The basic employee retention rate calculation, or the stability index, can be determined by following the steps below:
Determine the number of staff with one year or more of service.
Divide by the total number of staff on board one year ago.
Multiply the outcome by 100.
As the human resources officer, you should be tracking the actual number of employees on board. You also need to have a clear idea of how many of those employees have completed one year or more of service with the company. You can find this out by surveying your current departments one by one and getting a list of employees who have been on board for longer than a year vs. those who have just completed a year’s service.
Don't be concerned with employees who have recently joined the company or those who are planning to retire or resign in the current period, as they won't be factored into this calculation. Gather this information first to make sure all employee statistics are correct and then use the above formula to get the employee retention rate. Do this for each department and then for the company as a whole.
For example, your company currently has 172 employees. Six were recent hires and have served for less than a year, so we exclude them from the calculation, leaving us with 166. Divide this number by the total number of employees that were year one year ago. In our fictional scenerio, the company has had eight employees leave, so the number was 174. Dividing 166 by 174 leaves us with .95. Multiply by 100 for a Stability Index of 95.