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Retention Rate Definition (and Formula)

Drawing of a figure in suit flying toward an open door marked "Exit" and a huge magnet draws him back into the room.

Analyzing a company’s employee retention rate is essential so leadership can determine if there are departments or areas that need improvement. If so, they can work on developing strategies. Assessing the employee retention rate can also give insight into the overall health of a company. Consequently, you can create employee retention strategies to combat high employee turnover rates.

What Is Employee Retention Rate?

An employee retention rate measures how many employees are retained at the company during a specific period. You can do this by comparing how many employees are at the company on a starting date with how many of the same employees are still there on the ending date. The starting and ending date is for a measurable period that the company chooses, such as one quarter or a year.

Importance of Understanding Retention Rate

Employee retention is an essential part of operating a successful business. If you have a high turnover rate, you’re spending a lot of money on replacing employees. You have money invested in the employees’ training, which is lost if they leave. You also must spend additional funds to recruit, interview, and hire new employees when they leave. A company with a high retention rate will be healthier and better positioned for the future. Implementing strategies for retention is a key element of success.

Knowing the retention rate will alert companies to any issues they may need to address. It also provides them with better insight as to how their current employee retention efforts are doing. If the rate is low, they know modifications are necessary. If it’s high, they can keep on the same path they’re on.

Most companies perform employee retention rate calculations regularly, such as quarterly or annually, so they can keep on top of this issue.

What Is the Retention Rate Formula?

Let’s look at how to calculate retention rate. You can use the following formula to get a retention rate:

Determine the total number of employees who were at the company at the start of the period (we’ll call this amount “A”).

Next, count the employees again at the end of the period and see how many of the original employees there are (this amount is “B”). To find out how many employees are left, you can subtract “B” from “A” (this is “C”).

A – B = C

Now, you will perform the second part of the calculation. Take the number of employees that left (“B”) at the end of the period and divide it by the total number of employees (“A”). For example, B ÷ A. The answer will be a decimal, which needs to be converted to a percentage, so you’ll have the rate. Multiply the decimal by 100 and simply add the percentage sign. Now you have the retention rate. The full formula looks like this:

Step 1: A – B = C

Step 2: B ÷ A = decimal x 100 = retention rate

Examples of Retention Rate Formulas

It’s easier to understand the retention rate calculation by looking at some examples. These examples take the formula and put it into practice.

Example 1

A marketing firm has 50 employees at the beginning of the first quarter. On the last day of quarter 1, 42 of the original employees still work there. Let’s plug in our data to determine the retention rate.

Starting number of employees is: 50

Number of employees who left during the period: 8

Remaining number of employees is: 42

Calculation: 50 – 8 = 42 employees remained during the quarter.

The next step is dividing the remaining employees by the total number of employees at the beginning: 42 ÷ 50 = 0.84

Now, multiply 0.84 by 100 to convert it to a percentage. The retention rate is 84%.

Example 2

A local auto dealership has 245 employees at the beginning of the fiscal year. Of the 245 original employees, 185 were still employed at the company on the last day of the year.

Starting number of employees is: 245

Number of employees who left during the period: 60

Remaining number of employees is: 185

Calculation: 245 – 60 = 185 employees remained over the course of the year.

The next step is dividing the remaining employees by the total number of employees at the beginning: 185 ÷ 250 = 0.74

Now, multiply 0.74 by 100 to convert it to a percentage. The retention rate is 74%.

Example 3

A production company has 1,565 employees at the beginning of the calendar year, and 1,425 of them remain at the end of the calendar year.

Starting number of employees is: 1,565

Number of employees who left during the period: 140

Remaining number of employees is: 1,425

Calculation: 1,565 – 140 = 1,425 employees remained during the quarter.

The next step is dividing the remaining employees by the total number of employees at the beginning: 1,425 ÷ 1,565 = 0.91

Now, multiply 0.91 by 100 to convert it to a percentage. The retention rate is 91 %.

Tips to Increase Your Retention Rate

If your retention rate is lower than you expected or wanted, you can implement these tips to help improve it:

  • Hire right. Start with employees who match the business culture and are a great fit for the job.
  • Have an open-door policy for employees who are having problems or difficulties in the workplace.
  • Be sure to reward your employees according to their performance. You can use merit increases, job promotions, and other incentives to keep them engaged.
  • Offer training and educational opportunities, so employees continue to grow and thrive.
  • Provide a salary and benefits package that makes employees feel the compensation is fair.

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Interview Questions for Managers

Successful job interview with boss and employee shaking hands and smiling.

