Preventing Employee Turnover With Better Benefits
Turnover is a serious problem in many businesses, especially as the economy grows stronger. When the economy does poorly, people tend to stay in their jobs and not make any switches out of fear they won’t be able to bounce back if a new job doesn’t work out.
When the economy is strong, however, people feel free to change jobs more frequently. It can lead to increased costs for the companies they leave behind. Turnover cost businesses $600 billion in 2018 alone. That figure is expected to skyrocket to $680 billion by next year.
So, how to reduce employee turnover?
Why Long-Time Workers Leave
In the summer of 2019, the U.S. economy saw 224,000 jobs added in just one month. Unemployment also sank to a nearly 50-year low. While wages were up 3.1%, the cost of living has been outpacing wage growth by 14% on average.
People have been feeling the squeeze more and more. For many, changing jobs when they found an opportunity was more about long-term survival than any sort of dissatisfaction with their job. More than half — 54% — of people looking for new work are doing so because of money.
Still, there are plenty of people who are pretty happy with their jobs and would stay if they could just get more or better benefits. More than a fifth of workers are leaving jobs to access more or better benefits, leaving employers scrambling to replace them — a costly proposition.
To replace just one full-time $10-an-hour retail employee, the cost reaches $4,291. Replacing an employee costs up to a sixth of their yearly salary. The higher up a person is in an organization, the more costly they are to replace.
Replacement costs include recruitment efforts, interviewing, onboarding, training, monitoring and ensuring productivity is reached, and correcting any mistakes or customer service blinders that are made during the training process.
How Can Employers Keep People In Their Jobs?
But for most employees, just offering more in terms of benefits can prevent an exodus. In fact, 72% of employees said they’d be happier with their current job if they had more benefits. Companies that offer a six benefit plan — that’s medical, dental, vision, life, etc. — have 138% less turnover than companies that don’t offer benefits.
Conversely, companies with no benefits experience an average turnover rate of 157%. That said, 70% of employees want more than just medical benefits.
Employees want well-rounded benefits, including things like retirement plans, professional development, and better workplace culture and perks. As social security becomes less viable and pensions become a thing of the past, people are worrying about how they are going to live in old age. This makes companies matching 401ks especially important.
Employees also want professional development opportunities because that gives them the ability to progress in their careers. And while workplace culture and perks aren’t a replacement for wages and benefits, they do help make people feel like part of a more cohesive team. Some employers boast on-site gyms, game rooms, and more to keep employees engaged and healthy.
Wellness programs can help employees and employers alike. Healthier employees work more years and are more engaged and productive. Employees who have wellness programs at work often report feeling more cared about and healthier as a result.
When a workplace has a wellness program, it creates healthier employees and healthier employees lead to twice the employee engagement.
Workplace wellness programs:
- 85% improve clinical health
- 82% enhance total well-being
- 72% enhance workplace culture
- 67% help create support systems
It’s Time To Fight Back Against Turnover
Last year, a quarter of workers left their jobs for new ones for various reasons. 77% of that could have been prevented by employers if they just changed a few things about their workplace culture, work/life balance, and benefits offerings.
What people want in benefits varies by generation.
Baby Boomers want things like long-term care insurance and retirement coaching. Millennials want flexible working conditions and hours and tuition assistance and mentoring.
One thing is clear:
Knowing how to reduce employee turnover may be as simple as knowing what your employees want. Benefits may be the key to long-term employee retention.
Learn more about preventing turnover through better benefits and other offerings from the infographic below.