Key takeaways
- Measure before you act: voluntary, regrettable, and first-year turnover tell different stories.
- People rarely leave for one reason. Managers, growth, pay, and workload usually combine.
- Stay interviews surface problems while you can still fix them. Exit interviews arrive too late.
- Retention problems tend to cluster by team or manager, so look at the data by team first.
- For hourly teams, schedule predictability and pay timing often matter as much as the pay rate.
Employee retention is an organization's ability to keep the people it wants to keep over time. It is usually measured as the share of employees who stay through a given period, alongside turnover rates that track who leaves and why.
An HR director presents the year's numbers to her leadership team. Turnover is up, and the CEO's first instinct is a company-wide raise. She asks for a week to dig in first.
When she breaks the data down, the picture changes completely. Company-wide turnover looks high, but most of it comes from two teams. Both are led by managers promoted in the last year without any training. Engineers in the rest of the company are staying. Customer support is not, and the exit notes keep mentioning the same thing: schedules posted the night before.
A blanket raise would have cost a lot and fixed neither problem. Retention work starts with knowing where and why people leave. This guide shows how.
How to measure turnover properly
The basic turnover rate is the number of separations in a period divided by the average number of employees in that period, multiplied by 100. Monthly numbers bounce around, so most teams track a rolling 12-month rate.
One overall number hides more than it shows. Split it:
- Voluntary versus involuntary. Resignations tell you about retention. Terminations tell you about hiring and performance management.
- Regrettable versus non-regrettable. Losing a top performer is a different problem from losing someone who was struggling.
- First-year turnover. People who leave within 12 months, and especially within 90 days, point to hiring and onboarding problems.
- By team, manager, location, and role. This is where patterns appear.
For outside context, the Bureau of Labor Statistics publishes monthly quits rates by industry in its Job Openings and Labor Turnover Survey. Compare your numbers with your industry, not with the economy as a whole.
Why people actually leave
Exit surveys often say "better opportunity," which tells you almost nothing. Dig deeper and the same causes show up again and again.
The manager relationship is usually first. People leave managers who don't make time for them, take credit, play favorites, or avoid hard conversations. Next comes growth: no visible path, no new skills, the same work for two years. Pay matters, especially when people discover new hires earn more than they do. Workload and burnout drive exits in teams that have been short-staffed for too long. And flexibility, including remote work for office roles and predictable schedules for hourly ones, is now part of how people judge a job.
Usually it is a combination. A person with a great manager will tolerate below-market pay for a while. A person with a poor manager and below-market pay is already interviewing.
Stay interviews: find problems while you can still fix them
Exit interviews are useful for patterns, but by then the decision is made. Stay interviews ask current employees what keeps them and what might make them leave. They are short, one-on-one, and run by the manager or HR.
Questions that work well:
- What do you look forward to most when you start work?
- What part of your job would you happily never do again?
- If you could change one thing about your role, what would it be?
- What would tempt you to leave?
- What is one thing I could do to make your work better?
The rule that makes stay interviews worth doing: act on at least one thing you hear, and tell the person you did. If nothing changes, the next stay interview gets polite answers.
Invest in managers first
Because so much retention runs through managers, manager training often pays off faster than any perk. New managers in particular need help with one-on-ones, giving feedback, delegating, and handling conflict. Many were promoted because they were great individual contributors and were never taught how to lead.
Give managers their own team's data, such as engagement scores, turnover, and time since each report's last raise or promotion, and hold them accountable for retention in the same way they are accountable for results.
Pay competitiveness and pay compression
Market rates move faster than annual raises. When a company hires new people at current market rates but gives existing employees modest annual increases, long-tenured employees end up paid less than newer colleagues in the same role. That is pay compression, and it is one of the fastest ways to lose experienced people, because salary information travels quickly, especially in states with pay transparency laws.
Review pay against market data at least yearly, check for compression, and set aside budget for equity adjustments separate from merit increases. Our salary band guide covers how.
Career paths and internal mobility
People leave when they can't see a future. A simple career framework that shows levels and what it takes to move up gives employees something to aim for. Posting jobs internally before externally, and supporting managers who let good people move to other teams, keeps talent inside the company instead of sending it to a competitor. Learning programs help too, which our L&D guide covers.
