Why Does Company Culture Matter The Most?

Why Does Company Culture Matter The Most?

Company Culture has a way of evolving organically or inorganically, whether the management deliberately worked on creating a particular office culture. The principal contributors to company culture are the top management, Human Resources, employees, and the image your company is trying to create in front of clients and investors. While some aspects of work culture can be premeditated and worked on, some points develop on their own, and the company eventually learns to live with it.


What Is Company Culture?

Company culture reflects your company’s personality that is embodied by the management, employees, social media posts and profiles, presentations to clients, and the degree of hospitality they receive, holiday parties as well as billboards that let the world have a glimpse into the soul of the company. It is an unwritten code of conduct, the filter that everyone and everything wears, and the behavioral pattern that is expected to be followed by everyone who is on the payroll of the organization.

Company culture is not a frivolous value that must be taken lightly. It ultimately becomes who you are as an organization, and can dictate who is hired or fired, based on how well they adapt to the work environment. The absence of robust company culture can result in employees that lack passion and loyalty for the organization and the staff suffering from low employee morale.

Companies with an influential organizational culture produce directors, executives, and top management with similar leadership qualities and a workforce with the same approach to problem-solving, troubleshooting, and task management. These qualities are the ones influenced most by company culture.

Research shows that employees of the same company, irrespective of their placement in the organizational hierarchy, display a standard list of leadership skills that may be different from people with the same job profile working in a different company. This applies to employees with the same roles across different companies, including those from the same industry, region, and country.

Let us envision an Indian software engineer who works for a global search engine company. Working for this mega-company tells us more about his leadership qualities and work ethics than the knowledge of him graduating from a particular IT University, or that he is of Indian origin. His capabilities will be similar to employees of American companies rather than being identical to Indian software engineers working in Chennai.

Read a blog on Traits of an empathetic leader

Importance of Company Culture for Freshers or Aspirants

Company culture is essential not only to current and existing employees but also to who your new employees will be. If an organization is well known for its positive work environment, it helps build its reputation as one of the most desirable companies to work with. A college fresher will prefer to wait a little longer or accept a lower salary if he gets the opportunity to work with a company that is known for possessing values he also shares. This results in finding a perfect match that benefits both the organization as well as the employee.

Similarly, if a company is a mismatch for the candidate, he may be able to hold his new position only for a few months, until he breaks entirely and can no longer pretend to like the office culture. This often happens when leaders and higher management have a very different mentality, treat work differently from the employee, and use assessment and appraisal methods that may not seem ideal to the candidate.

When the candidate pre fits into the office culture, he is more likely to build a strong bond with his colleagues and work better in group projects and assignments. A feeling of happiness comes from being part of a company that shares the same values as the employee and makes even difficult and longer tasks easier. The employee is also motivated to contribute new ideas, work longer hours, and complete assignments that may not necessarily be a part of his formal job description. This also results in the employee sticking around in the company for years, growing at a fast pace, and an increase in love and loyalty for the company.

An important point to remember is that technical skills and qualities can always be taught to new employees. However, getting acclimated to the work culture is a natural process and cannot be forced upon anyone.


Employing the Right Candidate

To save the company from spending time, resources, and salaries, methods can be used to ensure only the candidates that fit perfectly into the company’s work culture are employed and trained. Many companies take 2 sets of interviews to ensure all aspects are taken care of. One interview may focus on the candidate’s skills, resume, and capabilities. The other interview may focus on aptitude and psychosocial behavior, which can help identify how well the aspirant will fit into the work culture.

Companies with an influential organizational culture have a low staff turnover rate as opposed to companies with the weak work culture. A reduction in staff turnover rate automatically saves the company money, time, and resources, which get spent in conducting interviews, paying for advertisements to attract freshers, and flying in candidates for personal meetings and signing of employment contracts.

Read more about what is cultural fit? and why you should you hire for a cultural fit


The benefit of Fitting in Culturally

When employees fit into the organizational culture, it is not only the management who is the benefactor but so are the employees. While both are extremely important on their own, they are what make up the organization’s strength. An employee that suits the company is happier as a result of which his productivity almost doubles when compared to an employee that merely exists. Being happy and working well are co-related and form a vicious cycle, which soon becomes impossible to interrupt.

A cheerful employee, who is content with his employment, has a higher chance of getting promoted quickly. Such employees also contribute to the company by giving social support, and in return, they add to the organization culture. This is because they are satisfied with their work, the form of appreciation they receive, and the adrenaline rush they experience.

There are times when employees do not fit in. As unfortunate as this is, the company ends up suffering more than the employee. While the employee still gets his salary at the end of each month, even if it is mediocre work that he submitted, the company loses on potential productivity, profits, and new ideas that could have come from these employees.

