years. By allow-ing people to move on after that time span, your firm can then hire newcomers who have the most up-to-date educational back-ground or technical expertise and who may cost less in terms of salary than more seasoned personnel. One thing that retention is not is continuing to invest in em-ployees who, for whatever reason, aren’t contributing in positive ways to the company. An Overview of Employee Retention 5 The importance of retention can also vary widely from culture to culture. For instance, in some countries, employees tend to stay at one company for their entire professional lives, while in other countries, they move from firm to firm frequently, depending on available opportunities and their interests and priorities. Even within one culture or country (or within one geographic region), attention to keeping good employees may fluctuate, de-pending on economic conditions and shifting workplace realities. Why is retention crucial? For several reasons, retaining good employees counts among the most essential ingredients for success in today’s business world.

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  Hiring and Keeping the Best People

  • (Author)
  • 2002(Publication Date)
  • Harvard Business Review Press

    (Publisher)

  But recessions don’t last forever, and most people recognized that the war for talent would heat up again once the economy got back on track. And in some sectors of the economy, the war never really subsided.

  So, what is the retention situation in your business? Are all of your employees toiling happily in the company vineyards? Don’t bet on it. According to a 1999 study of 2,000 employees by Hudson

  Institute and Walker Information:1

  • 33 percent are “high risk”—that is, they are not committed to their present employer and not planning to stick around for the next two years;
  • 39 percent are “trapped”—they aren’t committed to the organization but are currently planning to stay for the next two years; and
  • only 24 percent are “truly loyal”—both committed to the organization and planning to stay on for at least two years.

  Thus, if your employees are anything like the ones surveyed, more than half are prepared (or preparing) to bolt!

  This chapter is the first of several on the subject of employee retention. It explains why it is so important to your business—and so challenging. It offers insights into why people stay with their current employers and what factors influence them to leave. Two companies with remarkable success in employee retention are highlighted as examples: Southwest Airlines and SAS Institute. Finally, this chapter offers suggestions on what you can do to retain your best people.

  Why Retention Matters

  Retention is the converse of turnover (turnover being the sum of voluntary and involuntary separations between an employee and his or her company). Industry-wide and company-specific measures that track turnover rates reveal that most companies surveyed by the Center for Organizational Research had turnover rates in the 15 to 50 percent range, though a sizable minority enjoyed single-digit turnover (see figure 3-1 ).

  Retention isn’t simply a “feel good” issue. The retention of good employees matters for three important bottom-line reasons: 1) the growing importance of intellectual capital; 2) a causal link between employee tenure and customer satisfaction; and 3) the high cost of employee turnover. Let’s examine each of these in turn.

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  E-Commerce Growth Strategy

  A Brand-Driven Approach to Attract Shoppers, Build Community and Retain Customers

  • Kunle Campbell(Author)
  • 2023(Publication Date)
  • Kogan Page

    (Publisher)

  Meaning your resources would be better spent elsewhere in the growth stack, to create a symbiotic relationship with other nodes in your growth network. Fundamental retention-related metrics are the customer Retention Rate, churn rate, lifetime value and net promoter score. Customer Retention Rate is the percentage of customers who remain with a business after a certain time period. At the time of writing in 2022, average Retention Rates for e-commerce verticals range from 20.9 per cent (tea) to 33 per cent (high-performance sports clothing) (Rentech Digital, 2022). The average Retention Rate for e-commerce businesses is 30 per cent (Omniconvert, 2019). Customer churn is the opposite of retention and is the percentage of customers lost over a certain time period. The average churn rate for subscription e-commerce is between 9 and 13 per cent over a 24-month period (Recurly, 2019). C ustomer lifetime value is the amount of money a business can expect to earn from a customer throughout their relationship. The average customer lifetime value for direct-to-consumer e-commerce companies is $168, but ranges from $55 for tea, to $477 (CBD oil) (Teneva, 2018). Lastly, n et promoter score is a measure of how likely customers are to promote a brand and has an average score of 39 for internet shopping (Netpromoter, 2022). Marketing leaders generally report spending a lot more time and effort monitoring acquisition metrics like conversion rate and customer acquisition cost, as well as average order value. While the majority of marketing leaders reported measuring conversion rate and average order value (80 per cent and 64 per cent respectively), slightly less than half reported monitoring customer satisfaction, and around one-third monitor customer Retention Rate and customer lifetime value (Omniconvert, 2019). Only one-quarter of marketing leaders reported measuring net promoter score, a metric with a philosophy strongly founded in customer-centricity (Omniconvert, 2019)

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  Customer Relationship Management

  Strategic Approaches in Digital Era

  • Joao Heitor De Avila Santos(Author)
  • 2019(Publication Date)
  • Society Publishing

    (Publisher)