When you are hoping to hire a new manager to lead a team, you want to ensure that you pick the ideal candidate for the job. Managers are responsible for more than simply overseeing day-to-day operations. They are integral in motivating and keeping employees engaged. In fact, a recent survey by Gallup revealed that 70% of the time, employee engagement is determined entirely by the manager.

For this reason, using the right manager interview questions is important when screening a potential hire. In this guide, we’ll start by taking a look at the top manager interview questions to ask, along with insights into what you should be looking for in a candidate’s response. Finally, we’ll offer a few bonus tips for handling the interview process for managerial positions.

Top Manager Interview Questions

When you invite a candidate to interview for a manager position, you’ll want to prepare a standard list of manager interview questions to ask each potential hire. This will help ensure that you can easily compare candidates and will prevent bias in your interview process. The following are a few examples that you can include in your list, but be sure to add your own questions that are geared toward industry or business-specific needs.

How much experience do you have as a manager?

One of the first things you’ll want to establish is the amount of experience a candidate has managing others. When you ask this question, pay attention to a few key items in their answer:

  • The number of employees they managed in past roles. Often a candidate will share this as they explain their previous experience, but if not, ask for clarification.
  • The total number of years the candidate has experience working in a leadership role. Remember, this doesn’t have to be a formal managerial position. Many top candidates for manager roles are those who have been willing to step up and lead even without a formal job title.

Describe your management style.

This open-ended request will allow the candidate to share details about how they view themselves as a manager. This can help you understand whether or not their management style will be an ideal fit for the needs of the team they will be taking over. Pay attention to the following key insights during their answer:

  • The candidate’s level of self-awareness. Do they seem to be able to recognize their own strengths and weaknesses?
  • Whether their style is a good fit for your company culture — make sure their management preferences align with company values.
  • Do they have the ability to be flexible in their management style based on the needs of their employees?

How do you handle conflict among your direct reports?

Most managers will eventually need to help mitigate conflict on their team. How they handle this difficult situation will play a big role in their team’s success. Pay attention to the following as you listen to the candidate’s answer:

  • Whether or not they have experience dealing with conflict among their employees. If they indicate that they have never dealt with conflict, it might be a sign that they are unaware of conflicts that arise among their direct reports.
  • The ability to empathize with others while still being confident enough to address issues. You want a manager who can blend kindness with fairness.
  • Their creativity when seeking out solutions for dealing with conflict.

How do you motivate your employees?

Keeping employees motivated, even during challenging projects, is key to ensuring a team is productive. When asking a manager this question, you want to gauge how well they can match motivation to individual employee needs. Listen for the following:

  • Compare the candidate’s motivation style to the team they will be managing. Make sure it’s a good match for the culture of your business.
  • Pay attention to whether or not the manager has multiple methods for motivation. How flexible are they when working with employees who need a different style of motivation?

Tell me about a time you had to let an employee go.

Being able to handle terminating an employee is a difficult but necessary part of management. Asking this question will help you learn whether or not your candidate has experience handling this task. Listen for the following as they share their response to this open-ended manager interview question:

  • Indications that they are comfortable handling the difficult process of letting an employee go. Have they experienced this situation before?
  • The ability for them to empathize with employees. How do they handle keeping morale strong among their remaining team?

Tips for Interviewing Managers

Along with creating a standardized list of interview questions for managers, use the following tips to help optimize your interview process.

  • Take notes: Because you’ll likely be interviewing multiple people for a managerial role, make sure you take notes during each interview. Never rely on your own memory, as you can easily confuse one candidate’s response with another. Detailed notes will allow you to compare candidates after all interviews are complete.
  • Use a ranking system: As candidates answer each question, it can be helpful to try to rank their answers using a numbered scale. This can be an effective way of comparing the total score of each candidate. Keep in mind that you might need to use a weighted scale to ensure that the most important qualities are prioritized over nice-to-haves.
  • Think about the team: A manager needs to be a good fit for the team they will be managing. Throughout the interview process, make sure you think about each response in relation to the employees the candidate would be leading.
  • Involve more than one person: It can be helpful to have more than one person sit down with candidates for an interview. While you don’t want to run candidates through a needless number of interviews, having at least two different opinions can help ensure that any personal bias is taken out of the equation.
  • Be transparent: Throughout the interview process, make sure that you are being transparent with candidates about expectations for the role. When a candidate asks you questions, answer them honestly. This will help ensure that the person you hire knows what they’re getting into and is the right fit for your company.

