If you are a recruiter or human resources manager, you need access to the latest employee retention statistics. Knowing how the labor force behaves is essential to understanding what drives people to join or leave an organization.
To illustrate our point, consider that:
- 45 million workers in the U.S. chose to quit their jobs in 2023.
- According to BambooHR, 70% of new employees decide whether a job is the right fit within their first month—including 29% within the first week. On average, companies have 44 days to convince new hires to stay.
- Nearly half of employees say they’ve had regrets or second thoughts about accepting their job offer within the first week. As reported by the Bureau of Labor Statistics (BLS), people quitting make up roughly two-thirds of total separations.
- Also, according to BLS data, the median job tenure fell nearly 11% between 2012 and 2022. When tenure statistics are broken down by gender, men hold fast at 4.3 years. For women, the median tenure was 3.8 years in January 2022, down from 3.9 years in 2021. Although this is a small change on average, it does point to a trend in resignations among women, dubbed the Great Breakup.
- But seniority does affect this average. The median tenure for managers is 6.4 years.
- Nearly half (46%) of employees say they are considering leaving their jobs in 2024—more than during the ‘great resignation’.
- Historically, the month with the highest number of resignations was November 2021, when 4.5 million quit their jobs. This is considered to be the peak of the Great Resignation, though you'll still likely need to write a few farewell messages to coworkers this year, too.
Armed with this and other employee retention statistics we’ll cover in this article, you can create an array of employee retention strategies. This will help transform your business into a place that people would not want to leave.
Year-on-Year Employee Retention Statistics
Based on the latest BLS data, total separations (including quits, layoffs and discharges, and other separations) in the United States for March 2024 decreased to 5.2 million (-339,000).
We also note that the U.S. unemployment rate has remained in a narrow range of 3.7% to 3.9% (March 2024) since August 2023 - a figure that quickly rebounded from 8.1% in 2020.
The BLS defines the quits rate as the number of quits during a period as a percent of annual average employment within a given sector. The Bureau reports on this both as a monthly percentage of all employment, and an annual percentage of all employment per sector and industry.
Quits are closely linked to job availability. Both the quit rate and the number of available jobs are consistent with fluctuations in the economic cycle. They tend to rise when the economy expands and go down when the economy shrinks.
One way to read the quit rates is as a gauge of how confident the employees are that they can find and secure a new job.
.png)
In March 2024, job quits in the US dropped by 198,000 to 3.329 million — the lowest level since January 2021.
- Federally, the exit rate for March 2024 was 2.1%.
- Voluntary separations are significantly lower for government workers. Even at its highest point last year, the public sector quit rate for March 2023 was a mere 0.9%. By comparison, the March 2024 exit rate was 0.8%.
The BLS defines the annual quit rate as the number of quits during the entire year as a percent of annual average employment.
- Federally, the exit rate for 2021 was 2.7%.
- 2022 saw a slight increase in quits. Around 50.6 million Americans, or 2.8% of the U.S. workforce, left their jobs.
- After peaking between November 2021 and April 2022, the labor market was tough for some job seekers in 2023. Voluntary quits dropped significantly to 2.4%, and the total job quits declined to 44.5 million in 2023 from 50.6 million in 2022—the highest on record.
- Since then, the quit rate has continuously decreased, coming in at 2.3% in January 2024 and 2.1% in March 2024, the lowest rate since August 2020.
The Highest Voluntary Separations (Quit Rates) in 2024 by Industry
- Accommodation and food services: 5.1% (Jan 2024)
- Retail trade: 3.1% (Feb 2024)
- Arts, entertainment, and recreation: : 2.9% (Feb 2024)
- Professional and business services: : 2.7% (Feb 2024)
- Transportation, warehousing, and utilities: 2.6% (Jan 2024)
Why is Employee Retention Important?
Every time an employee leaves, the company incurs losses, which hurts its bottom line. Remember that every organization invests time and money during the onboarding of its new hires, and all of these efforts would go to waste if they end up quitting.
According to a new report from Express Employee Professionals, nearly half of hiring decision-makers (42%) report having open positions they cannot fill at their company. In addition to challenges attracting candidates, 33% expect employee turnover at their company to increase. More than one in five (22%) say turnover costs their company $100,000 or more per year.
