How to calculate employee retention rate, how it differs from turnover, how to measure it for hourly teams and what moves the number.
Retention rate answers a simple question: of the people we had at the beginning, how many did we keep?
To record clock-ins, breaks and overtime automatically, see EZTime time and attendance software.
| Part | Meaning |
|---|---|
| Employees at start (S) | Headcount on the first day of the period |
| Of those, still employed at end (R) | People from S who are still on the payroll on the last day |
| Retention rate | R ÷ S × 100 |
Example (fictional): a restaurant group starts the year with 120 employees. During the year it hires 70 people. On December 31, 84 of the original 120 still work there. Retention rate = 84 ÷ 120 × 100 = 70%. The 70 new hires do not affect the calculation, even if some of them also left.
Turnover rate usually measures separations during a period as a share of average headcount, and it includes people hired and lost in the same period. Retention focuses only on the starting group. The two numbers answer different questions, and you can have a reasonable retention rate with high turnover if many new hires leave quickly.
| Retention rate | Turnover rate | |
|---|---|---|
| Question it answers | How many of our existing people stayed? | How much churn did we have overall? |
| Includes new hires | No | Yes |
| Typical formula | Stayed ÷ employees at start × 100 | Separations ÷ average headcount × 100 |
| Best use | Stability of the core team | Total cost of hiring and replacement |
Use both. Our employee turnover calculator handles the turnover side, and the glossary explains turnover rate and attrition.
Annual retention is the standard for reporting, but hourly businesses often need a faster signal. Many employers track quarterly or monthly retention and, most importantly, new-hire retention at 30, 60 and 90 days. In high-turnover roles, a large share of departures happen in the first weeks, so an annual number can hide the real problem.
New-hire retention measures how many people hired in a period are still employed after a set time.
| Step | Example (fictional) |
|---|---|
| Hired in Q1 | 40 |
| Still employed 90 days after their start date | 28 |
| 90-day retention | 28 ÷ 40 × 100 = 70% |
If 90-day retention is low, look at hiring and onboarding first: were expectations about hours and pay clear, was there a training plan, did the person get the schedule they were promised? See how to onboard hourly employees.
A single company-wide rate hides the information you need. Break it down:
There is no single benchmark that fits every business. Retention depends on the industry, the local labor market, the share of seasonal and student workers and the type of role. Comparing yourself with a published average for a broad sector can be misleading. The most useful comparison is your own trend over time and the gap between your best and worst locations or managers. If your best location keeps 80% of its people and another keeps 55%, the difference is something you can study and fix.
Separate employees who chose to leave from those you let go. A low retention rate driven by terminations points to hiring or performance management; one driven by resignations points to pay, schedules, management or growth. Seasonal and planned departures, such as the end of a summer contract, should be tracked separately so they do not distort the picture. See involuntary turnover.
| Lever | Practical actions |
|---|---|
| Pay | Check local rates yearly; reward skills and tenure; pay accurately and on time |
| Schedules | Post early, respect availability, allow swaps, limit last-minute changes |
| Managers | Train supervisors in feedback, fairness and communication |
| Onboarding | A structured first week with a buddy and clear expectations |
| Growth | Skills ladders, cross-training and promotion from within |
| Recognition | Specific, regular thanks that reaches every shift |
| Workload | Staff to demand so people are not always covering gaps |
Our guides on reducing turnover, why good employees leave and recognition ideas go deeper.
Retention becomes a priority when managers see what it costs. Estimate the cost of replacing one hourly employee: advertising, interview time, onboarding paperwork, training hours for the new hire and the trainer, and lower productivity in the first weeks. Multiply by the number of extra departures compared with your best location.
Example (fictional): if replacing a cashier costs about $1,500 and a store loses 12 more people a year than the company’s best store, closing half that gap saves about $9,000 a year for that store alone. Use the cost per hire calculator and onboarding cost calculator with your own numbers.
EZTime keeps hire dates, locations, roles and status for every employee, so retention lists are easy to pull. The factors that most affect hourly retention are built in: schedules posted early, shift swaps, time off requests handled quickly, accurate hours for payroll and a company feed for recognition.
(Employees at the start of the period who are still employed at the end ÷ employees at the start) × 100.
Not exactly. Turnover usually includes new hires who joined and left during the period, and it uses average headcount. The two only mirror each other when measured on the same group.
Annually for reporting, and monthly or quarterly for management. Track 90-day new-hire retention separately.
It depends on your industry and roles. Focus on your own trend and on differences between locations and managers.
Track them separately, so planned seasonal departures do not hide resignations in your core team.
Early schedules, easy swaps and accurate pay with EZTime.