A company that has a weak culture may often find itself in this situation. Not appreciating an employee, ignoring his hard work, and expecting more than what is possible from a person with his technical abilities can lead to the employee not having a drive to perform better. As a result of this, the desire to come to work is reduced, the energy to sit for long hours in the evening dies, and no initiative is ever taken from such staff members.


Culture May Be Better Than Compensation

An excellent salary package may lure a candidate into a new job; however, what retains the employee is not compensation but the company’s holistic environment.

The Importance of company culture should be given the right space and recognition it deserves. A company that pays its employees’ prize money for problem-solving or for a solution to a task that may seem impossible produces a lower rate of success.

However, a company that appreciates and offers recognition to the employee for completing a difficult job sees a higher rate in performance from employees. This is a natural human tendency at its best.

Monetary compensation may retain your employee until he makes the money he needed or finds a job that pays more. Still, a powerful and happiness-inducing corporate culture will ensure that your employees do not leave you high and dry for more money from a job that doesn’t give them internal satisfaction.

How to Develop Company Culture?

While there is no fixed formula that can guarantee the development of successful company culture, specific steps can be taken to ensure your company is slowly headed towards making an impactful culture.

Each company is different in addition to the differences found in the industry it caters to and the country it exists in. However, the personality of the CEO and board of directors contribute a great deal in the development of organizational culture.

Learning from past mistakes is the first step that must be taken while developing a healthy office culture. If something done in the past did not produce positive results, let it go and look for an alternative approach.

Try and establish a culture that is not a façade over the real values of the company. If you are true to your employees and show your actual side, they will do the same for you.

Being authentic is extremely important. If you, as an organization, know your personality, try building more along those lines. If your core values are strong and shared by all staff members, the emotional bond that the company will have with its employees will always be unbreakable.

Read a complete guide on how to build a everlasting company culture for your organization

As it has already been established, hiring the right crew goes a long way and cuts your efforts by half. Try finding yourself in every candidate.

This can also be achieved by having relaxed conversations at interviews instead of making earnest and technical conversation. When discussed in an interview, simple life events relax the applicant, change their body language, and open up more naturally.

Lastly, ensure that the entire office is like a large family. Having an easy to approach vibe makes it possible for employees at all levels to communicate and express their ideas and issues and make substantial contributions to the company and its success.

Top management should also shed their old school ideology and lean towards the office culture to get their cue.
Establishing a work culture that makes people want to wake up in the morning and enter the workplace with a smile on their face is not as difficult as it may seem. With the right attitude and effective steps, a thriving company culture can be developed and sustained.


Company Culture, a Boon or Bane?

Company culture is a compelling device. Organizations have to struggle and contemplate how to maintain a culture in a way that doesn’t start affecting future expansion and merger plans.

If leaders and top management of the company are deeply ingrained with the company culture, merging with a new company means ensuring both companies are a good match for each other.

When a larger one also acquires a smaller company, the rate of success is higher when the new portion of the company adapts well to the existing culture of the larger company. If they do not match with each other, friction is created, resulting in malfunctioning, losses, inability to meet the company’s goals, and merely putting an unsuccessful merger.

When two companies merge, a higher rate of success is achieved only when employees are accustomed to a similar work environment and management styles or when both organizations have a culture that accepts new changes openly.

Once new changes start getting approved, it is possible to drive the culture in a dominant direction by ensuring future hires also represent the values the company wants to focus on.

A company new or old should not be free of company culture. Without a healthy work culture, there will only be chaos, confusion, and absence of any direction.

The company culture matters as much as balance sheets at the end of the year do. Its high time all organizations, big or small, start valuing the Importance of company culture.

Here are top 15 ways on how you can help your employees maintain work life balance

Digital Engagement Ideas For Work From Home Employees

Digital Engagement Ideas For Work From Home Employees

The current scenario has brought the world to a halt. The pandemic has affected not only health but also the routine and lifestyle of people.
The world’s economy has drastically declined, and the helplessness has given rise to frustration amongst workaholics. The initial weeks must have felt like a nice vacation, but now that it’s been a long time, there is agitation and suffocation all over the place.

Those who have a habit of going out very frequently are now trapped in the house for months and cannot cope with things. There is a reduction in salary due to the drop in the economy.

People are expected to work to bring normality in the world and to keep themselves busy. There are numerous factors to keep in mind when it comes to lockdown and work from home.

There is a lack of work environment, a lot of disturbance and chaos. One is expected to do both house and office work due to their availability at home.

There is frustration because of low income, and one has to continually look for solutions to make ways to pay rents and fees. People are not able to keep track of days and minutes.

Time is running at full speed, and it also seems like it isn’t moving at the same time. There is a lot of denial and depression all around the world.

Things are no longer smooth, and hence the work-life balance is taking a toll on everyone. There is a lack of privacy and space at home, which also adds to the agitation.

The workload of the company is the icing on the cake. Hence there are some ways in which work from home can be made fun and encouraging.