When you need help hiring a manager for a leadership role in your company, be sure to check out all the resources available through Ladders Recruiter for employers. Recruit smarter, faster, and better with our tools.

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Understanding the CASDI (California State Disability Insurance) Program

Employment law book on an office table.

In the state of California, for those who are unable to work due to a non-work-related injury or illness, there is a program that will help replace lost wages called the California State Disability Insurance (CASDI) program. Under the CASDI program, eligible workers can continue to earn a portion of their wages when they are incapable of returning to work.

For employers, it is important to understand the CASDI program, what it is, what employees are eligible for this program, and how it is funded. This can help employers assist their employees in navigating the system. Learn more about CASDI below.

What Is CASDI?

If you employ workers in the state of California, CASDI is a program that can benefit your employees during a period of time in which they cannot perform their normal work duties. CASDI stands for California State Disability Insurance and is a state-specific, short-term disability insurance and paid family leave wage replacement program.

Through CASDI, when a worker needs time off — not due to a work-related injury or illness — they may be eligible to receive state-sponsored disability insurance that will help to replace lost wages.

It is important to note that CASDI only provides monetary benefits to workers. It does not protect their job. However, in the state of California, an employee’s job might still be protected based on the Family and Medical Leave Act or the California Family Rights Act.

Who Is Covered by CASDI?

According to the state of California, there are currently more than 18 million workers who are covered by the CASDI program. This partial wage-replacement plan is available to those who cannot work due to non-work-related illness or injury, pregnancy, or childbirth.

Common reasons for an employee being covered by CASDI include the following:

  • They are missing work due to caring for a seriously ill family member.
  • They are bonding with a new child.
  • They are participating in a qualifying event that is due to a family member’s military deployment to a foreign country.

It is important to note that the state of California outlines detailed requirements to ensure eligibility, which are as follows:

  • An employee must be unable to do their regular work for at least eight days. CASDI does not kick in until the eighth day.
  • An employee must be losing wages due to their disability.
  • They must be actively employed or looking for work at the time their disability began.
  • An employee must have earned at least $300 from which CASDI deductions were withheld.
  • They must be under the care and treatment of a qualifying practitioner.
  • They must complete and submit a claim no earlier than nine days after their first day of disability but no later than 49 days after.
  • Their qualifying practitioner must complete a portion of their application.

When an employee applies for CASDI benefits, their citizenship or immigration status will not affect their eligibility. Additionally, while their employer will be notified that they have submitted a CASDI claim, all medical information will remain confidential.

How is CASDI funded?

CASDI is a state-run disability insurance program that is funded through deductions. These deductions are taken out of an employee’s paycheck automatically. Currently, every time an employee is paid, 1.1% of their wages will contribute toward the CASDI program.

However, CASDI deductions are only paid on income of up to $145,600 a year. This means that any money earned above this amount is not subject to the 1.1% tax. This creates a limit on the total amount an employee will pay annually toward the CASDI program.

How Much Will an Employee Receive from CASDI?

When an employee applies for CASDI, if they are eligible for benefits, their total weekly pay will be calculated based on the wages they were previously earning. A weekly CASDI benefit is equivalent to around 60% to 70% of wages earned in the 5 to 18 months leading up to the claim start date.

However, for wages to qualify, an employee must have been paying CASDI taxes on those wages. This deduction is usually noted as CASDI on a pay stub.

How Can an Employee Apply for CASDI?

If an employee wants to apply for CASDI, they can use the SDI Online Portal provided by the State of California. To complete their application, they will need to verify their identity and have their qualified practitioner submit documentation regarding their inability to work.

What is the Purpose of CASDI?

The CASDI program is designed to offer wage replacement for California workers who are incapable of performing their normal work resulting in the loss of wages. CASDI, similar to other disability insurance programs, aims to ensure that when someone is incapable of working, they can still meet their basic needs.

For example, if an employee becomes too ill to perform their normal work, in California, CASDI will help make sure that during their illness, they can still pay their bills and afford standard necessities. This is a critical stopgap for those who are facing long periods of time during which they are not capable of earning their regular wages.

How Should I Notify Employees about the CASDI Program?

If you are an employer in the state of California, you can help your employees understand the potential benefits they could receive from CASDI in two key ways:

  1. Post notices: The state of California offers posters that will provide detailed information about the CASDI program. If you have a physical office or retail location, be sure to place these posters in an area where employees can easily access them.
  2. Add information to your employee handbook: When designing your employee handbook, include links to the California disability insurance portal. This will allow employees to explore critical information regarding all disability insurance programs.

