What is employee retention?

Employee retention: How to reduce turnover and keep great hires

Key takeaways

• Employee retention is a joint effort between talent acquisition (TA), leadership, stakeholders and management.
• TA owns retention strategies in the recruiting, interview and hiring stages, but can influence beyond those stages.
• TA improves retention with structured hiring, compensation and role clarity, hiring management alignment and effective onboarding strategies.

Employee retention is one of the clearest signals of whether your hiring strategy is working. It’s not just about who you hire. It’s about who stays, develops and succeeds once they’re in the role.

For talent acquisition (TA) and TA operations teams, retention is especially meaningful. It reflects how candidates experience your company over time, not just during interviews. That matters more than ever. Hiring volumes are high, reliable signals are harder to find and the cost of turnover is increasingly visible.

This guide outlines the retention strategies TA and TA Ops teams can directly own. These include role clarity, structured hiring and candidate experience. It also looks at where TA can influence retention. That influence often comes through close partnerships with hiring managers, leaders and stakeholders.
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What is employee retention?

Employee retention refers to how long employees remain with an organization. It is typically measured using a retention rate, which calculates the percentage of employees who stay during a defined time period.

Employee retention can also be positively or negatively affected by the company’s talent retention strategy.

In practice, employee retention is a trailing indicator. It reflects the full employee lifecycle, from hiring and onboarding to growth and the decision to stay or leave.
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How to calculate employee retention

To calculate employee retention, start by choosing a time period. For example, you might measure the previous year. Then, calculate:

TA teams often pair retention rate with average employee tenure. This shows how long employees typically stay with your company. Together, these metrics highlight ways to improve recruiting practices and increase employee lifetime value (ELTV).

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Why employee retention matters (beyond replacing a role)

Hiring new employees takes a lot of resources. Replacing an employee is expensive. Costs can range from 30-50% of salary for entry-level roles to 150% or more for leadership or technical positions.

These costs are difficult to calculate because the effects of turnover have both direct and indirect costs.

Direct costs include:

• Time it takes to onboard and train a new employee.
• Ramp time it takes for the new employee to work at full capacity.
• A loss of recruiting capacity, especially when backfilling roles that are difficult to hire for.

Indirect costs are numerous, including:

• Employer and brand reputation suffer due to increased attrition.
• Knowledge lost when top talent leaves.
• Team morale when they’re asked to take on coverage.
• Feelings of reduced continuity for customers.
• Hiring process impacts, including reduced applicant quality, increased applicant drop-off, and slow or more expensive processes.
• Lower offer acceptance rates due to perceived instability.

Improving employee retention can ease pressure on TA teams. It can also improve how work gets done across the business.
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Employee engagement vs. turnover

TA teams need to know the difference between employee retention, employee engagement and turnover. That clarity can help them improve collaboration and identify the right stakeholders.

In short, employee engagement drives employee retention, and employee turnover rate quantifies where engagement efforts don’t work.

How to measure employee retention

Measuring employee retention requires a mix of qualitative and quantitative values. As a result, recruiters are often judged on metrics they don’t directly own. However, TA and TA Ops teams can still help. They can offer retention metrics that measure:

• Annual retention rate: Percentage of employees who leave over the course of a year. This is useful for understanding broad trends year-over-year and measuring the long-term success of recruiting and engagement efforts.
• Quarterly: Measures short-term success of recruiting and onboarding efforts. It may indicate seasonal changes or more minute process changes.
• Cohort/new-hire: Measures the retention of groups of new hires with common factors, like employees hired after an internship or hires from a single job fair.

While calculating the top-level employee retention rates, other key performance indicators (KPIs) can add nuance to these broad measurements:

• New hire retention (90/180/360): How long does an average new hire stay 3, 6, or 12 months into their tenure?
• Regrettable turnover: Of the total turnover, how many were employees managers regret losing, as opposed to those who weren’t making an impact?
• Internal mobility rate: How many employees change roles rather than leave the organization?
• Time-to-productivity proxy: Since productivity is difficult to measure, consider using time to autonomy, certification or a milestone metric as a proxy for productivity.

