Retention rate refers to the percentage of employees who remain with an organization over a specific period. It is a crucial metric for assessing an organization's ability to retain its workforce, which is indicative of employee satisfaction, engagement, and the overall health of the workplace environment.

Example
Suppose a company has 100 employees at the beginning of the year and, by the end of the year, 90 of them are still working for the organization. In this case, the retention rate for that year would be calculated as follows:

Retention Rate = (Number of Employees at the Beginning of the Year/Number of Employees at the End of the Year) *100

Retention Rate = (90/100) *100 = 90% 

This means the company has a retention rate of 90% for the year, indicating that it was able to retain 90% of its workforce. High retention rates are generally seen as positive, as they suggest a stable and contented workforce, while low retention rates may signal underlying issues in the organization.