What does labor retention measure?

Labor retention measures the number of employees remaining in a company over a specified period. This metric is crucial for businesses as it reflects employee satisfaction and engagement levels. High labor retention indicates a stable workforce, which can lead to improved productivity, reduced recruitment costs, and the maintenance of organizational knowledge and culture.

In contrast, choices such as the percentage of employees who leave within a year and the number of new hires do not capture the essence of retention, which is fundamentally about keeping employees rather than tracking turnover or hiring rates. Similarly, the total workforce count at a specific time does not provide insights into how well a business is retaining its employees over time, as it does not take into account those who may have joined or left. Therefore, the focus on measuring the number of employees who remain over a designated period accurately defines labor retention.