Retention rate is an important metric for any business. While it is most often used to measure the number of customers a business retains year over year (or month over month, depending on how you keep track), retention rate as it relates to employees is often just as important. In the landscaping industry, where employers often struggle to keep good employees, knowing how to improve your employee retention rate can help you save money and grow your business.
Calculating retention rates
Determining your employee retention rate is simple. Let’s look at an example to see how it works.
A landscaping business owner (we’ll call him Len Mower) is getting ready to hire a new crew for the summer season. He looks back at his employee records and notices that only seven of the original 25 employees he hired last season are around for this year. In order to calculate his retention rate, Len will divide the number of employees from last year that he’s hiring back (or that still work for him) by his total number of employees for the current season.
Retention Rate = Last Year’s Returning Employees/Total # of Employees
When Len divides 7 by 25, he gets an employee retention rate of 0.28 or 28%. This means that Len retained less than 30% of the employees he hired last season.
For the most part, this is probably standard for most landscaping companies. While there is no exact number, Jay Murray of TLC Landscaping Design & Pools estimates that the average retention rate for the landscape industry is around 25%. From a cost perspective, replacing 75% of your workforce every year can be a disaster.
5 ways to keep your best employees
Finding the right employees is crucial to your business success. The wrong employee can frustrate other crew members, lead to a decrease in efficiency, negatively affect the quality of work, and waste your time and money.
The reality is that keeping employees is significantly cheaper than hiring new ones. Some estimates indicate that it costs 33% of an employee’s annual salary to replace them once they leave. Luckily, there are some things you can do to hold on to your employees (and save you money).