Article: What you should know about implementing retention analytics

HR Analytics

What you should know about implementing retention analytics

Using analytics to tackle talent retention can yield significant results. Find out how
What you should know about implementing retention analytics

HR leaders should focus on asking the right questions – which levels are the most impactful to business?


Employee attrition is a costly affair. How? In a study conducted by, an average company with 10,000 employees, the ideal manager-employee ratio could be broken down to: 70 percent - entry level employees, 20 percent - middle management and 10 percent - senior management. By calculating the cost of replacing talent and comparing the annual turnover, the study concluded that the bottom-line turnover cost of replacing talent would be 11 percent – about $41.3 million. By reducing turnover cost to 10 percent, (where just 100 less people quit the organization), that company could save over $3.75 million. Find out more about this case here. Apart from having a direct impact on bottom line cost, the benefits of retention analytics include: understanding trends in workforce attrition, helping companies understand the primary drivers of attrition and enabling them to identify the stage at which attrition is likely to have a negative impact on the company.

The use of retention analytics in India is still in a nascent stage. A recent report by NASSCOM and Aon Hewitt notes that “talent analytics will play a crucial role in employee retention”, according to the report 60 percent respondents rate future talent analytics as a top talent priority. In this scenario, it is worthwhile asking what kind of analytics a company should look at that enables talent retention? This article looks at a few steps in the retention process.

An efficient analytics solution should involve extensive use of data or statistical input; it should enable creation of predictive models and help decision makers with specific action points that could lead to better outcomes. Traditionally in HR, analytics has had a threefold impact: one, it enables organizations to save cost; secondly, it is capable of impacting customer experience by identifying areas of employee engagement. Thirdly, it also helps organizations assess their talent – whether they have been assigned the right roles and to measure their ongoing performances. The key to an impactful analytics program lies in the quality of data and identifying levers that contribute to the problem at hand. In case of retention, companies need to enable immediate action to have any significant impact. Here are a few steps in the process:

  1. Identify factors: Best in class exit surveys are instrumental in understanding why existing employees leave the organization. Conversations with line managers as well as HR business partners bolster insights from the survey data. So, surveying exiting employees on an ongoing basis enables organizations to identify trends and patterns that should capture both, internal as well as external factors.

  2. Segment employees: The second step in the process has to do with identifying characteristics and profiles of employees who at risk of leaving the organization. In this process of segmentation, companies employ employee data that includes demographic information such as skills, experience, education, designation to create clusters of employees. By associating attrition risk scores with performance data, organizations can identify high performing employees who are at high risk of leaving the company and distinguish them from those that are at a low risk.

  3. Implement Action: Data on retention is collected by HR departments in different ways – whether that is in the form of simple average tenure or average turnover cost. Using HCM tools to identify key contributors and by looking at the retention differential between high and low performers enables HR departments to act on the data. Organizations need to individualize their action- whether that means instituting a bonus, increasing the salary, giving the concerned employee an overseas opportunity or giving opportunities to learn and grow within the company. 

  4. Operationalize a plan: The benefit of using a retention analytics model lies in the long term impact that the company is able to bring about. This would mean steady use of analytics to help decision making not only in the immediate future but one that also tackles employee engagement in the upcoming years. An operational plan should also tackle challenges across different levels of the workforce – including entry level and middle and senior level management. A comprehensive suite of solutions will truly enable the business effectiveness of the company. 

In order to have the right impact, HR leaders should focus on asking the right questions – which levels are the most impactful to business?  And what kind of engagement levers would get high performing employees to consider a long term association with the company? Another concern that HR leaders must be vary of is data hygiene – is the data collected same across all the tools or should there be data cleansing tools that need to be employed? What kind of process would best enable data integrity across the employee lifecycle? At a time when HR departments are being asked to focus on the overall alignment to business, the tangible business impact that employee retention brings would be instrumental in making HR more visible and vital to any business.

Read full story

Topics: HR Analytics, Employee Engagement, #Reimagine HR

Did you find this story helpful?


Your opinion matters: Tell us how we're doing this quarter!

Selected Score :