Engagement is Great - Retention is Better

Learn everything you need to know about the difference between Employee engagement and staff retention

January 10, 2023
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Employee engagement and staff retention go hand in hand. 

How long your teammates tend to stick around for is a clear sign of how engaged they are. And taking the pulse of engagement levels across your business is one of the clearest ways to get an idea of how many staff you’re going to lose in the coming months.

But if you want to boost employee retention and engage your disengaged employees, you’ll need to figure out how to untangle the two metrics and tackle them one at a time.

Here’s everything you need to know about the difference between these two crucial HR metrics – as well as how they influence each other.

How are engagement and retention related?

Employee engagement is hard to define.

But you’ll know an engaged teammate when you see one. They’re emotionally invested in your company’s success, passionate about their work, and always willing to go the extra mile.

With that in mind, it will come as no surprise that a study of nearly 10,000 workers showed that engagement levels “significantly influence employee happiness”. 

Which means engaged employees are happy employees. And happier employees stick around for longer.

Book a demo of Assembly to make measuring engagement and retention levels across your organization easy.

Does engagement increase retention?

Your organization’s employee engagement levels have a huge impact on how likely your teammates are to jump ship. 

In fact, engaged employees are 87% less likely to leave their job than their disengaged teammates. And since it typically costs companies around 20% of an employee’s salary to replace them – and even more to replace their very-highest-paid members of staff – that has a huge impact on your bottom line.

And the bad news for businesses? A massive 54% of people are apathetic about their work or actively disengaged with it – with just 10% of workers highly engaged.

When staff leave, you shouldn’t underestimate the impact that has on your remaining employees’ engagement levels, especially if they’re having to say goodbye to workplace friends. The people that stick around tend to disengage from their work and become less productive.

On top of that, you can expect a drop in productivity and an increase in errors while your outgoing employee’s replacements get up to speed. And whenever a highly-skilled or longtime employee leaves, institutional knowledge leaves with them – not to mention that your company culture will take a hit as well, especially when well-liked people leave.

Whenever someone chooses to leave your business – no matter what the reason – their teammates are going to take the time to ask “why?”. So, bear in mind that your retention rates have a big impact on your employee engagement levels – which in turn impact your retention rates.

How do you measure engagement and retention?

The first step in improving employee engagement and increasing employee retention across your organization is measuring where you stand on both metrics right now – and which of the key areas you're falling short in.

How to measure your staff retention rate

While some businesses wait a full year between measuring their employee turnover, you’ll be able to spot trends with enough time to do something about them by running the numbers every month.

To work out your staff retention rate in a month you’ll need:

  • The number of employees you had on the first day of the month
  • The number of employees you had on the last day of the month (not including hires you made during the month).

Then you simply divide the number of employees you had at the end of the month by the number of employees you had at the start of the month, then multiply the number you get by 100. This will give you the percentage of employees you retained during the month.

For example, if you started the month with 20 employees and two left for other jobs during the month, leaving you with 18 teammates, your staff retention rate would be:

(18/20) x 100 = 90%

Large organizations will do well to look at the retention rate across each department as well as the whole business to spot trends. And you’d also be well advised to keep track of the average length of employment for each department and across the whole business as well.

These numbers will help you get to grips with your retention rates – and whether they need looking into.

Try Assembly to see how easy it can be to take the pulse of how your employees are feeling.

How to measure employee engagement

While measuring your staff retention rates is a case of digging into the data and running the numbers, figuring out how engaged your employees are is a very different story. In fact, it isn’t really possible to come up with an exact employee engagement metric that indicates how well you’re doing on this front.

The first hurdle you’ve got to overcome is that it can be hard for your teammates to put into words – or on a scale from one to ten – how engaged they are.

So, for most organizations, the most effective way to measure employee engagement is through a combination of:

  • Employee engagement surveys. It’s crucial to give your people a platform to openly and honestly discuss how engaged they are with their work. Anonymous surveys full of questions aimed to reveal how they feel about the key areas of employee engagement will do just that.
  • HR metrics. Productivity, how much extra responsibility your people ask to take on, the number of sick days your team takes. If these metrics are falling short, it’s a clear sign your employees aren’t engaged. 
  • Intuition. The difference between an engaged workforce and an apathetic one isn’t subtle. Don’t ignore your intuition here – if something doesn’t feel right, be sure to dig a bit deeper into the data or run another engagement survey.

Unfortunately, there isn’t a quick and simple way of measuring engagement. The more data you can gather around the key employee engagement KPIs, the more accurate the picture of how your staff are feeling will be. 

Book a demo of Assembly to get all the tools you need to measure employee engagement in one place.

To get to grips with the employee engagement metrics that matter, be sure to:

  • Go beyond surveys. While a survey will help you understand where engagement levels stand across your company, they don’t tell the whole story. To fill in the gaps, you’ll need to supplement your surveys with some thoughtful questions in your one-to-ones with your reports. Giving your staff the chance to put how they're feeling about their work into their own words can paint a clear picture of the areas you need to improve in to engage your people more.
  • Regularly take the pulse. It’s a big mistake to think engagement is something you can measure once a year in an annual staff survey. You need to regularly run employee pulse surveys to understand where they stand over time – and how they’re impacted by the initiatives you roll out. 
  • Encourage open and honest feedback. Most companies have a habit of paying lip service to wanting their employees’ feedback, then sweeping any criticisms that aren’t an easy fix under the rug. If you want a highly engaged team, you need to cultivate effective communication at work

Wrapping up

Improve employee engagement across your business and you can expect your staff retention rates to rise, which will help keep engagement levels high.

But to kickstart this virtuous cycle, you need to untangle the two metrics to understand how you can improve each one.

Follow the advice we’ve laid out here to get to grips with each in turn and figure out how to boost both of them.

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