Employee turnover or attrition can be expensive for companies. In many industries, the cost of losing quality talent is rising, thanks to increasingly competitive labor markets.
This makes measuring employee turnover rates more critical for employers.
You likely have a few questions about employee retention in your industry.
- How much money is high employee turnover costing your business?
- What is the average employee retention rate?
- How does your rate compare?
According to the U.S. Bureau of Labor Statistics, the average employee quit rate across all industries was 2.4% in April 2023.1
The average cost to replace an employee can range anywhere from half to two times their salary, according to Gallup 2. When considering high turnover across your company, the costs may quickly add up and spill over to operational efficiency, customer service and workplace morale
Which Industries Have the Best and Worst Employee Retention Rates?
Let’s take a look at the industries with the best employee retention rates and worst employee retention rates.
A Look at the Lowest Turnover Rates
Government jobs typically have the lowest employee turnover rates across all industries. Industries among the lowest turnover rates as of April 2023 include:3
- Federal government: 0.6%
- State and local government: 0.9%
- State and local education: 1.0%
Industries With the Highest Turnover Rates
Poor compensation and benefits are some common reasons for high employee turnover rates.4 Let’s take a look at some of the industries with the highest turnover rates as of April 2023:5
- Leisure and hospitality: 4.6%
- Retail trade: 3.5%
- Transportation, warehousing and utilities: 3%
The Cost of Turnover
A high turnover rate is costly for businesses. Find your company’s potential cost savings.
Does My Company Have a Good Employee Retention Rate?
Your company should also focus on how well you maintain employee satisfaction. A good way to measure this is by using eNPS, or Employee Net Promoter Score. If you’re missing the mark with employee retention, how can you improve internally?
What Are Some Ways To Prevent Turnover and Promote Employee Retention?
One strategy to improve retention is to evaluate current tactics like recruiting, employee onboarding and overall company culture — which areas can be improved? What can you do to keep your employees engaged and happy?
When you’re going through the interview process, do you sense that a potential candidate is a job hopper? If an employee quits shortly after they’ve been hired, can you gauge if the employee’s expectations about the job were different than reality? If you are forced into firing people because they don’t have the skills to do the job, this, as well as the aforementioned issues, could be a recruiting issue increasing your turnover rate.
Creating the right culture backed by growth opportunities and employee support can go a long way to attracting and retaining strong talent. According to Gallup, companies with low engagement have turnover rates that are 18% to 43% higher than those with high engagement.6
Training is a great way to show that you are invested in your employees. Training initiatives can range from career development opportunities to financial wellness programs. By showing that you are invested in your employees’ professional and personal lives, you are encouraging loyalty and engagement.
Pay Well, or Pay Differently
It’s no secret that many employees look at pay as an indicator of their happiness at work. If an employee feels they’re not getting enough support for financial wellness, they may consider looking for a new job.
By offering flexibility with pay, you are again encouraging employee satisfaction and loyalty. If you’re unable to increase pay, there are other ways to make wages more valuable. If you can’t raise salaries, how can you make your pay feel different? Learn how on-demand pay can help reduce turnover and increase employee engagement.
What is employee retention and how it is measured?
Employee retention is the percentage of employees who remain with an organization year to year. To calculate employee retention, divide the number of employees by the number of original employees and multiply that number by 100 to get your percentage.
What’s the difference between employee retention vs employee turnover?
Employee retention is the percentage of employees who remain with an organization year to year. The percentage of employees leaving an organization determines the turnover rate.
Why is employee retention crucial for businesses?
High employee retention can improve employee morale and revenue.
Which industries have the lowest employee retention rate?
As of March 2022, the U.S. Bureau of Labor Statistics reported that the industries with the highest turnover rates included accommodation and food services: 86.3%, leisure and hospitality: 84.9%, retail trade: 64.6% and professional and business services: 64.2%.1
Which industries have the highest employee retention rate?
As of March 2022, the U.S. Bureau of Labor Statistics reported that the industries with the lowest turnover rate included state and local education: 16%, state and local government (including education): 18%, and the federal government: 18.8%1
Is there a correlation between pay and employee retention?
If employees feel well-compensated, they’re less likely to look for a new job. Attractive and competitive pay not only involves how much an employee gets paid but how often. Fifty-nine percent of employed Americans, including 70% of hourly workers, say they would benefit from getting paid more frequently than they currently do.3
All information herein is for educational purposes only and should not be relied upon for any other use. The information herein does not constitute the rendering of professional advice by DailyPay. DailyPay does not warrant the completeness or accuracy of any information provided to you.
1 https://www.bls.gov/news.release/jolts.t04.htm:DailyPay, 2020
3 https://www.bls.gov/news.release/jolts.t04.htm:DailyPay, 2020
5 https://www.bls.gov/news.release/jolts.t16.htm:DailyPay, 2020