Formula
| Term | Meaning |
|---|---|
| Headcount at the start | Employees on the rolls on the first day of the period. |
| Still employed at the end | Of those same people, the number still on the rolls on the last day of the period. Joiners during the period are not counted. |
Worked example
A private school in Jaipur had 120 teaching and non-teaching staff on 1 April 2025. During the academic year it hired 22 people and 25 people left, 4 of them new hires. On 31 March 2026 HR checks how many of the original 120 are still on the rolls.
- Original staff who left = 25 exits minus 4 exits among new hires = 21
- Original staff still employed = 120 minus 21 = 99
- Retention rate = 99 / 120 x 100 = 82.5%
- Closing headcount = 120 + 22 minus 25 = 117, so average headcount = (120 + 117) / 2 = 118.5
- Attrition for the same year = 25 / 118.5 x 100 = 21.10% (21.097 rounded to 2 decimals)
Why retention is not 100 minus attrition
Retention and attrition answer different questions. Retention follows a fixed group of people from the start of the period to the end and ignores everyone who joined in between. Attrition counts every exit, including new hires who left quickly, and divides by average headcount. In a company that hires and loses many new joiners, attrition can be high while retention of the established workforce stays steady. Report both, and say in the report which question each one answers.
Comparing retention over time
Measure retention on the same dates every year, for example 1 April to 31 March, so that academic sessions, festival months and appraisal cycles fall in the same place each time. Compare departments and locations with their own previous years first, and with each other second. For a sharper picture, calculate retention for key groups separately: teachers and support staff, confirmed staff and probationers, or employees rated in the top two bands.
- Overall retention: everyone on the rolls at the start.
- Key talent retention: only the people on your critical list.
- Retention by manager: shows where people stay and where they do not.
Pitfalls in the calculation
Putting people hired during the period into the numerator is the classic error. It pushes retention above its true value and can even produce a figure over 100 percent. Another error is treating a move to a group company as an exit when the person stayed within the group. Decide once whether retirement counts against retention, and note the rule in the report so next year's figure is built the same way.
How to improve it
- Hold a yearly career conversation with every confirmed employee, not only with those who seem likely to leave.
- Look closely at pay and workload in any team whose retention falls two years in a row.
- Recognize long service at work anniversaries, and make the recognition personal rather than a form email.
- Offer internal moves and training so people can grow without changing employer.
- Act early when exit interviews name the same manager more than once.
Tracking it in ZeniaHR
Use ZeniaHR employee records: list the active employees on the first day of the period, then check which of them appear in the previous employees list with a last working day inside the period. Joining dates let you set new hires aside. The match itself is done in a spreadsheet. Work anniversaries appear in Celebrations and Praise, which helps with visible long-service recognition.
See it on your own data
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Book a free demoSee pricingFrequently asked questions
How do you calculate employee retention rate?
Take the number of employees on the rolls at the start of the period, count how many of those same people are still employed at the end, divide the second number by the first and multiply by 100. Leave out anyone who joined during the period. For example, 99 of 120 still employed gives a retention rate of 82.5 percent.
Can retention rate be more than 100 percent?
No. Retention follows only the people present at the start, so the highest possible value is 100 percent, when nobody from that group left. A figure above 100 percent means new hires were added to the numerator by mistake. Rebuild the calculation from the opening list of employees and match names, not totals.
Is a high retention rate always good?
Mostly, but not always. Very high retention combined with weak performance, no promotions and no new skills can mean people stay because nothing ever changes. Read retention alongside performance ratings, internal promotion and regretted attrition. Keeping strong performers matters more than keeping everyone.