Retention rate measures the percentage of employees who remain employed over a given period, isolating people already in the starting headcount who stayed, rather than crediting the number with new hires who joined partway through.

Formula, and why it isn’t exactly the inverse of attrition

Retention Rate = ((Employees at Period End − New Hires During Period) ÷ Employees at Period Start) × 100

A company starting the year with 200 employees and ending at 210, including 25 new hires during the year, works out to ((210 − 25) ÷ 200) × 100 = 92.5%. It’s a common shortcut to assume retention rate is simply 100% minus attrition rate, but that’s only a loose approximation, not an exact identity. Retention rate’s denominator is headcount at the start of the period, while attrition rate uses average headcount across the period, and the two also handle new hires differently in their calculations. Treat retention rate as its own distinct metric rather than a simple mirror image of attrition.

Frequently asked questions

Is retention rate exactly 100% minus attrition rate?

No, they use different denominators and count new hires differently, so the relationship is directionally close but not mathematically exact.

What’s considered a good retention rate?

Rough industry rules of thumb put 90% or higher as strong, but these are general guidance rather than an audited standard, and what’s realistic varies a lot by industry and role type.

Does retention rate account for who is leaving?

Not on its own, a high retention rate can still hide the loss of a few critical people, pairing it with role-level or performance-tier analysis gives a fuller picture.

See employee turnover for the related departures-focused view.