The following 15 steps can help guide the employees towards good work from home experience:

1) Build a new routine

Don’t follow the routine that was developed before the world flipped out. Set a time table and distribute all the activities so that there is enough time for everything.

Allotment of time and proper schedule can keep one glued and motivated throughout the day. Given that work from home may not have a fixed start and end time, it can cause a lot of stress and pressure if one doesn’t have a firm stand as there could be a possibility to be taken for granted. One will be expected to receive calls as per the convenience of others, so it’s essential to be firm.

2) Make a checklist

Putting a tick before each task is very satisfying and can encourage one to keep going without getting frustrated and tired. The time table should be such that there is enough buffer time between each activity to avoid lag and frustration.

3) Adapt to a healthy lifestyle

The way the day has begun for someone has much influence on how the rest of the days will go. The lockdown is the perfect time to start the healthy habits that one has always wanting to do but couldn’t due to time constraints.

The day can begin with early morning meditation and exercise, followed by a wholesome, healthy breakfast, and a refreshing shower. The healthy start to the day will keep one energetic and active.

Starting the day with eating something nutritious instead of junk can not only help in boosting immunity but concentration as well. Early to bed and early to rise has always been the go-to mantra for all.

4) Boundaries

Since it’s impossible to go to a particular place to do the office work, some limitations should be made for the family members so that there is no expectation, disappointment, and confusion later.

The family members should be considerate and understand that it is impossible to entertain household activities in the middle of the work.

5) Work like the environment

It is challenging to get the feel and seriousness of work when done from home, so in such a case, there must be an environment made for employment.

Just like playrooms and study areas are made for kids at home in the same way, a portion of the house can be dedicated as a workplace. Table, chair, stationaries, and other relevant things can be kept together and organized in a way that it gives the workplace vibes.

One can stick post it’s and decorate that area; however, they want to replicate the look of the cabin they have in their office. To further get the seriousness, it is also advisable for people to sit for work in their office look as it will help them concentrate and get the feel of being in an office.

6) Technicalities

Factors such as the appliance used and the connectivity of the internet and signal should be kept in mind. If the laptop is not in its best state, then it can make the work more frustrating.

Get the computer fixed and make sure that there are proper connectivity and signal at home. Buffering and slow internet can instantly boost the frustration level.

7) Socialization

Like every healthy office environment, employees have a habit of talking to their colleagues and discuss the reports and other office-related things.

Since sitting together in one place isn’t possible anymore, there is still an option to stay connected with friends from the office. A video call on zoom or Skype with a colleague can help to reduce that problem.

The video call will not only help in interaction but also aid in motivation. One employee can get motivated by looking at another one, and it can help in encouraging them to work and make them realize that they are not alone.

Read our blog to learn more about Why are millennial’s important and how to motivate them?

8) Keep in the loop

The heads of the office must remain in constant contact with their employees. An update should be given to those in the office to prevent them from feeling blank and out of the loop.

It should be the boss’s responsibility to have a one to one interaction with every employee to identify an issue that he/she is facing while working from home.

Regular conference calls and meetings can help the employees in staying busy and connected. It will add familiarity and less amount of change for the employees.

9) Deadlines

The work allotted to the employees should be done along with a deadline. If not given by the boss, then the colleagues should set a deadline for one another. This will keep people busy.

Work will be done on time and keep everyone engaged. The deadlines along with the checklist will help one realize that some productive work has been done, and feeling of hopelessness and frustration will be significantly reduced.

Here are top 20 Employee Engagement Activities that will help you to motivate your employees

10) Plan activities

Events and activities that are usually done in the office should be continued. Games should be organized regularly, to keep the energy alive and to bring some enthusiasm back.

Employees can take turns and plan games for the weekend, and these games can be based on their area of interest. This will help bring out hidden talents, act as an ice breaker, and erase the feeling of boredom and monotony. If the concept of celebrating an employee’s birthday is there is an office, then it should be continued.

The employee should be made to feel special by receiving warm wishes. This, too, can be done on the video call. The lockdown can be utilized to bring the employees together and fill in the gaps.

11) Work on the weaknesses

The boss should make an effort to motivate and boost every employee’s confidence. Tasks and activities should be given to the employees so that it enhances their performance at work.

The negatives and positives should be identified, and the employees should be made to work on them. This will boost their confidence and also encourage them to do better.

12) Incentives and bonuses

The companies that are well established and are not showing any loss in business can take it as an opportunity to increase the salary of their employees. There is much money saved from travel, electricity bills, and other expenses.

The money saved by the company can be used to give a bonus to their hard-working employees; this will reduce the pressure on their heads and also keep them cemented to their work.

13) Give feedback

There should be transparency between the company and its employees. The employees should be allowed to give their views on how the company is being run; there should be room for ideas and suggestions by the staff. An approach to improve the way the work is being done can benefit the company and its employees.

The employees should also receive feedback from the company, and their performance should be assessed and discussed. This will help keep a performance track of every employee and reduce the possibility of friction and confusion.

