Imagine working at a company where on your first day the CEO says: “We are really excited to have you here. Now, how can I use my personal network to help you get your next job?” That’s exactly how Jon Bischke from Entelo kicks off the first day for his employees on day one.
What a positive way to bring up the fact that employees probably won’t stay at your company forever. Instead of pretending that they will, Entelo works on how they can most impact someone’s career while that person is employed with them.
At Buffer, we sometimes think of this as ‘stealing someone’s time.’ If we, or they, have any intuition that it might not be a good fit, it’s always better to end things sooner rather than later, and not take away any of their opportunities to go and do great things elsewhere.
Still, we’ve never before shared employee tenure stats at Buffer. Not because we’re hiding them, but because it’s not something we thought to ask about or calculate. As it turns out though, there are tons of benefits to calculating your employee tenure and many ways that you can bring that information into your company to make positive changes.
Eager to learn more about our own employees, we did two things to discover tenure.
First, the People team at Buffer included a question about tenure in two anonymous internal surveys. I want to emphasize anonymous because these surveys are not meant to single out anyone at Buffer; they’re purely for the purpose of collecting information, learning more about ourselves, and improving.
Second, we looked at the data on people who have left Buffer and how long people have been working at Buffer to calculate employee tenure, retention rate, and turnover rate.
Let’s start by taking a look at what our employees said, then dive into some of our own data to see how it compares to industry averages, and we’ll share a bit more about how this data has been valuable to us, too.
We’ve calculated some updated numbers for retention and turnover as of August 2018. Our retention rate is 94 percent. Our turnover rate is 5.8 percent.
How Long Our Team Plans to Stay at Buffer
Every two months we send out an anonymous survey to the entire team, primarily used to determine our team NPS score. In two past surveys, we decided to add in a question asking “How long do you plan to stay at Buffer?” The purpose here was to discover the self-reported number for how long we might expect people to stay at Buffer.
These were the multiple choice answers in the surveys(plus an optional section to leave comments):
- Short term (1 – 2 years)
- Medium term (3 – 4 years)
- Long term (5+ years)
- As long as possible
- I don’t know
And here are the results from the most recent survey. We had 56 responses out of 71 teammates, that’s 79% of the company.
Here’s the breakdown:
- 59% of respondents wants to stay as long as possible
- 21% of respondents plans on staying 5+ years
- 14% of respondents plans to stay 3–4 years
- 4% of respondents plans to stay 1–2 years; and
- 2% of respondents responded that they don’t know
With this information, we can see that 80% of respondents (remember the total respondents was 79% of Buffer) would like to stay at Buffer for more than 5 years total.
Now, this is the self-reported number. And things absolutely change, both for people and at Buffer. So next let’s look at some hard numbers that look a little more scientifically at tenure.
All of Buffer’s Tenure Numbers
It turns out, there are tons of way that you can calculate the data related to how long employees stay. These are roughly broken into three sections: retention, turnover, and tenure. Here’s the difference:
- Retention rate: How many employees have stayed at your company during a certain period of time, often simultaneously calculated with turnover. According to Monster, a healthy retention rate is around 90%.
- Turnover rate: How many employees have left your company during a certain period of time, often simultaneously calculated with retention rate. Turnover can either be calculated with employees who have voluntarily left or the entire turnover rate including employees who are let go. The healthy number here is less than 10%.
- Average tenure: Used to find out how long employees stay. One calculation focuses on how long current employees have been around, while another focuses on longevity and calculates the total number of months worked before quitting.
Buffer’s numbers for each of these
Retention rate for 2017 = 91%
Turnover rate for 2017 = 9%
Average employee tenure of current employees = 29 months / 2.4 years
Average employee longevity tenure in the past 12 months = 34.7 months / 2.9 years
How we made these calculations
It’s worth noting here that there are tons of different ways to slice and dice these calculations. To be consistent we grabbed all of these formula’s from one place, the SAMHSA website. These might change in the future as we discover new ways we want to calculate these numbers.
Retention rate formula
Number of employees who remain at the end of a period of time ÷ Number of employees at the beginning of a period of time X 100 = your retention rate.
