What Is Retention Rate? Meaning, Formula & Importance for Indian Businesses
Book a Free DemoRetention Rate
The percentage of employees who remain with the organization over a certain period. High retention rates indicate employee satisfaction and effective HR practices.
Retention rate measures the percentage of employees who remain with an organisation during a given time frame. It’s a key HR metric that reflects job satisfaction, workplace culture, and overall employee engagement.
In India’s competitive talent market, especially in IT, finance, and startups, a high retention rate can reduce hiring costs, boost morale, and improve long-term business performance.
💬 “Pagarai’s HR analytics helped us track retention rates and identify the causes of attrition.” — Neha, HR Business Partner
👉 Want to improve retention? [Use Pagarai’s employee engagement and retention tools →]
How to Calculate Retention Rate
| Step | Purpose |
| Define Time Period | Monthly, quarterly, or annually |
| Count Starting Employees | Number of employees at the beginning of the period |
| Count Remaining Employees | Number still employed at the end of the period |
| Apply Formula | (Remaining Employees ÷ Starting Employees) × 100 |
Example: If you started with 100 employees and ended with 92, the retention rate = (92 ÷ 100) × 100 = 92%.
Why It Matters
- Indicates employee satisfaction and stability
- Reduces recruitment and training costs
- Maintains organisational knowledge and experience
- Strengthens company culture and team cohesion
- Improves employer brand in the job market
Common Tools for Measuring Retention Rate in India
- Zoho People, Keka HR – for workforce analytics
- Google Sheets / Excel – for manual tracking
- Pagarai HR Suite – for real-time retention dashboards and reports
How Pagarai Helps
- Tracks retention and attrition in real-time
- Identifies departments or roles with high turnover
- Links retention data with engagement surveys
- Suggests targeted strategies for improvement
- Generates reports for leadership and board reviews
FAQ
Q1: What is a good retention rate in India?
It varies by industry, but 85% or higher is generally considered good.
Q2: How is retention rate different from attrition rate?
Retention measures how many employees stay, attrition measures how many leave.
Q3: How often should retention rate be tracked?
Quarterly is common, but monthly tracking is better for fast-changing industries.
Q4: Can retention rate improve without salary hikes?
Yes — through better engagement, career development, and work-life balance initiatives.
