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Employee retention is a crucial indicator of workplace health. A high retention rate often signals a positive work environment, while a low rate may point to deeper issues such as poor management, weak engagement, or lack of growth opportunities.
What is retention rate?
The employee retention rate refers to the percentage of employees who remain with a company over a given period. It helps employers assess organizational stability, employee satisfaction, and the effectiveness of HR practices.
Formula: Retention rate (%) = (Number of employees who stayed ÷ Number of employees at the start) × 100
For example, if 100 employees joined in April 2022 and 65 were still at the company in March 2025, the three-year retention rate is 65%.
Retention vs. turnover
While turnover measures the percentage of employees who leave, retention measures those who stay. The two are complementary:
Retention rate = 100% – Turnover rate
Japan's average retention rate
In Japan, the average retention rate in 2023 was estimated at 84.6%, based on government data. However, this varies by employment type and industry:
Full-time employees: ~88%
Part-time employees: ~76%
Highest by industry: Postal and cooperative services (~92%)
Lowest by industry: Hospitality and leisure services (~72%)
For new university graduates, roughly 1 in 3 leaves their first job within three years.
Source: Ministry of Health, Labour and Welfare – 2023 Employment Trends Survey Results
Why retention rate matters
Improving retention rate helps reduce hiring and training costs, increases organizational knowledge, and boosts productivity. Companies with high retention typically enjoy:
Strong internal communication and team cohesion
Long-standing employees build trust and efficient workflows, which strengthens collaboration across teams.
Competitive compensation and benefits
Fair and attractive packages show employees they are valued and reduce the likelihood of them seeking better offers elsewhere.
Clear career paths and fair evaluations
When employees know how they can grow and how their performance is assessed, they’re more motivated to stay and succeed.
Work-life balance support
Flexibility and respect for employees’ personal time contribute to job satisfaction and long-term engagement.
Transparent leadership and inclusive culture
Open communication and a sense of belonging foster loyalty and trust between staff and management.
Common causes of low retention rate
Unclear job expectations or mismatched roles
When employees feel misled or unprepared for the actual responsibilities, they’re more likely to disengage and leave.
Poor work-life balance
Excessive overtime, inflexible schedules, or burnout can quickly lead to dissatisfaction and turnover.
Uncompetitive pay or benefits
If compensation doesn't reflect market standards or workload, employees may feel undervalued and look elsewhere.
Lack of growth or development opportunities
Without chances to learn and advance, employees may feel stagnant and unmotivated to stay.
Weak management or poor workplace culture
Ineffective leadership and toxic environments erode morale and drive employees away, even if other conditions are favorable.
Ways to improve retention rate
Hire right from the start
Prevent mismatches by being transparent during the hiring process.
Strengthen onboarding and training
Help employees integrate and grow from day one.
Improve work conditions
Address workload, hours, and flexibility.
Offer career support
Clear development paths and mentoring go a long way.
Review compensation
Align salaries with market rates using tools like Robert Half’s Salary Guide.
Gather feedback regularly
Use employee surveys and 1-on-1s to identify pain points early.
Get in touch with us today
Retention isn’t just about keeping people—it’s about creating a place where they want to stay. For companies hiring in Japan, understanding local retention trends and creating a supportive, engaging environment is key to long-term success.
Whether you’re looking to reduce turnover, improve your hiring process, or build a workplace where employees thrive, partnering with a trusted recruitment expert can help.
At Robert Half, we support both global and domestic companies in Japan with proven strategies and talent solutions tailored to your needs.