14) Flexibility

Now that the work needs to be done from home and there is nowhere to go, there is an advantage of flexibility. In case, due to some home-related chore, the exact time table was not followed, it should not become a reason for agitation and irritation as one should keep the option of modification in mind.

If the work assigned is not done in the morning due to some reason, then one should not panic, the work can be done in the afternoon or evening.

There is a lot of travel time that is being saved, so it is fine to not stick to the exact schedule all the time. However, one should try to follow the routine as much as possible because otherwise, it can nullify the entire purpose.

15) Rest

One cannot sit in one place for long, sitting in front of the laptop in the same posture all day can be tiring and unhealthy at the same time. It is advisable to take 10 minutes to break after every 45 minutes.

Work without a break can lead to tiredness and fatigue. Small breaks can help to keep it active for the rest of the day. The phone calls from the office can be taken by walking while having a conversation.

It will not only help in having some mobility but also help one to wake up from sleep. Healthy snacks and beverages can also be consumed while at work to get energized.

It all comes down to the perspective one has. Work from home can undoubtedly be confusing and frustrating, but one should also try to look at the other side of the road.

Staying at home for months can help members of the family to reconnect and bond again. This wouldn’t have happened if one had to sit in the office away from home for hours.

There is much money that is being saved due to the lockdown. This can help in refining one’s accounting skills and can build the habit of saving.

The work from home concept has made people realize that a balance between work and home can be created. The ones who don’t usually help at home have realized that they have hidden talents and can also cook well.

The time away from the office environment can be utilized to stay fit and in help in personality development. New skills and programs can be learned in an enormous amount of time.

Digital engagement activities should be incorporated exclusively. Online courses and skills determined can enhance CV and improvise knowledge and work performance.

Companies should encourage their employees to do better and identify the potential they have. The daily dose of encouragement should be given in the form of calls and webinars.

Influential personalities should be invited to give talks and address the budding talents in the office. This is the time for unity and teamwork, and hence the energy should be put towards positivity.

A planned routine and focussed approach can help in making the work more manageable than it looks. Support from the family and a comfortable environment can further enhance the ease of work.

Engage in activities that calm the mind, listen to music, read a novel, or talk to a friend when taking small breaks between tasks. Allow the brain to rest, eat healthy, and take short naps to refresh the body and soul.

Here are top employee engagement trends that will keep your employees motivated

Things should be slowed down in terms of work, and the rush can add to the stress and tension. Hard work, dedication, and determination are all that is needed, whether it is about working from home or away from it, the key to success remains the same.

What is employee retention rate & how to calculate it?

What is employee retention rate & how to calculate it?

Receiving an unexpected resignation is every manager’s nightmare. Not only does it makes it challenging to find an equally talented, if not more, replacement but it also makes others in your team contemplate looking for other opportunities. Leaders and HR executives must address the causes of attrition to retain their workforce. A low employee retention rate constitutes a high employee turnover rate, which is a costly problem for companies.

What is the employee retention rate?

An organisation’s ability to retain its employees over a period of time is referred to as its employee retention rate. It comprises several functions within an organisation, typically relating to HR policies and their efforts in engaging with their employees in order to retain them. Policies such as offering perks and benefits, a steady work-life balance, and maintaining a healthy working environment play critical roles in an employee’s decision to stay at an organisation.

An organisation’s retention rate throws light at the company’s success and ability to focus on its employees. A low employee retention rate incurs high costs to a company and makes it challenging to re-hire in tight market conditions. In addition, this not only gives an organisation a holistic view of its current workforce stability but also enables them to understand and restructure their strategies to maintain a higher employee retention rate.

When an organisation is focusing on employee retention, then it shall be fruitful in retaining the motivated and trained employees in the organisation. This will result in increased productivity and better performance in the organisation.

How to measure employee retention rate?

The procedure to measure employee retention rate within an organisation is pretty straightforward; divide the number of employees on the last day of a given time period by the number of employees on the first day. Let’s use the following example to easily explain to you the calculation of a company’s employee retention rate.

A BRH Cement – an Indian cement company – has 100 employees on the 1st of January 2019. By the end of its first fiscal quarter, the company has 105 employees, of which 10 are new hires. Across the course of the next three quarters, 25 more people were hired and as of 1st of January, 2020, BRH Cement had a strength of 125 employees.

Define The Period Of Time

Usually, employee retention rates are calculated across a period of one year; however, you can decide to calculate it for shorter periods of time as well. For the purpose of this example, we will calculate BRH Cement’s employee retention rate for the whole year

Period = 1st January 2019 – 1st January 2020

State the number of employees on the first day of the defined period

You can check the company’s payroll to find out the number of employees on this particulate date.