This reason alone should motivate businesses to be more proactive about optimizing various development opportunities for their workforce, but there’s more to benefit from reducing the number of employees who leave.
Higher Retention Decreases the Cost of Employee Training
Aside from the cost of onboarding, companies invest in ongoing training, management oversight, and other similar activities. The less you need to train new hires, the less you can spend on onboarding and basic training. A great benefit is that, if less budget is spent on training, more resources can be allocated to upskilling and reskilling your top talent.
Employee Retention Enhances Company Culture, and Vice Versa
The longer an employee stays with a company, the more they adopt its core values. This strengthens the company culture, which has a positive impact on the perceptions, preferences, and behaviors of the rest of the organization.
With a favorable work environment, new employees are more likely to stay and current employees are more likely to give their best. According to Heidrick & Struggles, culture is cited as the top three positive influences on retention rates, along with compensation and benefits and flexibility in work rules and locations. Most CEOs surveyed also see culture as a driver of success in their business and talent management strategies.
Furthermore, candidates are increasingly interested in a company’s culture and values when deciding if a role is right for them, says Clinch in its latest study.
Retention Leads to an Improved Applicant Pool
Top talent will likely look into your company before applying to work there. Seeing positive employee reviews on sites such as Glassdoor, and employees who have stuck around and been promoted on LinkedIn will affect their decision to submit their resumes.
Making retention a part of your business strategy, therefore, means you can hold on to high-performing talent, and draw the best applicants for future hires.
Retention Creates Higher Morale
If one employee after another leaves permanently, it affects the ones left behind. Employees who you have managed to retain must pick up the slack as you scramble to fill positions.
As a result, there is a good chance that your remaining workforce would have lower morale, which could affect their performance. Bear in mind that, even before an employee leaves, talks of quitting and looking for other job opportunities are already affecting those who stay behind.
Efforts to improve retention have the knock-on effect that, the fewer people leave, the fewer people will seriously consider leaving.
Higher Productivity
The longer you retain your employees' services, the more experience they accumulate and the better they become at their jobs. Employee retention, therefore, makes your workforce more effective and valuable to your organization.
Employee productivity statistics suggest it may take up to two years for a new employee to reach the productivity level of an existing employee.
Improved Employee Experience
Much like you would think of customer experience, employee experience describes how an employee perceives all the interactions that they’ve had in the company from the day they submitted their application, up to the day that they stop working there.
A favorable employee experience inspires loyalty and higher employee engagement. A happy, inspired workforce is more productive. The same actions you take to improve retention also boost the general morale of workers. That is why you benefit from creating a positive work environment to drive employee retention.
Less Recruiting and More Development for HR
It is important to establish continuity when it comes to business processes, especially in the HR department. Besides the implementation of employee retention efforts, and the improvement of employee experience, HR is tasked with skills development to ensure each employee has a career growth trajectory.
Losing employees can be disruptive to this operation. The more you’re replacing employees who resign, the more you’ll divert HR's time and energy towards posting job openings, sorting through resumes, interviewing applicants, and onboarding new hires. These are hours and resources that are better spent keeping a good employee in the organization.
What is the Average Employee Retention Rate in the US?
Generally, good companies retain an average of 90% of their employees. This translates to an employee turnover rate of 10% or less if you don’t factor in dismissals and retirements.
According to data from March 2024, the government has the lowest quits rate among all the sectors (0.8%), followed by:
- Finance and insurance: 1.2%
- Information: 1.4%
- Manufacturing: 1.5%
What Is a Healthy Employee Turnover vs Retention Rate?
Turnover rate is often used interchangeably with retention rate, which is understandable because they are two different sides of the same coin.
An organization’s turnover rate describes the rate at which full-time employees leave, while the company's employee retention rate is an indication of how many employees choose to stay for a given time period.
However, employee turnover should not be confused with attrition, where an employee leaves through a natural process like resignation or early retirement due to a health problem.
To compute the turnover rate, get the average number of employees by adding the number at the start of a given time period to the number at the end. Divide this figure by two. Next, get the total number of employees who left within the same period (excluding involuntary turnover), divide it by the average number of employees you got previously, and multiply your result by 100.
