We’re in the middle of a talent drought and a job opportunity downpour. The unemployment rate is at an impressive 18-year low, and as a result, unhappy employees feel confident seeking other opportunities, thus creating a serious turnover issue.
While retention is a top priority for both employers and HR leaders, it can seem like companies are doing more to put out fires than proactively preventing turnover before it turns into a recruitment expense. A majority of companies are planning to increase their investment in talent sourcing, but research shows it’s more cost-effective to boost employee satisfaction (and by extension, boost retention) than spend the money needed to recruit a new employee.
There’s also the issue of competing priorities. Nearly 90% of HR leaders say that retention will be a priority during the next several years, but 20% said that they would likely be too overwhelmed by other needs to prioritize it.
Is It Worth the Price?
Calculating the cost of losing an employee includes more than just the cost of recruiting a replacement. There are a lot of different factors that may not immediately come to mind, such as:
- Lost productivity and knowledge from the resigned employee
- Lowered morale from team members affected by the loss
- Any service or product errors resulting from the resigned employee’s absence
- The cost of onboarding and training a replacement
When you consider all of these impactful pieces, it makes sense that the turnover cost calculations can be so high. Depending on the level of the employee, turnover can cost the company anywhere from 30% to 50% of the employee’s salary for an entry level position and 200% to 400% of salary for employees who are higher level or have a specialized, hard-to-find skillset. That’s a doozy.
An Alternative: Powerful Health Insurance Benefits
Improving employees’ job satisfaction is key to keeping them onboard and avoiding those hefty turnover costs.
The first step to doing this is figuring out why they are leaving. An exit survey can give you answers right from the source. But if you don’t want wait for an employee to leave to find your answers, consider these statistics:
- Over 40% of workers said their company loyalty would increase if their benefit options were customized to meet their individual need.
- 56% of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job.
- Over half of U.S. employees have left their jobs after finding better benefits elsewhere.
These numbers all point to the fact that benefits are a main driver in their job happiness and their willingness to stay or leave a company. Eighty-four percent of employees with high benefits satisfaction report high job satisfaction, and the #1 benefit according to employees is health insurance, so focusing your efforts on employee health insurance benefits can be a savvy choice.
With current primary health insurance prices so high, putting more money toward health benefits can be a difficult thing to wrap your head around. But there’s a type of supplemental health insurance, called expense reimbursed insurance, that can be both a powerful turnover solution and budget friendly at the same time.
There are many reasons why expense reimbursed insurance is a smart investment, but I’ll briefly cover a few here:
- This type of coverage can be carved out by class, so it can be offered to just those employee groups at-risk of leaving. This gives you more control over the cost.
- There are also different levels of coverage that you can choose to offer to best work with your needs and budget.
- Due to 105(h), this type of coverage can also offer tax-savings for both you and the employee.*
- It’s more cost-effective than a similar bonus.
The cost of employee turnover just isn’t worth it. With such a powerful and progressive health insurance option to boost employee engagement and retention available in the market, it’s time to change your mindset. Rather than working to fill lost employee positions, proactively invest in your current employees’ happiness and satisfaction with supplemental expense reimbursed insurance.
*This is not local, state or federal tax advice as each person and company is unique. It is recommended that you seek the independent counsel of a professional tax adviser.
Sources:
AJG.