The CASDI program can help your employees navigate a period of time in which they are incapable of performing their normal job duties. Be sure to check back with the California Employment Development Department for updates to state-specific programs.

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Job Websites: The Difference Between Job Boards and Job Search Engines

The word Jobs in cut out magazine letters pinned to a cork notice board.

There are many job websites employers can use to post their jobs. What many don’t realize is that job listing websites fall into one of three categories: job boards, job search engines, and professional social networking recruiting platforms. For this post, we focus primarily on the two most common types, which are job boards and job search engines.

Job Websites: Job Boards vs. Job Search Engines

Job boards and job search engines have the same primary goal, which is to provide the opportunity for employers to advertise their jobs online to help businesses and job candidates find each other—employers want to find the perfect candidates to fill their open positions and candidates want to land their dream job. However, though job boards and job search engines are both types of job websites with the same primary goal, they each operate differently.

Here’s a breakdown of some of the key differences between job boards and job search engines.

Job Boards

Job boards provide opportunities for employers to specifically list their jobs on the job board. Applications are typically accepted directly through the job board, either as an email that goes into the employer’s inbox or by the employer going directly to the job board to check for new applications.

With job boards, employers and recruiters generally pay a fee to have their jobs listed. Employers then have access to resumes provided by the job board and candidates can apply directly to the jobs they see. Candidates looking for jobs might also have to pay a fee to join a job board in order to search and apply for jobs.

Job websites that function as job boards are frequently broken down by industry, job type, or geographical location. However, there are job boards, like Monster.com, that function as generalist job boards and showcase jobs across all sectors, industries, locations, and employment types. Colleges and professional organizations are examples of entities that often have niche, or specialist, job boards where employers can post their jobs.

Job Search Engines

Job search engines crawl the web to aggregate a listing of jobs based on search terms a candidate enters into a job website’s search field. They offer a wider variety of job posting types since they contain postings from multiple sources. Job search engines pull jobs into the search results from various company career webpages and job boards that align with the search terms used.

With job search engines, candidates will likely have to provide some information, like their names and email addresses, to search for jobs. However, they do not have to pay a fee to search. Conversely, employers often have to pay a fee for their jobs to be included in searches on a job search engine site if they want to view the resumes of those who have applied to their jobs. The fee is typically performance-based. In other words, to be listed, employers often have to enter into a vendor contract with the job search engine and have the flexibility to stop spending resources at any point in the future.

Another difference between a job board and a job search engine is how bots are used on job search engines. Bots search web pages for all jobs posted on career sites and job boards and pull a fair amount of information from the different job websites to provide the most accurate results. So, if recruiters are using a job search engine to identify if a job aligns with their job seeker’s career goals, they’ll see the posting date, job title, location, educational requirements, job description, and more. On the flip side, when searching for a job on a job board site, recruiters tend to have to count solely on job location and title to populate search query results since the postings on a job board are often intended for specific candidates.

Note: Some job websites function as a job board and a job search engine.

Social Networking Job Websites

Social networking job websites, like LinkedIn, functions as both a job search engine and a job board. These sites also offer additional niche functions for employers and recruiters, as well as job candidates.

What Are the Best Job Websites for Employers and Recruiters?

When it comes to determining the best job website to use for your business, your budget, industry, employment type, location, and in-house resources all play a factor. In many instances, developing a multifaceted recruiting strategy works best. This approach allows you to incorporate a combination of job website types to find the ideal candidates for your open positions.

Job boards can work well for very specialized, niche positions. Job search engines and social networking job websites are great for all levels and types of positions, including entry-level. For hard-to-fill positions where you’re seeking passive candidates, as well as active job seekers, a social networking job website might be the way to go.

The Ladders Job Website

There are many options available to help you source top candidates as a recruiter or an employer. Sometimes, it takes some trial and error with different job websites to determine where you get the most traction and bang for your buck. In some instances, you might find that a particular job website works wonders for a certain type and level of position, whereas another job site works better for another type of position.

If you’re looking to fill positions in the $100k+ range in the U.S. or Canada, Ladders Recruiter is the ideal choice.  Ladders’ member website, combined with Ladders Recruiter, is the only job website dedicated to connecting employers with experienced professionals in the $100k+ range across industries. On Ladders, 89% of candidates have a Bachelor’s degree, and 36% carry a Master’s degree or higher, with an average professional experience of 15 years.

Ladders allows you to post jobs or source jobs using a simple search option, or in-depth search with Boolean operators. You can also read full resumes as you search without losing your place in search, download resumes, contact candidates based on full contact info and much more, with packages tailored to your needs.