As mentioned in the example, BRH had 100 employees as of 1st January 2019

Total employees on the first date of the defined period = 100 employees

Determine the number of retained employees

The goal of calculating the employee retention rate is to determine the number of employees the organisation has been able to retain over the defined period of time. Hence, new hires cannot be included as part of this calculated as they will interfere with the end result.

To determine the number of retained employees, subtract the new hires from the total number of employees on the last date of the defined period. Referring to our example, BRH Cement had 125 employees at the end of the defined period (1st January 2020) and had 35 total new hires.

Total retained employees = Total employees at the end of the defined period – New hires throughout the defined period

Total retained employees = 125 – 35

Total retained employees = 90 employees

Calculate Your Employee Retention Rate

Divide the number of employees at the end of the defined period by the number of employees at the start of the defined period and multiply the result by 100 to convert it to a percentage.

Employee Retention Rate = (Total number of employees on the last date of the defined period / Total of employees at the start of the defined period) x 100

Employee Retention Rate = (90/100) x 100

BRH Cement’s Employee Retention Rate = 90%

What is the average employee retention rate in Indian companies?

There are two types of attrition in companies – voluntary and involuntary, both of which incur high costs to a company. While involuntary attrition happen when an employee is asked to leave the organisation if they are under performing or if they don’t seem fit for the role they were hired for, voluntary attrition mean when an employee chooses to step down from his role at an organisation for various reasons. Employees can choose to quit an organisation to pursue a better opportunity or to take up a better paying job or for any personal reason such as marriage or relocation.

While a good employee retention rate would be 90% or more, India has an average employee retention rate of 80-85%, which is reducing at an alarming rate.

Why does India have a seemingly low employee retention rate? According to a KPMG report, the top three reasons are:

  • Better Pay Elsewhere (28.1%)
  • Better Career Opportunity (23.4%)
  • Personal Reasons (19.6%)

If you are an Indian company and want to improve your employee retention, download our guide

What are some of the employee retention rate statistics?

The attrition rate in the Indian industry is alarming! In India, long-term employees who are retiring or leaving the organisation are replaced by younger employees who tend to change jobs frequently. It is not uncommon for a 20- or 30-year employee to be replaced with a millennial who tends to change jobs every two to three years. Even Generation X hops more jobs compared to the veteran/traditionalist generations.

The same KPMG report shows the retention rates across all the industries in India with the retail industry having the lowest employee retention rate at 81.5%.

Below is the industry-wise employee retention rate statistic for the financial year 2018-2019:

  • Retail – 81.5%
  • Insurance – 81.7%
  • Financial Services – 81.8%
  • Professional Services – 81.9%
  • Banking – 82.2%
  • ITeS – 84.9%
  • Life Sciences/ Pharma / Healthcare – 85.2%
  • Telecom – 85.4%
  • IT – 85.4%
  • Transport & Logistics – 86.3
  • Infrastructure & Real Estate – 86.7%
  • Consumer Goods – 87.2%
  • NGO/NPO – 90.8%
  • Energy & Natural Resources – 91.5%
  • Engineering & Manufacturing – 91.6%
  • Automotive Components – 92.1%
  • Automotive – 93.4%

Meanwhile, the employee retention rate at Indian startups is at a staggering 20-50%

How to improve employee retention?  Have a look at some strategies to improve employee retention rate

One consistent truth across every type of worker, regardless of age, gender, ethnicity, or geography, is that compensation is king for both recruiting and retention. If you don’t pay employees fairly, they will leave—and no perk will change their mind. This is the main reason behind the attrition in the Indian industry.

With dynamic market trends, it is in an organisation’s best interest to focus on employee retention using encouraging motivated and talented employees to remain a part of the company and contribute to its success.

Employee retention meaning and definition

Employee retention meaning and definition

For any organization, its employees are its backbone. For the growth of the company, it is important that employees give their all. But this is only possible when employees see the company as more than just a place of work and are willing to contribute their best. Many a times, employees quit their present position in an organization because they are unhappy with the environment and culture at their workplace or the compensation being offered to them.


A company can address grievances of its employees effectively and ensure that their employees do not quit. However, this takes work and strategy which fall under the umbrella of what is known as employee retention.

Let us take you through employee retention meaning and definition first to help you understand this concept in greater detail.

Employee Retention Definition and Meaning

Let us first try and understand what employee retention is. Or what is known in Hindi as कर्मचारी प्रतिधारण.

Employee retention, in extremely simple terms, may be understood as the ability of a company or an organization to retain its employees and ensure a low turnover rate. In a broader employee retention definition, this may include strategies implemented by the company or employer to keep the employees employed in the company within a given period of time.

The employee retention meaning in Hindi too remains the same: strategies that keep the employees in the company for a longer duration.

Employee retention is generally attributed as a function of the Human Resources (HR) department of a company which is responsible for ensuring that the number of employees leaving the company within any given period remains low.

However, it must be made clear that employee retention only pertains to the retention of employees who contribute value to the company.