The biggest drivers of retention (and which ones TA can influence)

TA teams can’t own every retention metric. But they can still advise and influence stakeholders. That influence can boost employee retention.

The recruiting process is often a candidate’s first real window into the company. And TA teams are usually their main point of contact. A helpful recruiting experience sets employees up for success from day one.

Retention drivers TA can control

• Role clarity: TA teams can edit job descriptions with hiring managers to document listings that identify and attract the right candidates.
• Selection quality: TA teams should continuously improve how candidates are selected so hiring managers see higher-quality options.
• Candidate experience: Candidates judge companies by how they’re treated during recruiting. Clear communication can reduce drop-off.
• Onboarding readiness: Structured onboarding boosts three-year retention by 58%. Sharing onboarding plans early can help new hires feel prepared.
• Poor role fit: Retention issues often start with unclear roles. Align early with hiring managers and use interviews to catch misalignment.‍
• Culture mismatch: TA teams bring company values into hiring by aligning with leaders on the behaviors that drive long-term success.

Retention drivers TA can influence

• Manager quality: TA teams can’t directly control manager quality. But interview feedback and early employee reactions can surface coaching opportunities.
• Compensation: TA teams can flag when pay ranges are misaligned by using market data from job boards and placements.
• Growth: TA Ops teams set realistic growth expectations and highlight when internal moves may be a better fit than external hires.
• Burnout: Employee burnout can drive turnover. Understanding how feasible a job description is in advance of a hire can reduce the chances of new candidate burnout.
• Effective onboarding and training programs: Just 12% of employees strongly agree their employer does a good job with onboarding. A successful onboarding sets expectations, defines work norms and helps new hires feel connected from day one.
• Positive work environment: Retention relies on a people-first culture supported by fair hiring practices and strong collaboration.‍
• Recognizing and rewarding employee performance: Only one in three U.S. workers strongly agrees they received recognition. TA teams can encourage leaders to build recognition habits and support them with training and guidance.

Employee retention strategies TA can own

What do actual employee engagement and retention strategies look like in practice? TA owns strategies that impact the recruiting and hiring stages. These stages are often a candidate’s first glimpse of the company.

These strategies set candidates and new employees up for success. A strong start goes a long way toward employee satisfaction.
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1. Build and enforce structured hiring

Unstructured hiring leads to inconsistent decisions. That inconsistency often results in poor role fit and early turnover. When interview processes vary, teams tend to rely more on intuition than evidence.

Structured hiring practices create a consistent, reliable hiring experience while setting clear standards for which candidates advance.

TA teams should own:

• Clear intake criteria tied to role success.
• Consistent interview stages and questions.
• Standardized scorecards for bias reduction and fair evaluation and decision-making.

TA tracks: 

• Pass-through rates by stage.
• Interviewer score variance.
• Time-to-decision.
• Candidate drop-off.

2. Align with hiring managers early and create job descriptions tied to the role 

Retention problems often start with vague or misaligned roles. Detailed job descriptions with clearly defined requirements and needs increase candidate and hiring manager satisfaction.

TA teams should own rigorous intake conversations that clarify:

• What success looks like in the first 1, 3, 6-12 months.
• What problems the role is actually responsible for solving.
• What will not change after hire.

TA tracks: 

• Hiring manager satisfaction at 30/90 days.
• New hire ramp feedback.

3. Be transparent about compensation and scope early

Overselling roles may close candidates faster, but it increases the risk of early regret and turnover.

Research shows compensation is still the top motivator when accepting a role, yet expectations are often misaligned. In the Greenhouse Candidate Experience Report, 53% of job seekers said they were disappointed by salary or title offers that didn’t match how the role was presented.

TA teams should own:

• Honest conversations about pay bands and leveling.
• Clear boundaries around growth timelines.
• Consistent messaging from the first screen to the offer.

TA tracks:

• Offer acceptance rate.
• Reneges.
• “Expectations mismatch” as a rejection reason.

4. Set managers up for effective onboarding

While TA doesn’t own onboarding execution, recruiters heavily influence how prepared managers are to onboard well. This includes:

• Translating interview criteria into early success expectations.
• Ensuring managers understand why the candidate was hired.
• Flagging risks or gaps that onboarding should address.

