Employee Retention Statistics for 2024

“I quit.”

Those are the last two words you ever want to hear if you’re talking to one of your top employees. What you thought had been a great business culture wasn’t enough to keep your employees around and they’ve now got a new job. They’ve accepted a job offer somewhere else—not for much more pay, you note—and now you’re left scrambling for the budget and time to recruit, onboard, and train their replacement.

Sound familiar? It probably does. The U.S. Bureau of Labor Statistics shows that four million employees have left their job voluntarily every month since the beginning of 2022. People are quitting in droves and businesses are scrambling to keep up.

Everyone knows their business is only as good as the people working there. But if you don’t get a hold of your employee retention numbers, you won’t keep good people in your business for long. You’ll be stuck in an endless loop of hiring and rehiring—often at great expense. 

Employee Retention Statistics for 2024

Why bother? Without good employee retention, you’ll struggle in these key areas:

• Spending more money recruiting, onboarding, and training new employees. This costs more than money. It costs time. Training takes weeks on average, according to Statista. Those are all weeks you could have spent moving forward on a project if you had retained the old employee.
• Experiencing knowledge drain. An employee takes all their old training with them. Their skills and talents, too. Every little trick of the trade they developed by working with your company for years will go out the window.
• Losing company culture points. If employees are constantly coming and going, it gives other employees less time to build a community at work. As a result, it’s harder for your team to function as a cohesive unit. They’ll experience the growing pains of onboarding new employees, too.

Let’s examine the numbers more closely to determine the keys to employee retention and how you can create a retention plan of your own.

Why is Employee Retention So Important?

Employee retention isn’t just a money-saver. It’s an indication of health—a thermometer for the temperature of your company culture. The more employees leave voluntarily, the more it suggests something is fundamentally wrong with how you’ve built your organization. A high turnover rate is an indication of cracks in the foundation.

But let’s get specific and set a clear benchmark here. An employee retention rate of 90% or higher is generally “considered good,” and if your company experiences turnover of 10% or less, you’re faring well. Those numbers should give you some basic milestones against which to measure your company culture.

But why is it so important that you do so?

You’re Investing Good Money in Employees

It takes money to recruit. It takes money to interview. It takes money to onboard and train new employees. So when an employee quits after three months, it feels a bit like tossing money down the drain—only to reset and begin the process all over again.

It’s not a drain on your funds if your employees stick around for a while. But when BambooHR surveyed over 1,000 employed Americans, they found that nearly a third of them—one third!—left before they crossed the half-year mark. That’s 33% of all new employees leaving for one reason or another. It’s a lot of effort and money to put into a new employee, only to feel left out in the lurch.

This translates to real costs on the bottom line as well. SHRM estimated that the average cost of new employee onboarding is around $4,100 per new hire. The average cost of training, according to an ATD Research State of the Industry report from several years back? Nearly $1,300. And costs have only gone up since then.

Why invest all that money in new employees if they’re only half-serious about sticking around? Yes, it’s good to trust that new employees will work out. Yes, it’s good that you put your money where your mouth is when it comes to investing in the quality of your people. But if you’re not getting a return on that investment thanks to poor churn, it eats away at your profitability.

Here’s a rule of thumb for understanding the cost of losing employees. “It costs 33% of an employee’s annual wage to replace them,” according to one report. It’s much cheaper to invest in employee retention—and becoming a company worth sticking around for.

You Get More Productivity with Happy Employees

It’s not just a dollars-and-cents proposition. If you retain more employees, you get all sorts of untold benefits. Those employees have training and experience, after all. They understand the inner workings of your business. They develop professional relationships upon which it’s impossible to put a price tag.

These kinds of “untold” benefits manifest in all areas of your business. Consider:

• If employees aren’t happy, they “check out.” Remember Toby from “The Office”? He mentally checked out of his work in Human Resources by Season Six. By the end of the series, he couldn’t be bothered to enforce company policy. And it’s not just Toby. Everyone’s checking out when they’re not happy with their job. “80% of workers acknowledge that they would initiate a job search after experiencing an exceptionally challenging day at work,” according to Flair HR.
• When employees are productive, you make money. A Gallup report on employee engagement showed that if you have a highly engaged workforce, you also generally have 21% higher profitability. That’s on top of 17% higher productivity. There’s a compounding effect: the more productive your employees are, the more it adds up on the bottom line.
• “Quiet quitting” is a silent enemy. Quiet quitting is the phenomenon of employees going beyond checking out—they may not think about the job at all. Either they’re totally disengaged or actively looking for new jobs. Meanwhile, they’re not putting in 100% at work. According to McKinsey, anywhere between a fifth and two-fifths of an organization’s workforce can be “quiet quitters” at any point. These “quiet quitters” are three times as likely to experience dissatisfaction as other employees. That means they drain company morale. Even if they’re technically showing up as “retained” on your bottom line, it’s still a net loss for your company.