Low-performing employees and top-performing employees in a company are not valued at the same level. Therefore, employee turnover is also a function of the performance of the employees.

Read: Employee retention facts and trends

Why is Employee Retention important?

For any company, employee retention is an extremely important factor in ensuring the growth of the company as a whole. There are several reasons which make employee retention important for a company and some of these are as follows:

Value of the employee

Employees are an asset for any organization, contributing to its growth. The longer an employee stays with a company, the more value they create for the company. Since longer serving employees are more familiar with the company’s systems, work culture, goals and targets, they are more driven towards helping the company realize its goals.

The financial cost to the company in replacing an employee

The financial cost of replacing an employee in the company adds to the costs incurred by the company in any given period. According to a 2017 study by the Work Institute, the cost of replacing a mid-level worker in a company is at least 30-40 per cent higher than the existing salary of the employee who quit. Another report by Perito mentions that the average cost of replacing an employee of India can almost be ten times as high as the salary of the replaced employee. This is because of the various costs involved in looking for a suitable candidate
which include the cost of advertising, conducting interviews, background checks, training costs, bonus and incentives to the new employee, etc.

Employee morale

Low turnover rates also speak for the company’s work culture, which in turn affect the employee morale. If a greater number of employees continue to quit the company frequently, it creates a negative attitude among the remaining employees. This dwindling morale also affects the productivity of the workers and the overall work of the company. On the other hand, the high retention rate of the company promotes the confidence of the
employees in the company. Employees in companies with high retention rates are more confident that the company is willing to take the necessary steps to keep their workers happy.

Boost to the company brand value

The higher the retention rate of employees in a company, the greater the boost to the brand value of the company. It creates a perception in the job market that the company values its employees and makes the company a sought after the name to work with.

Want to know more about retaining your top performing employees? Get the complete guide to employee retention


How to measure employee retention

Given how crucial employee retention is for an organization, measuring it through verifiable metrics is an important aspect. The calculation itself is not difficult and can be done periodically to assess the effectiveness of various initiatives taken by the organization.

Basic formula

The simplest formula for how to measure employee retention rate requires the division of the total number of employees who quit the organization during a given period by the total number of employees at the end of the same period. The percentage obtained is an effective employee retention rate.

Let us understand this with an example. Say an organization has 100 employees in the first quarter (Q1). In the same quarter, seven employees leave the organization. Then, the employee retention rate will be calculated as follows:

Employee Retention Rate  = Total number of employees – Number of employees who quit

Total number of employees = 100, Employees who quit = 17

Employee retention rate = (100 – 17) x 100% =  83 %

The Data Set
The first step towards calculating employee retention is collating the data. For this, there are two methods. One is the regular collection of data about all employees who join the company as well as employees who leave the company.

The other method is to go through the records of the company for the period for which the employee retention rate is to be calculated.

A complication in the data collection for the calculation of the employee retention rate arises from the change in roles of employees.

If the calculation is to be made department-wise within the company, for the same employee to have changed roles within the company creates a duplication. In such a case, only the last held position of the employee is to be taken into account as this provides accuracy to the calculation.

Read our complete on blog on Why your company needs an employee retention policy?


How to improve employee morale and retention

Improving employee retention rates is always a challenge for companies, and it is an important one for the growth of the company. Employees leave companies for a variety of reasons and dissatisfaction with their salary is just one of these.

This is why it is important that companies work towards understanding the reasons which push their employees to the brink of considering quitting their jobs.

Working on these will reduce the turnover rates and improve the employee morale, which in turn will go a long way in boosting the employee retention for any organization as well. Here are some tips on how to improve employee morale and retention:

Communicate effectively

Communication gaps between the employees and the employers can significantly affect employee morale and also whether employees want to stay on in the company or quit.

Allow employees to express their opinions on work-related issues with frankness so that any grievances or miscommunication can be addressed at the beginning.

Pass information clearly and create a work culture where junior employees are not hesitant to approach their seniors to ask for clarifications or more information. If there are any grievances from either side, they must be addressed clearly.

Clear communication, ethical behaviour, and positive work conditions go a long way in improving employee morale and hence, the retention rates.

Work towards ideal salaries and perks

In the 2019 Randstad Employer Brand Research report, it was found that 33% of the respondent employees left their jobs due to inadequate compensation.

When workers feel that they are not being paid in proportion to the contribution they are making to the organization, they are bound to feel dissatisfied.

Appraisals and reviews not resulting in salary increments as expected by the employees also contributes to this feeling. A structured system of periodic performance-based or tenure-based salary increments is an effective way for organizations to boost employee retention.

At the same time, perks and annual bonuses create attractive incentives for the employees to stay in the company over the long term instead of considering a job change.

Create a flexible work environment

Flexible work environments are excellent morale boosters. Be understanding of the requirements of your employees. Rather than enforcing office timings, if an employee seeks to work from home on account of pressing circumstances, allow them to do so.

