While offering a wide array of benefits is likely to reduce turnover, to make benefits affordable, employers need to find ways to contain costs-–without alienating employees.
Workers tend to stick around longer if their employer offers a wide array of benefits. But the key is to provide the right kinds of benefits depending on the age make-up of the workforce, according to the Paycor report, “The HR Playbook: Reduce Turnover With Employee Benefits.”
Paycor examined its customer base of more than 30,000 medium and small businesses nationwide, and found that companies with six benefit plan types had a 138 percent decrease in employee turnover versus those with no benefit plans. Plan types defined for the analysis include medical, vision, dental, life and non-traditional benefits. The average turnover rate for organizations with no benefit plans was 157 percent.
Does this mean that the more benefit plans the better? “Not exactly,” according to Paycor.
“The right mix of benefit plans can significantly reduce turnover–just as the absence of benefits, or the wrong benefits, can drive turnover rates way up,” the authors write. “The key is finding the right mix of benefits for your company.”
- Baby boomers prioritize PPO/traditional health plans; retirement coaching; aggressive savings programs; long-term care insurance; home warranty insurance; life insurance and critical illness insurance.
- GEN Xers prioritize traditional + HDHP w/HAS; flex spending accounts; low-deductible health insurance; childcare options; flex working arrangements; homeowners insurance; long-term care insurance; comprehensive retirement; coaching and savings programs and life insurance.
- Millennials prioritize HDHP with HSA; tuition assistance for continuing education; flex work arrangements; ID theft protection; employee mentoring programs; gym or wellness center memberships; competitive wellness programs; travel rewards; accident insurance and short-term disability insurance.
“Customization is the key to non-traditional benefits, so your strategy needs to reflect the generations represented in your workforce,” the authors write. “But there is at least one non-medical benefit that has broad appeal across all age groups — financial well-being. From both an employee experience and bottom line perspective, it makes sense to invest in financial well-being.”
While offering a wide array of benefits is likely to reduce turnover, to make benefits affordable, employers need to find ways to contain costs-–“without alienating employees,” according to Paycor.
Strategies include cost-sharing with employees; imposing surcharges for spouses and dependents, or for smoking; offering high-tech, high-touch programs designed to intervene and help employees with specific chronic conditions; robust benefits administration platform and tools to reduce errors; offering free benefits such as flexible work arrangements and tools for measuring the return on investment in the benefit offerings.
“Track your recruiting and retention practices, and bring it back to an overall ROI,” the authors write. “If you can reduce your turnover by 5 percent, what could that mean for your business? Reduced recruiting costs, reduced training costs, less lost productivity. Can you track it back to the bottom line in some way?”
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Katie Kuehner-Hebert
Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.