TA tracks:

• New hire pulse surveys (or equivalent).
• Early attrition.
• Onboarding completion.

Retention strategies TA can influence (via partnership)

TA-owned strategies can’t stand on their own. Other factors like compensation, growth and manager quality will always affect retention rates.

TA teams can directly influence these decisions to improve the chances of higher employee retention.
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1. Design competitive compensation packages

‍The Greenhouse Candidate Experience Report reported that 53% of job seekers felt that salary and title offers didn’t match their qualifications, skills and experience. Creating a competitive compensation package can attract and retain top talent who feel valued.
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2. Offer career development and growth opportunities

Career development and growth opportunities motivate high-performing employees. It also helps your company adapt faster and reduce ramp-up time.
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3. Promote work-life balance

Flexible work helps prevent burnout by maintaining a good work-life balance. That includes remote options and time-off programs, like sabbaticals.
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4. Build strong relationships with employees

Provide training and resources for people managers. This helps them build positive environments and avoid common missteps, like micromanagement.

You can also promote relationship-building outside of an employee’s immediate team by organizing coffee chats, cross-functional lunch and learns or volunteer activities where people connect across teams.
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5. Encourage open communication and feedback

Encourage open communication and feedback to foster engagement. This can include engagement surveys and recognition, along with other activities that drive retention.

According to the Betterworks State of Performance Enablement report, 15% of respondents said recognition and appreciation for their work are significant factors that keep them with their current employer.
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6. Foster a sense of purpose and belonging

Help employees understand how their roles connect to company goals. TA teams can reinforce this through values-based interview questions.

It can also create a sense of belonging by promoting diversity and inclusion, which ensures every employee feels valued and respected.
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7. Create a culture of retention with your employer brand

A strong employer brand creates a shared sense of purpose and motivation for current employees, reducing turnover. It can help you attract more qualified candidates who are aligned with your mission and vision.
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8. Establish a supportive leadership style

People don’t leave companies, they leave managers. Ensure leaders support and encourage employees as talent magnets.

Leaders who are clear on the company’s mission and values attract and retain talent. Reaching out during the offer stage shows personal investment.
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9. Promote diversity and inclusion

Diverse teams include people with a range of backgrounds: gender, race or ethnicity, age, sexual orientation, religion and educational background.

Younger employees value inclusive workplace environments where representation matters, making diversity initiatives and progress key to retaining Gen Z in the workplace.
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Build a retention engine with Greenhouse

Employee retention can be difficult to measure directly. Many factors influence whether someone stays. Retention strategies should span the entire employee lifecycle. Over time, strong retention helps attract more top talent.

Hire right. Onboard right. Measure what matters. That’s how you can give your company the best chance to retain top talent. Greenhouse can help TA teams structure their hiring and onboarding processes and make measurable progress toward goals.

Request a demo to see how Greenhouse can help you find and retain better employees today.
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FAQs

How do you calculate employee retention rate?

Calculate employee retention with these steps:

1. Choose a time period to measure.
2. Calculate the number of employees at the beginning of the time period.
3. Calculate the number of employees who left the company by the end of the time period.
4. Subtract the employees who left from the total from the beginning of the period.
5. Divide your answer by the total from the beginning of the period.
6. Multiply your answer by 100 to get your percentage rate.

What is a good employee retention rate?

A good employee retention rate depends upon the industry and skill level of employees. A retention rate of 90% or higher is considered good.

What’s the difference between retention and turnover?

Employee retention is the process and policies that keep employees engaged and in their roles over time. Turnover is the measure of how many employees leave the company during a given time period.

Retention and turnover rates are opposites and should add up to 100%.

How does onboarding impact retention?

Onboarding is the candidate’s first working experience with an organization and prepares the new employee for their immediate and long-term success. When onboarding goes poorly, new employees are more likely to think negatively about their roles and leave early.

How can structured hiring improve retention?

Structured hiring creates consistency across teams and roles. This means candidates for the same role are evaluated against the same expectations and skill requirements.

This improves retention by creating harmonious expectations for new hires and shows a well-planned employee experience.