  Customer retention has no direct relationship with customer loyalty, for example, a brokerage firm runs the conventional and online trading platforms, when a customer who has been using the regular platform decides to move to the online platform. This situation can be looked at in two different perspectives, according to the company, they see loyalty, but on the customer’s side of things, he is retained by the services offered by the trading company. Customer retention is strategic and is meant to keep existing customers without giving them an opportunity to run to competitors when all they are looking for is a quality relationship with the organization. In general, terms a customer will be retained up to the extent to which their basic needs are met. In a perfect scenario, such customers show no intention of moving to another supplier. To a company the higher their Retention Rates, the more profitable it becomes. 10.2. CUSTOMER RETENTION STRATEGIES 10.2.1. The Concept of Strategy A strategy is that pattern of related activities that bring its impact on the overall achievement of the firm’s objectives in response to environmental demands (Porter, 1990). Strategic management is that vital activity that takes place in the business market. Business strategy is all about the competition strategy an organization uses to compete in a particular industry.For any form of success in the company, the management must institute some plan that will give them a competitive edge over other competitors (Porter, 1998). Managers must be in constant learning and study their environment and any set of rules that they may use to their advantage. Proper benchmarking must be done to make to achieve the best practices. Outsourcing may be an option for a firm to compete in the market aggressively. Few competencies Customer Retention Strategies and Customer Loyalty 241 needed within the industry may have to be achieved to stay ahead of the pack (Prescott, 2001).

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  International Human Resource Management

  • Mustafa F. Özbilgin, Dimitria Groutsis, William S. Harvey(Authors)
  • 2014(Publication Date)
  • Cambridge University Press

    (Publisher)

  Some executives have a clear vision and articulate it throughout the organisation, including at board of direc-tors, top management and senior executive levels. & Employee retention The retention of valuable employees is a global challenge. Organisations seek to become sustainable by attracting talented people and keeping them satisfied and productive. Their aim is to employ exceptional people who add value and help the organisation create a culture that cannot be copied (Jackson & Schuler, 2003 ). The retention of intellectual capital is of growing strategic importance (Tymon, Stump & Doh, 2010 ) and as a result the retention of qualified employees has attracted growing interest among organisations, practitioners and academics (Scullion, Collings & Gunnigle, 2007 ). As McKinsey & Company consultants highlight, there is ‘a war for talent’ mainly in recruit-ment for multinational firms, where leaders have a key role in the success of the company (Chambers et al., 1998 ). Employee retention has been a major issue for many companies across the world, but Asian countries such as South Korea, Malaysia, Singapore, Taiwan and China have faced particular difficulties, despite the economic growth of the region in recent years (Barnett, 1995 ; Chang, 1996 ; MacLachlan, 1996 ; Syrett, 1994 ). Effective employee retention is a systematic effort by employers to create and foster an environment that encourages current employees to stay with the company by putting in place policies and practices that address their individual needs. Organisations are focusing on employee retention by encouraging employees to remain in the organisation as long as possible. So, HR managers must know what factors motivate their employees to stay in the field or cause them to leave. Employee retention .........................................................

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  Managing Employee Retention

  • Jack J. Phillips, Adele O. Connell(Authors)
  • 2004(Publication Date)
  • Routledge

    (Publisher)

  A critical time in an employee’s tenure with an organization is usually with the first few days, weeks, and months of employment. It is during this period that mismatches are identified and frustrations intensify. An employee may decide to leave if other opportunities are available. This early turnover is often a function of improper selection systems, ineffective orientation systems, and inadequate socialization processes to adapt the employee to the organization. To understand this issue completely, an early turnover measure should be developed. This measure is defined as the number of employees leaving in the first 60 days of employment divided by the number of new employees hired in the same period. The time period for the length of employment could vary from a shorter time frame, 30 days for entry-level unskilled employees, to a longer period for technical and professional employees (90 days). Monitoring and understanding this specific turnover rate provides an opportunity for early attention to an important issue.

  Setting Retention Targets

  Collectively, the five measures listed previously should be appropriate for monitoring turnover data. Two other issues of monitoring will be discussed later. They are intention to quit and turnover costs. Total, avoidable, and early turnover are the measures typically collected by employers of choice (Fitz-enz and Davison, 2002). A more appropriate measure may be dysfunctional turnover rate.

  In addition to selecting the appropriate definition, it is important to set the targets or triggers for action. Triggers can be set at different levels, depending on when and where action is needed. The maximum acceptable rate for the turnover is often the first trigger. A value above this rate is unacceptable and triggers significant analysis, action, or both. A value below that rate is accepted as minimum; however, organizations often set lower targets as desired or stretch goals. Some organizations striving to be employers of choice set their turnover rates at a value below the maximum acceptable rate. These organizations focus much attention on attracting and retaining employees. In still other situations, a few organizations desire to be the best at this issue. When considering their position in the industry and other best-practice firms, a lower rate is often set that is considered to be a best practice, world-class, or a top 10 percent standard for the industry. This represents truly exceptional performance, achieved by only a few organizations. This becomes a stretch goal for the entire organization. Figure 3-3

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