In the recent coronavirus outbreak, major private sector companies in India allowed their employees to work from home to prevent the spread of the disease. This is an apt example of companies taking the extra step to protect their employees which the latter will surely appreciate.

Encourage teamwork

When people work together as a team, it creates bonding and. A culture of collaboration and cooperation results in a healthy work environment where workers are happier and more satisfied with their work.

Apart from teamwork within the office, also organize group outings such as a picnic or a tennis match where colleagues can get together and socialize and feel a greater affinity towards each other as well as towards the organization.

Acknowledge and reward achievements and milestones

Everyone craves appreciation for a job well done, and it is the same for the employees in a company too. Reward employees for targets achieved not just to encourage then but also to encourage the other employees to emulate the achievements of their colleagues.

An even a better way would be to incorporate a system in place where achieved milestones, such as achievement of targets or completion of a specific number of years in service automatically qualifies an employee for promotion or a salary increment.

Do read: Top 9 employee retention strategies

Clearly, employee retention is an aspect every company must pay more attention to. The more willing employees are to stay on in the company, the greater their contribution will be towards the growth of the company. Regardless of their size, companies must seek to ensure that they take the necessary steps to hold on to the value-contributing employees. There will be some turnover, but a lower rate is in the larger interest of the company in the long run.

Employee retention facts and trends

Employee retention facts and trends

The corporate doesn’t operate the same way it used to anymore. The rule of the law that used to govern the corporate has changed. There are certain factors that have contributed immensely to these changes. Some of which include the complete overhaul of the technological landscape, exciting and sometimes borderline strange employee demands, and societal expectations among others.


As a business in the corporate world, you know how important employees are and how important it is to keep them happy and content. However, this is easier said than done.

Employee retention in India is not easy, more so because we have so many startups that are backed by renowned investors springing up every other day. So, in order to retain your employees, you need to first listen to them.

You need to show them that you want them to continue working with you. You need to take them into confidence that you are willing to do everything to keep them.

But, there are not many companies in India that are ready to go that extra mile. They don’t understand how important employee retention is to their long-term success. No wonder a lot of businesses have to shut their doors even before they start to find their footing.

All is still not lost. There are ways that can help businesses in turning the tide in their favour. The biggest thing that businesses need to show is that they value their employees and that they are ready to do everything that is required to reward them.

Best companies are those that don’t give their employees any reason to look elsewhere. If you are willing to respond to your employee demands, those that are justified, you will have little problem in retaining them.

You need to understand that no employee wants to leave a good employer. It is only when an employer pays no heed to heed to an employee’s demands that they start looking out for other opportunities.

You can’t get caught off guard as an employer. You need to always stay ahead of the trends. Let us now set the context straight.

Let’s put before you employee retention trends and statistics that will help you better understand your workforce perception and come up with an actionable plan to not let your performers drift away.


Read our complete blog on Why your company needs an employee retention policy?


What are some employee retention facts you should know?

The things you need to do to keep great employees or stop that from leaving can be unsolved mysteries if you are not aware of your company work culture, or if you are still building on your business. We are going to put before you a few surprising facts and then discuss employee retention analytics based on those.

  1. Forbes studied a number of surveys done recently in India to understand employee retention KPIs. What it found out was unexpected, to say the least. The cumulative study of these surveys revealed that over 50% of Indian employees are considering leaving their jobs. Out of these, more than 65% of the employees belonged to the below 25 years age bracket. These figures aren’t too promising in today’s India where the startup revolution is at its peak. Now, startups are looking for young talents, but only those that are willing to stick with them for a few years. And well, they have their work cut out. Investors don’t put money on businesses that see high attrition.
  2. HireRight published its India Employment Screening Benchmark Report 2018 to give employers valuable insights into how employee retention works. The report featured a survey that gained inputs from 6,000 HR professionals. We are only going to talk about the biggest takeaways of this report here. 85% of Indian organizations were considering hiring more people. This figure for the entire APAC region was 77%. So, Indian companies seemed more intent on freshening up their teams than their counterparts in the Asia Pacific region. Another important finding was related to hiring expectation and employee retention. Nearly half of the companies that were spoken to during the surveys pointed towards investing more money in retaining their staff. This figure is more than double of what it was when the survey was last conducted in 2017.
  3. Finding a fitting replacement for an existing employee that could leave you is a big investment, both in terms of cost and time. A lot of time and money goes into finding the right talent for your needs. You need to advertise vacancies, get in touch with recruitment agencies, screen and interview the candidates, and then finally hire a candidate. Onboarding is another important part of the process. A study by Employee Benefits News reveals that when a company loses an employee, it bears a loss that is equivalent to nearly one-third of that employee’s annual salary. So, when an employee leaves you, it isn’t just a resource that you no more have access to, it is as much the cost associated with it. The easiest way to do away with these concerns is to retain your employees by providing them enough reasons to stay loyal.
  4. Employees that perform want to be recognised for their efforts. If they aren’t recognised or rewarded, they are highly likely to look out for a new job. According to data released by TINYpulse, only 12.4% of employees that are recognised for their efforts start looking for a job whereas 21.5% of employees that aren’t recognised prefer switching their job to a better option than continuing in their current company. If employees get validation for their work, they are more than willing to stay. Employees that are appreciated by their managers are far more likely to continue with a company than ones that are seldom acknowledged. Similarly, employees who are assisted by their managers in managing their workload are more likely to stay. According to TINYpulse, only 13% of employees who receive regular recognition from their managers look for a change in employer. The figure stands at 24% for the employees who think they don’t receive recognition regularly enough from their managers.
  5. Employers that don’t pay too attention to the work-life balance of their employees, pay the ultimate price by losing them. It has been found that employees that value their personal life as much as they value their professional life are likely to stay with a company that helps them in maintaining this balance. In a study conducted by Kronos, it was revealed that 95% of HR leaders agree to the fact that employee burnout is seriously hampering retention. Whether or not they are allowed to work remotely on some days or in certain situations and whether or not their work hours are flexible are factors that employees consider when choosing to stay or move on. Let your employees maintain a work-life balance and focus as much on their personal lives as they do on their professional lives. You will start seeing great results very soon.
    Employers that empower their employees give them another reason to stay. According to TINYpulse, employees who have complete control of their professional careers have a 20% higher chance of staying with their existing company. Employees that are clear about the direction their career is taking, and are aware of the support and guidance from their leadership, are more loyal.


