Employers aren’t just struggling to find skilled workers. They’re also struggling to keep them. High employee turnover is a problem for many companies, and it can have a wide range of negative effects. However, there are solutions that can help you attract quality workers and support your employee retention goals. As employers look for strategies to get their turnover under control, it’s important to understand the link between benefits and retention.
What are the benefits of employee retention?
If an employee quits, you can simply hire another employee, so why does employee retention matter? There are a lot of reasons.
- Employee turnover can be disruptive. You’re not just losing a worker. You’re losing the skills, training and experience that the worker provided. Until you can hire and train a new worker, your operations may suffer from lost productivity. When workers have very specialized knowledge of the systems you use, the disruption can be especially severe.
- Employee turnover can hurt workplace morale. Other workers might wonder if they should quit too, especially if their workloads have suddenly increased because the company is now short-staffed. This can lead to a domino effect and spiraling employee morale.
- Replacing workers is expensive. You have to put out ads, screen applications, conduct interviews and train the new hires. When you add up all the costs, it’s clear that turnover is an expensive problem. According to Gallup, replacing a worker can cost one-and-a-half to two times the worker’s annual salary.
Why is employee turnover so high?
The U.S. Bureau of Labor Statistics says that quit rates began rising noticeably a little over a year after the start of the COVID-19 pandemic, a trend that many have called the Great Resignation. In November 2021 and then again in December 2021, the quit rate reached three percent.
Many people have tried to pinpoint the causes of the high quit rates. One important thing to note is that many workers aren’t leaving the workforce entirely. They’re quitting because they have found or want to find a better job. This leads to the question – what are employees looking for in a new job?
According to Gallup, pay and wellbeing are the top two issues, with 64 percent of workers saying they want a significant increase in income or benefits and 61 percent saying they want greater work-life balance and personal wellbeing.
Benefits Can Boost Retention
Employees want better compensation, and this includes both salary and wages and the benefits package. Although employers can simply decide to introduce pay raises, benefits can be a more cost-effective approach, especially when the benefits in question come with tax advantages.
The right benefits can also support work-life balance and wellbeing, another key employee priority. For example, perks can include childcare benefits that help working parents juggle their responsibilities and mental health benefits that help them deal with stress or anxiety. By offering these and other benefits, employers can support their employees and give them another reason to stay.
Benefits Impact Company Culture and Employee Engagement
According to Cengage Group, 89 percent of workers who quit or had planned to quit said they felt burned out and unsupported.
Stress and mental health issues can impact work performance, and work can impact stress and mental health. Employers can help by offering benefits that support a positive company culture and encourage employee engagement.
To see how this can work, imagine you have an employee who’s worried about money. This is highly likely since, according to PYMNTS, most U.S. consumers live paycheck to paycheck, including 53 percent of people earning $50,000 to $100,000. Maybe this worker has a lot of debt, and she also has a child who needs expensive dental work. The financial problems keep her awake at night, and it’s leading to a drop in her productivity at work. The right benefits could help. If she had access to dental benefits and possibly some financial planning benefits as well, she could get her finances in order and focus on work. She’d also have a reason to stay at the company instead of looking for a different job with better compensation. In this way, benefits can boost job satisfaction and help with employee retention strategies.
Dealing with Low Employee Retention
It’s true that quit rates have been high. However, this doesn’t mean that you should accept high voluntary employee turnover as inevitable. Not everyone is quitting. Some employees are happy with their jobs, and they’re staying put.
If you’re experiencing low employee retention, it’s time to take action. Get to the root cause of high turnover rates and determine what you should be doing differently. In many cases, this will likely involve changes to your employee benefits program.
Benefits and Employee Retention Best Practices
When it comes to employee benefits and retention, you need strategies that give your company an edge.
- Talk to employees who quit. An exit interview can be a good opportunity to see what went wrong and whether your company could have done anything differently to retain the employee.
- Talk to current employees. Ideally, you want to address issues before employees quit. This means talking to current employees. Find out what benefits they would be most interested in and whether they feel like their physical, mental and financial health is supported by their current benefits package.
- Look at other employers. Other companies in your area and industry are competing for your workers. See what they’re offering and whether your benefits stack up.
- Meet the unique needs of your workers. One size does not fit all. One worker may love having a robust health insurance plan, while another might balk at the cost and prefer a cheaper plan. The same goes for voluntary benefits. A worker with a new puppy might value pet insurance offerings, but a worker without pets probably won’t care. By offering options and a wide variety of voluntary benefits, you can cater to the diverse needs of your workforce.
- Update your benefits as needed. Maybe you had a great benefits package 10 years ago, but expectations have changed. If you haven’t updated your benefits package in a while, it’s time for a serious reassessment.
- Educate employees. Sometimes the problem isn’t that employers aren’t offering benefits. The problem is that employees aren’t using their benefits. A low participation rate may mean that employees don’t understand their benefits. They might not even realize that some benefits exist. Frequently communicate the options available.
- Help workers feel comfortable using their benefits. Some benefits relate to sensitive issues, like mental health. According to a poll from the American Psychiatric Association, only 62 percent of workers say they feel comfortable using the mental health services provided by their current employer. Encourage workers to use their benefits, and assure them that their personal information will be confidential.
The link between benefits and retention is clear. If your company is facing turnover and recruitment problems, it’s time to take another look at your employee benefits package. At Higginbotham, we can help you put together a benefits program that fosters employee satisfaction and helps you retain employees. Learn more.
