How much do employee benefits impact employee retention
  • Industry Trends & Insights

How Much Can Benefits Impact Employee Retention?

Most employers would agree that employee retention is a top priority, as the unemployment rate sits at an all-time low and the cost of turnover climbs. This is no doubt an even greater concern for organizations that have a large population of millennials and Gen Z'ers that are more likely to job hop than the generations that came before them.1

What seems to be a point of contention is quantifying the actual cost of turnover. It's very evident that it costs more to replace an employee (in most cases) than acquire a new one — very similar to acquiring a new customer vs. keeping the customers you have. Some studies indicate that it's based on salary, costing employers six to nine months' salary of an employee. Others say that the cost is a percentage range based on the individual's job level.2

Either way, the cost is high. According to Work Institute's 2019 Retention Report, the cost of turnover for U.S. employers totals $617 billion, of which the majority is due to voluntary terminations.3 Work Institute also rounds out the cost of turnover per employee to be $15,000 based on the average median income for a full-time employee. 

What's the good news?

With the emergence of non-traditional voluntary products that are available year round, employers have more opportunity than ever before to leverage their benefit programs as a means of retaining employees. In fact, employers have the potential to decrease employee turnover by up to 37 percent when they choose active enrollment and implement a year-round engagement strategy according to a recent analysis done by Benefitfocus. 

The analysis also revealed that for every 10 percent increase in engagement, an employer with 10,000 employees could reduce turnover by 70 people. When you use the Work Institute estimate of turnover cost per employee, that's a savings of $1.05 million.  

Download the latest Benefit Insight Brief from Benefitfocus to take a deeper dive into the data and key takeaways of the analysis. 

Ready to see how see how you can increase employee retention through enhanced engagement? Schedule a demo today!

 

 

1. financialexecutives.org

2. peoplekeep.com

3. Work Institute 2019 Retention Report