Estimated reading time: 3 minutes
I’ve been seeing some comments about employee retention being a “terrible HR metric”. IMHO, employee retention isn’t an HR metric at all. It’s a business metric.
HR doesn’t have absolute control over the key drivers to employee retention: organizational culture and the employee value proposition (EVP). Yes, HR plays a role in developing and maintaining culture and the EVP. But there are other department leaders who play critical roles as well.
And HR is typically responsible for calculating the retention number. Just because you calculate the number doesn’t mean you own all the factors that go into it. And holding HR accountable for a number they don’t control … well, that just doesn’t make good business sense.
But let’s for a moment put the conversation about who owns the metric aside and just discuss employee retention. The metric measures the organization’s ability to retain employees. We could say the opposite of retention is turnover. A high turnover number would indicate that the organization struggles to keep employees.
Department managers have the primary responsibility for their teams. When they manage their teams well, and employees stay, the manager often gets credit. And when managers experience a lot of turnover, the organization needs to understand why. This isn’t a situation where when turnover is low the manager gets credit and when it’s high, it’s HR’s fault.
HR does want to understand the reasons that employees stay with the organization. Organizations can discover this during stay interviews. This information can be valuable when the company is making decisions about culture and the EVP. For instance, let’s say the company is considering a change in health care coverage. Employees say that health care is one of the top reasons they stay with the company. Management will want to know that as they are making health care decisions.
Also, the organizations can use the reasons employees stay with the company in their recruiting strategy. The recruiting team will want to promote these benefits in their recruitment marketing campaigns.
Lastly, and this point is kinda related to why employees stay with the company, organizations should want to know why employees leave as well as why they start looking for new opportunities. There’s a difference. Companies can ask these questions during exit interviews. An employee might resign and say they’re leaving for an organization that pays more, has better benefits, and allows hybrid work. All that may be true.
However, the reason they started looking in the first place? Well, their manager is inconsiderate blockhead. Understanding why employees start looking in the first place can provide insights to help improve employee retention.
Which brings us back to the original comment about employee retention. Retention isn’t necessarily a terrible metric … as long as it’s used as a starting point to deeper questions AND in the proper context.
Image captured by Sharlyn Lauby after speaking at the Flora Icelandic HR Management Conference in Reykjavik, Iceland