Flexibility, workload, and recognition
Flexibility means different things for different roles. For office roles it may be remote or hybrid options. For hourly roles it is schedules posted well in advance, easy shift swaps, and a say in hours. In some cities, predictive scheduling laws make advance notice a legal requirement for certain employers anyway.
Watch workload. Teams that have run short-staffed for months burn out, and burned-out teams leave in clusters. Recognition, when it is specific and timely, costs very little and signals that work is noticed.
Retention for hourly and frontline teams
Turnover in hourly roles tends to be highest in the first weeks. Strong onboarding, a buddy for the first shifts, clear pay explanations, and a manager who checks in during week one make a measurable difference. Predictable schedules, the ability to swap shifts, and options like earned wage access often matter more to frontline workers than small rate increases. See our onboarding guide for the first-90-days playbook.
Exit interviews that produce useful data
Exit interviews are a lagging indicator, but they are still worth doing well, because patterns across many exits reveal things no single conversation will.
Have someone other than the departing employee's manager run the interview, ideally HR. Ask open questions about why they started looking, what the new role offers, and what would have changed their mind. Code the answers into a small set of categories, such as manager, growth, pay, workload, flexibility, and personal reasons, so you can count them over time. Then report those counts by team twice a year. One exit tells you a story. Thirty exits tell you a trend.
Early warning signs of a flight risk
Most people don't resign out of nowhere. Common signals include a sudden drop in engagement or survey participation, more frequent unplanned absences, pulling back from long-term projects, a long stretch since their last raise or promotion, a recent change of manager, and a peer group that has already started leaving.
None of these prove anything alone, and you shouldn't treat people as suspects. But a manager who notices two or three of them should schedule a stay conversation sooner rather than later.
Counteroffers: when they work and when they don't
A counteroffer can keep someone whose only real issue was pay. It rarely works when the reasons are a manager, lack of growth, or burnout, because money doesn't change those. And it can create a fairness problem if colleagues learn that the way to get a raise is to bring an outside offer.
If you find yourself making frequent counteroffers, treat it as a sign that your pay review process is too slow, and fix the process instead of negotiating one resignation at a time.
Building a retention plan
Turn the data into a short plan. Identify the two or three teams or roles with the highest regrettable turnover. Run stay interviews there. Pick one or two changes per team, such as manager coaching, schedule changes, or pay adjustments. Set a target and a review date, and report progress to leadership quarterly.
HR software makes this easier by putting turnover, engagement, and pay data in one place. Our people analytics guide and engagement software guide show what to look for.
Employee retention action checklist
Work through this list with your team. The printable PDF version has space to tick each item off.
- Calculate rolling 12-month voluntary turnover
- Split turnover into regrettable and non-regrettable
- Track first-year and 90-day turnover separately
- Break turnover down by team, manager, location, and role
- Compare your quits rate with BLS data for your industry
- Run stay interviews in the highest-turnover teams
- Act on at least one stay interview finding per team
- Train new managers on one-on-ones and feedback
- Share team-level retention data with managers
- Check pay against market and look for compression
- Publish a simple career framework
- Post open roles internally first
- Review schedules and workload for hourly teams
- Report retention progress to leadership quarterly
Where to go from here
Wherever you are in the process, there is a next step that fits.
Compare software categories
Email templates for this topic
Ready-to-edit emails with subject lines, compliance notes, and a free PDF.
- Employee referral request email templateAsk employees to refer people they know for open roles, with clear bonus terms and an easy way to submit.
- Internal job posting announcement email templateTell employees about an open role first, with who can apply, how, and what happens to their current job.
- New hire 30-day check-in email templateA manager or HR check-in at the end of the first month to catch problems early.
- Work anniversary email templateMark an employee's work anniversary with a personal note about their contributions.
Frequently asked questions
How do you calculate employee turnover rate?
What is a good employee retention rate?
What is a stay interview?
What is pay compression?
Does raising pay fix turnover?
Sources
We checked the facts in this guide against these primary sources. Laws and thresholds change, so confirm current rules before you act.
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.