Employee turnover is expensive and employee recruiting and retention can be even more so. Estimates of the cost of employee turnover vary, but a study by the Center for American Progress analyzed 30 case studies and came up with a figure of 10-30% of an employee's salary. So an employee that makes $50,000 a year would cost the company between $5,000 and $15,000 to replace. Using these figures, a company of 100 employees averaging $50,000 a year and a 10% turnover rate could lose $50,000 to $150,000 each year to employee turnover. Because of this, employers are often looking for ways to improve their employee retention.
Employee compensation is often considered to be the most important part of recruiting and retention. Competing for employee retention based solely on salary can be challenging though. Employees' access to online job postings and pay scale comparisons make it easy for employees to see how their compensation lines up with others in their field. Selling a job based solely on pay scale is the equivalent of selling a product based solely on price; it is much easier to beat price than to beat value. A comprehensive, well-administered employee benefits program that is designed with the employees' interest in mind can set apart an employer and boost the morale and productivity of a workforce. A study done by the Small Business Administration (SBA) reported companies that offer employee benefits see a decrease in annual turnover by 26.2%. Selling a company on its culture, its employee benefits and its employee satisfaction is a long-term solution for employee recruiting and retention.
Employee compensation is often considered to be the most important part of recruiting and retention. Competing for employee retention based solely on salary can be challenging though. Employees' access to online job postings and pay scale comparisons make it easy for employees to see how their compensation lines up with others in their field. Selling a job based solely on pay scale is the equivalent of selling a product based solely on price; it is much easier to beat price than to beat value. A comprehensive, well-administered employee benefits program that is designed with the employees' interest in mind can set apart an employer and boost the morale and productivity of a workforce. A study done by the Small Business Administration (SBA) reported companies that offer employee benefits see a decrease in annual turnover by 26.2%. Selling a company on its culture, its employee benefits and its employee satisfaction is a long-term solution for employee recruiting and retention.
The Forbes "Top 100 Companies to Work For" are released each year and in 2011, 25 companies on the list of 100 had a turnover rate of 3% or less. In 2012, that number was cut in half to 12 and 11 of those companies were on the list the previous year. This means 88% of the best companies to work for were unable to retain more than 97% of their workforce. Furthermore, only 14 of the 100 companies pay 100% of their employees' healthcare and only one company, NuStar Energy, is on both lists offering fully-paid health care with a turnover rate of 3%. If fully paid benefits were the way to guarantee employee retention, more companies would do it.
A quick glance at both the 2011 and 2012 lists shows some unusual perks some of these companies provide their employees. Google is well known for its nap pods, while Microsoft built its employees their own shopping mall in 2009. Zappos offers its employees a life coach and "Hero Employees" are nominated every month to receive a $50 bonus, $150 Zappos gift card and their very own Zappos cape they can wear during the parade that is held for them. Several companies on the list hold monthly barbecues or ice cream socials and one company, DPR Construction, even has a wine bar at all of its locations to serve as a meeting place for employees to discuss proposals or celebrate company wins. Read some more examples of how workplace extras pay off in staff loyalty.
Employee retention and employee morale are important parts of a business's productivity, growth and success. Creating competitive compensation and benefits packages that are comparable to or better than other employers is a necessary part of recruiting and retaining top talent. Educating your employees so they can fully understand the value and get the most out of these benefits can improve value for the employees. Unique perks can round out a benefits package and set yourself apart as a top employer.
If you would like more information on establishing yourself as an employer of choice by creating a comprehensive benefits package, please contact SOI today.
About SBA
Since its founding on July 30, 1953, the U.S. Small Business Administration has delivered millions of loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses. For more information, visit sba.gov
About Certain for American Progress
The Center for American Progress is an independent nonpartisan educational institute dedicated to improving the lives of Americans through progressive ideas and action. For more information, visit americanprogress.org
About SOI
SOI is a leading professional employer organization (PEO) for small and medium-sized businesses (SMBs) serving as a trusted partner in integrated human resource (HR) compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing. SOI is based in Charlotte, NC and supports tens of thousands of worksite employees throughout the U.S. For more information, visit SOI.com.
No comments:
Post a Comment