Employee retention trends in different companies

Well, you need to understand that there is a lot common between employee retention and being a company that everyone wants to work for. Let’s take a look at some companies that have done really well in keeping employees happy.

Future Magazine named Google as the best company to work for, again. It is the sixth consecutive year that Google has topped this list. Its attrition rates are not as high considering the huge size of its human capital.

So, what does Google or Facebook for that matter do to keep employees happy? They employ a set of straightforward strategies to not let their employees run out of the door, if you like.

One of the things that hiring managers at Google or Facebook do is take their time when hiring a candidate for a role. A big reason that people want to leave your company is because they don’t fit the job profile or role.

Hiring done in haste often leads to repeated training and manager-employee frustration among other things.

It is very important to have a hiring plan in place that mentions the required qualification, skill set, experience, and other things that a hiring manager needs to look for before giving a candidate a heads-up.

Google posts about 5,000 jobs every year. Over two million candidates apply for these. However, Google gets its hiring right every time of asking because it follows an exhaustive recruitment process.


Give it a read: Complete guide to employee retention


How do companies use employee retention analytics to improve retention rates?

Let’s take you back to the first quarter of FY 2019-2020 and see what top IT companies had posted regarding their attrition rates in that period. Cognizant reported a jump of 4% from 19% in the last quarter of the previous financial year.

Infosys reported an increase of 3 % from its attrition rate of 20.4% in the period from January-March 2019. Wipro did comparatively better than its counterparts in this regard. Its attrition rate saw a jump of only 1% in the last 1-1.5 years. What did Wipro do that the others couldn’t?

This is what data analysis and employee retention all about. You work on the previous data and try to bring in reforms to make your employees stay. So what Wipro did was it brought out certain initiatives to reward performing employees.

At the same time, it started reskilling its employees. It had learnt its lessons. That’s why it gave its junior level employees a retention bonus of Rs.1 lakh. That’s how it was able to retain its employees.

It wasn’t doing as well in terms of retention about 18 months from when these figures were reported in the first quarter of FY 2019-2020.

This is what Ayaskant Sarangi, Senior VP (HR), Wipro had to say about these employee retention efforts, “We recognize the contribution of high performers by offering them better opportunities and substantially higher increases.

They are rewarded with promotions and managerial roles where they are entrusted with team-leading responsibilities. We also offer them opportunities in client-facing roles.”

Infosys is also learning to make better use of employee retention analytics after the period of its well-documented struggle with keeping employees. According to Salil Parekh, CEO and MD, Infosys, the company has formed a task force, which will be working under COO, Pravin Rao, to turn its retention situation around.

The task force will be responsible for preparing a list of actions, which will be put to work in the next few quarters.

Cognizant also learnt from its mistakes and was quick to make amends by setting up a transformation office for reviewing factors that can help them in improving upon their employee retention rates.

It has upskilled and reskilled nearly 150,000 employees in the last year or so. It also released retention rewards worth $48 million to not allow great talent to leave.


Also read: Top 9 employee retention strategies



Many companies pay all the attention to their bottom line, in order to maximise their growth. However, there are other things as well that need as much attention, if not more. These companies need to realise that the most important asset of their businesses are their employees. Employees that work with all honesty to achieve the goals set by a company can ensure long-term success. So, need to focus on employing employee-first approaches to retain their best resources.