Retention Helps You Identify What’s Wrong with Engagement

Another way to look at retention is not as a cause of all these troubles, but a symptom of an underlying problem. They lack engagement. If employees don’t feel invested in your company’s success—if they don’t feel appreciated for the work they do—they’re more likely to jump ship. If you want to erase this problem, you have to think about it in terms of nipping it in the bud.

Trying to fix retention by offering employees more money to stay would be a mistake. That’s a band-aid solution. To fix retention, you need to figure out what’s going wrong. Why are employees mentally checking out? And what are the key pain points you can address to solve those issues?

Think about employee retention problems as stemming from employee engagement problems.

Once you do, you can run employee engagement surveys to find out what’s going wrong. By reframing retention issues as challenges of employee engagement, you can start asking the right questions. 

For example, look at these statistics about the root causes of employee turnover:

• One out of two people eventually leave a job because of burnout. Up to 50% of employees leave their jobs because they feel overworked or exhausted. The lack of engagement may not be a problem of morale—you’re just working employees too hard. 
• One out of two people eventually resign because of their manager. Don’t underestimate the impact of leadership on employee retention. Gallup’s statistics found that 1 out of 2 employees leave their jobs simply to get away from an “incompatible manager.”

If you know why employees are leaving, you start to get to the root causes behind high employee turnover. And addressing these root causes won’t only reduce turnover. It will lead to a better company experience for the people who stay.

How Employee Retention (Or Lack Thereof) Impacts Business

Clearly high employee turnover goes beyond the basic problem of lowering morale. There are real tangible problems that high turnover can create:

• New hire expenses: Advertising the open position, interviewing, screening, and onboarding new employees is a big money drain—not to mention a headache. The Work Institute’s Retention Report shows the replacement cost could be as high as $16,500 per person for an employee making the median salary.
• Reduced productivity: A new employee isn’t going to hit the ground running. There will be an adjustment period. They may even take as much as a year or more to reach the productivity level of the person they’re replacing. These indirect costs are impossible to measure, but they’re real. That may be one key reason companies with high retention rates make as much as four times the profits as companies with high turnover.
• Customer service and error rates: If you had an employee who offered high-quality customer service, you’re losing that aspect of your business. Customers may also be turned off when an employee leaves—they may feel it reflects poorly on your brand.
• Loss of institutional knowledge: These aren’t always “trade secrets,” but they can hurt just as much. If your ex-employee knew faster ways to get things done, those secrets go with them.
• Cultural impact: Losing an employee also means loss of friendships and work relationships. If your employee was particularly well-liked, it can make other high-producing employees question their place in your company.

How to Retain More Employees

Once you’ve identified the problem, how do you start creating a solution? There are a few stats that back up the strategies you can employ to make your company better to work for:

• Invest in training and learning: One workplace survey found that 94% of employees said that if a company invested in helping them learn, they’d prefer to stay longer.
• Encourage employees to give upward feedback. Employees want to feel heard. And if employees don’t feel comfortable sending feedback “upward” to leadership, there’s a 16% decrease in retention rates.
• Create a dedicated onboarding program. A good first impression counts, and the stats bear that out. A good onboarding program meant 69% of employees stayed at least three years. 
• Diagnose the problem with engagement surveys. Your engagement surveys will teach you what your employees feel most strongly about.

On the latter point, let’s explore an example. Briggs Industrial used engagement surveys to find out what was creating disengagement and turnover. They discovered that pay gaps might be causing frustration. Their solution? Beginning a profit-sharing model. This lead to 17 increased points in “perceptions of recognition,” 14 increased points in perceptions of fair pay, and feelings of being valued by senior leaders increased by 16 points.

To start retaining more employees, the key is simple: 

Start asking the right questions.

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Build a Company Worth Working For

If keeping more employees affects everything from morale to the bottom line, then every point of increased retention is better for your company. But you can’t raise those percentages if you don’t know what your employees need to stick around. Start asking the right questions by scheduling a demo with Peoplelytics — we’ll help you run accurate, insightful surveys that identify employee pain points.