Buffer’s retention rate
71 teammates at the end of 2017 ÷ 78 teammates at the beginning of 2017 = 91%
Turnover rate formula
The number of employees who have left during your calculation period ÷ by the total number of people employed during your calculation period X 100 = your turnover rate.
Buffer’s turnover rate
7 employees who have left in 2017 ÷ 78 employees employed total in 2017 X 100 = 9% turnover rate in 2017
Average tenure for current employees
The sum of months worked by all current employees ÷ by the number of employees you have today = the tenure of employees who are still employed.
Buffer’s average tenure for current employees
Sum of months worked by all current employees is 2064 ÷ number of employees we have today is 71 = 29 months
Average tenure for longevity
The sum of months worked by people who have left who worked in the last 12 months and resigned before today ÷ by the total number of people who have left who worked in the last 12 months and resigned before today = the average tenure of employees who have left over the previous 12 months.
Buffer’s tenure for longevity
The sum of months worked by people who worked in the last 12 months and resigned before today is 313 ÷ total number of people who have left who worked in the last 12 months is 9 = 34.7 months
Employee Tenure at Tech Companies Big and Small
Now that we all know a bit more about employee tenure and how it’s calculated, let’s look at a few other companies for examples and comparison.
It’s fairly easy to find data from Fortune 500 companies. (It’s quite a long list so we won’t share it here.)
And thanks to data from Paysa we can see the same information for the top 10 tech companies. It turns out that the average employee tenure in 10 big tech companies is one year and nine months or 1.76 years. Here’s the full list:
- Facebook: 2.02 years
- Google: 1.90 years
- Oracle: 1.89 years
- Apple: 1.85 years
- Amazon: 1.84 years
- Twitter: 1.83 years
- Microsoft: 1.81 years
- Airbnb: 1.64 years
- Snap Inc.: 1.62 years
- Uber: 1.23 years
Just a note here, I talked about calculating two different types of average employee tenures above. With this data, it’s not clear whether this is tenure calculated based on current employees or the longevity of employees who have left.
It’s a little less common to find this data for smaller companies, though the Atlantic reported in 2014 that the average tenure at a startup is 10.8 months. But here are a few stats I dug up on more specific companies:
They are a 150 person company boasts a 95% employee retention rate, and has never laid off an employee, according to a First Round Review article.
They are a 55 person company, and while this isn’t an exact number for their employee tenure rate, I used the number of years on their about page to estimate that the average tenure for current employees and my calculation was 59.3 months or 4.9 years. Really high for a tech company!
How is This Valuable?
Why are we bothering to send out team-wide surveys and dig through tenure data? Well there are tons of good reasons.
Average employee tenure can be very valuable to business leaders for getting a sense of how the company is doing, if people are happy and growing enough, and if they have confidence in the direction the company is going. Knowing the number might also help improve it, which can be extremely cost-effective when you consider the expense of a low employee tenure rate.
The survey that we sent also came with some great insightful comments. It was the anonymous way that we were able to ask how we might be able to help people land their next job. Here are a few ways:
In the comments of our survey we received great feedback about mentorship and career growth. It’s something people want more of, and we have control over giving it to them. These are changes we’ve been working to make internally since we first saw the results. One of the biggest changes we’ve been able to make here has been creating career frameworks for everyone at the company. Meaning that people can see exactly where they fall on the experience level and how they might get to the next stage.
Leaving to Start a Startup
We were so excited to see comments from quite a few people about hoping to start their own business one day. As it happens, our CEO Joel is passionate about helping early-stage startup founders, and he has personally said how happy he would be to help our team with advice and follow along with their journey.
Should We Pay Employees to Leave?
We are also currently considering paying employees to leave if they want to start their own business or if they realize the path Buffer is currently on isn’t the right fit for them, similar to something Zappos does that we quite admire. This is still in the works, but the survey results are a good indicator that this could be a great idea to make sure people are continually moving and growing toward their goals.
Measuring Employee Happiness
This is also a good measurement for employee happiness at Buffer. We want to keep employees at Buffer happy. It is part of our company culture, and a good business practice. Asking these questions helps us see how people are doing.
Over to you:
- Have you ever been asked, anonymously or not, if you plan on staying at your company?
- What do you think the turnover rate is at your company?
Photo by Nicholas Swanson