Again, the actual numbers vary from industry to industry, but generally, an annual turnover rate of 10% can be considered healthy.
What Is a Bad Turnover Rate?
Employee turnover is not just a number to watch. Why employees leave is also important.
When a good employee leaves for a higher position in a different company, it shows your company has a robust training program and a clear professional development plan, allowing employees to learn new skills and become attractive to other employers. This can be a good selling point when you start recruiting to fill the position.
However, if someone leaves a company to assume the same position in another company, you need to take a close look at your employee retention efforts. This scenario indicates that something is amiss, compelling the employee to go through the trouble of pursuing other job opportunities for potentially the same compensation.
Every organization’s ideal churn is different. That said, if your organization has a bad employee turnover rate, one of more than 15% calculated on annual turnover, you should sound the alarm bells. The most logical action would be to improve your company culture and/or compensation package.
Industries with the Highest Employee Turnover Rates
Based on figures released by the Bureau of Labor Statistics, private companies generally have higher quit rates compared to government offices.
A report by Awardco compares turnover rates of notoriously low-retention industries from 2020, 2021, 2022, and 2023.
According to their findings, the highest turnover rates in 2023 were seen in:
- Leisure and Hospitality: 79%
- Professional and Business Services: 57%
- Construction: 54%
- Trade, Transportation, and Utilities: 49%
While it is important to know what industries have the highest turnover rates, knowing the reason behind the quits is equally crucial.
For instance, in the tech industry, the high turnover rate for some of the professions might be due to high demand. More recently, we’ve also seen major reductions in force (layoffs) in the technology sector. Tech, being so web-based, is also one of the industries under the most pressure to offer a remote work policy.
On the flip side, there are volatile industries where the pay is low, the hours are long, and layoffs are rampant - retail, for example.
Industries with the Lowest Employee Turnover Rates
In the U.S., the government has an overall annual quits rate of about 10%, which is very low compared to the private sector. The lowest is employment at the federal level, which piqued at 7% in 2023. State and local posts have a quit rate of 11%, but if you exclude the education sector, it goes up to 12%.
In the private sector, Information companies have one of the lowest employee turnover rates, which is 13% on average. Other top performers in terms of low employee turnover are Financial activities (17%) and Construction (22%).
Statistics on the Cost of Employee Turnover
Losing an employee can affect a company in many ways. There are many factors that determine the total cost of the turnover. Generally, it can be broken down into four major components:
- The initial cost to terminate the employment (including impact on company culture and employee morale)
- The cost of recruitment, hiring, and onboarding
- The lost income opportunity while the position remains unfilled
- The loss of productivity as the new hire goes through a learning curve
Culture Amp estimates that total costs associated with losing an employee could range from 30% to 200% of a person’s salary. So if, for example, a supervisor who earns $60,000 a year quits, you can expect it to cost your company up to $120,000.
The Work Institute’s 2024 Retention Report states that U.S. companies spent nearly $900 billion to replace employees who quit in 2023.
However, beyond simply calculating the cost of retention, it is important to realize that a company’s workforce is an appreciating asset whose economic value increases over time.
If you weigh the cost of onboarding and training an employee on an ongoing basis, there comes a point where the company transitions from investing to benefiting from the employee. So if a worker who is already adding more value to the company quits, it would have a more significant impact.
Statistics on the Why Employees Leave Their Job
If you want to manage your organization’s employee turnover rates, you must first understand what compels them to leave in the first place. Knowing the reasons behind the low employee satisfaction will allow you to come up with the most appropriate solutions.
The Work Institute found that 75% of employee turnover could have been prevented if the company had a better understanding of what their employees wanted. According to their latest data, the most commonly found avoidable causes for resignations were:
- Career-related: 17.4%
- Health and family: 12.3%
- Work-life balance: 11.9%
- Job-related: 9.8%
- Manager-related: 9.8%
- Relocation: 9.1%
- Total rewards: 9.1%
A recent study from Randstad shows that hiring and retaining talent requires more than just competitive pay and benefits. The share of employees who said work-life balance is important (93.7%) was just slightly lower than those who consider pay important (93.8%).
In fact, more than half (61%) expressed they wouldn’t accept a job that would disrupt this balance. More than one in three employees said they would quit if they found themselves in a toxic workplace, and an even larger portion (48%) would quit a position if it prevented them from enjoying their life.
