Metrics that Matter #7: Retention vs. Turnover

In today's "Metrics that Matter" we're going to deep dive into 2 common HR KPIs: Retention and Turnover! While Retention and Turnover appear to be mirror images of each other, they tell different stories and it's important to understand the nuances. We're also going to bring in the customer perspective with Lisa Rogers, Director of HR at Pathway to Living to share her expertise.


What is Retention?

Employee Retention is the number or percentage of employees within a cohort (i.e. employees who are employed on a selected day) who are still employed after N days. For frontline or community staff we suggest measuring Retention after 90 days. For leadership employees (EDs, department heads, or home office) we suggest measuring retention after 1 year. For example, if you hired 100 employees in January and in April 75 employees are still on the team then the 90-day employee retention KPI would be 75%.

What is Turnover?

Turnover measures the number of employees who left divided by the average number of employees during a time period. We can calculate turnover for any time frame. To use the example above (25 employees left between Jan 1 to April 1 and during this period the average number of employees was 86) the 90-day employee turnover KPI would be 29%.

How are Retention and Turnover different? 

Here's where the nuance comes in! Lisa Rogers, Director of HR at Pathway to Living, told us: "Turnover is history. You can't do anything about turnover except report it. But you can, as a leader, do everything with retention... we should be focusing on how do we get employees to want to stay with us, what do we need to do to help them develop? And how do we make work better for them so that they bring others? So it really is a change in mindset... You don't need to focus on the past. You need to focus on the future!"

2 Ways to Use Retention Strategically

As Lisa notes, Retention is a forward looking metric -- it tells you what % of your workforce is still here TODAY (vs. Turnover, which tells you what % has departed). We suggest 2 different ways to use Retention:

* Highlight your high retention KPIs as part of the sales process. A high retention KPI (i.e. >60-70%) tells families that their loved ones are likely to be cared for by staff that love their jobs and will really get to know the residents and understand their needs and preferences. This is a really powerful data point for families and potential residents: they want to live a community with stable staffing where they will build a great relationship. Many communities don't share this data because they don't measure it or they have low retention. If you have high staff retention, be proud of it! 

* Interview employees to better understand WHY they choose to stay and what they enjoy about their job. In a tight labor market it's essential to understand why your best employees stay: you've made a huge investment in hiring and training them, and it's invaluable to understand why they are happy. Is it purely compensation? Culture? What specifically about culture? This is a great starting point for digging deeper into your company's culture to understand what aspects of culture are valued by employees.

Turnover is history. You can't do anything about turnover except report it. But you can, as a leader, do everything with retention... - Lisa Rogers, Director of HR at Pathway to Living