Reduced Employee Satisfaction Due to Lack of Work-Life Balance
Looking further into the two mentioned reports, work-life balance as a reason for quitting has not been this high since 2019. Notably, three work-life balance subthemes that are most cited by employees are:
- Shift/Schedule: According to the Work Institute, 80% of workers said they would be more loyal to their employer if they offered schedule flexibility, 79% said schedule influences whether they stay with their current employer. Per Randstad's data, 45% said they wouldn’t accept a job if it didn’t offer accommodating hours.
- Commute: Increased slightly from 12% in 2019 to 15% in 2023—somewhat surprising given the trend towards remote work, Work Institute reports. Yet, this reflects the availability of jobs giving people who want a shorter commute and the opportunity to work elsewhere.
- Remote capability: 4 in 10 employees surveyed by Randstad said they would turn down a job offer if it didn’t provide remote/hybrid arrangements (40%). 27% have even quit if the job didn’t offer the flexibility they required.
Statistics on How to Retain Employee
Now that we understand why employees become restless in their jobs to the point of quitting, let’s discuss how you can increase employee retention in your company.
Create a Remote Work or Hybrid Policy
First, allow your employees to work remotely where it is possible or feasible. You could also explore the possibility of implementing a hybrid workplace where they can report at the office some days and work from home on others.
Based on the statistics in the previous section, offering remote working an extra day or two each week can make a big difference in helping reduce employee costs amid growing economic uncertainty. . In addition to work location, Randstad believes that employers should consider the work day (e.g. Would a workday that doesn't adhere to a 9-to-5 schedule give workers greater flexibility without creating workflow issues?) to develop better policies.
Make Their Onboarding Experience a Priority
According to BambooHR’s 2023 report, companies have 44 days to convince new employees to stay. Almost two-thirds of workers (62%) say their impressions of their employers from the first day at work are still accurate. 60% concur that first impressions are difficult to change.
The question now is: How to make sure your new hires get onboarded just right? While 86% of surveyed workers prefer having some time to ramp up, over one-third (36%) express frustration over long onboarding processes that can leave them feeling excluded or bored.
Additionally, more than half of employees (56%) believe they need just one or two days to ease into their new role—doubling those who prefer slower, more gradual onboarding.
When asked what they expect onboarding to include, 97% consider training on the tools and software the company uses important, the same figure mentions an introduction to employee guidelines, and 96% want the company's mission statement and values.
The report also found that new hires value relationship building during their earliest days on the job: 93% want to shadow a colleague, 87% appreciate workplace friendships, and 86% hope to get support from an onboarding buddy.
If you don’t make a good first impression and engage team members early on, your high-performing new hires are likely to be concerned and start looking for their next move. Get more insight into effective onboarding practices in our Ultimate 7-step Guide.
Improve Employee Engagement
Employees who feel they belong and are valued within your organization are less likely to leave. Highly engaged employees are 3.4 times less likely to say they are seeking new jobs compared with their disengaged counterparts. If you want to increase employee retention, encourage a strong connection among them using various employee engagement tools.
For more insight into how to improve employee engagement, read our article on How to Keep Remote Employees Engaged
Prioritize the Well-being of Your Employees
Employee wellness programs that focus on health and fitness can relieve employee stress through physical activity or by providing information on health and proper nutrition.
This is not the only wellness you can address though. Also, provide them with different employee financial wellness platforms and employee assistance programs focused on supporting their mental health.
Recognize and Reward Good Work
Of course, you need to provide employee recognition to any good employee who deserves it. Using a dedicated employee rewards platform to maximize engagement can be a great investment.
Fueling Business Success Through Employee Retention
Research shows that 67% of employees who consider resigning admitted that they would change their minds about leaving if conditions were right.
Work Institute studies echoed this finding, pointing out that the top reasons for leaving tend to be more preventable ones: career development, work-life balance, job characteristics, manager behaviors, and well-being.
The success of a business is closely tied to the success of its people, as one could not survive without the other. To make this happen, keep an eye out for key employee retention statistics at all times, see how you can overcome obstacles to employee happiness, and listen to your workforce.
