Imagine you're a candidate choosing your next job. You've narrowed it down to two companies. Both offer the same salary and very similar benefits. However, after reading reviews on job sites, the candidate finds out that Company A has a reputation for high employee turnover. At the same time, reviewers of Company B indicate they've been there for several years, feel cared for, and are satisfied with their jobs. Which do you think the candidate will pick? If you answered Company B, good choice.
Companies are hyper-focused on attracting and retaining top talent while avoiding the T word: turnover. Turnover costs companies their good talent and millions of dollars in unforeseen costs. However, more engaged employees are more likely to stay with their companies and less prone to turnover. And convertible benefits can help companies do just that.
The importance of employee retention
Organizations across the spectrum are realizing that one of the key ways to hit strategic business objectives is to retain organizations looking at new ways to support employees’ financial wellness and social well-being goals.
Meanwhile, 68% of employees state they are more likely to stay at their current job if their employer offers financial wellness benefits. And 93% of employees indicated that they are interested in using their paid leave to support their personal financial needs.
Why is employee engagement important?
Employee engagement drives businesses forward. An engaged workforce is more productive than one whose employees are disengaged. Highly engaged companies have lower absenteeism, higher productivity, and lower turnover. Engaged workers also produce better work with fewer quality issues and safety incidents. Moreover, engaged workforces see higher customer success metrics and sales, resulting in higher profit.
But not every organization has highly engaged employees. In fact, according to a recent Gallup study, only 23% of the workforce is engaged at work, meaning most employees are disengaged. The more disengaged your employees are, the more likely you'll lose them.
The cost to replace talent
Engaged employees save companies money on replacement costs. It costs a company anywhere from 1.5-2 times the employee's salary to replace them, not to mention the time and resources to train and onboard employees so they can perform up to speed.
A similar study from SHRM placed the figure somewhere between 50% and 75% of an employee’s annual salary. But either way, the replacement costs of turnover have a massive impact on an organization’s profitability.
The impact of employee turnover
Employee turnover negatively impacts profitability and the company's ability to carry out its business. Turnover can cost the business in the following ways:
- Cost of reduced productivity of an employee during the time leading up to their departure
- Lost productivity during the search for a replacement
- Reduced productivity of those covering the tasks of the departed employee
- Overtime of backup employees
- Recruitment costs, including advertisements and time of the recruiters and the team doing the interviews
- Onboarding costs of the new employee and the trainers
- Costs of reduced productivity of the new employee until they are as productive as the person they are replacing
Employee turnover can also damage your employee brand and give you a reputation for being a high-turnover organization. You'll also see a reduction in employee morale and satisfaction from the additional workload and loss of a colleague.
How flexible benefits combat employee turnover
PTO Exchange helps mitigate the turnover ratio and increase employee engagement by offering flexibility and choice that allows personalized benefits packages by exchanging unused PTO. Employees of all generations and socioeconomic classes can put their unused PTO toward financial wellness and social well-being benefits.
Offering PTO Exchange distinguishes your benefits package and helps you become the employer of choice in your industry. When employees choose between two employers, the choice usually comes down to benefits. PTO Exchange gives you an edge with a non-traditional benefit not everyone offers.
Lastly, PTO Exchange increases efficiency and drives profit through engaged employees and less turnover. Employees experience the full value of their PTO by using it to reach their financial goals, achieve better work-life balance, or donate to charity.
PTO Exchange’s impact on retention
PTO Exchange has been working with our clients to identify the impact our solution can have on their employee turnover and the results have been staggering. As a benefit that employees can opt into, we analyzed 30 of our customers across a spectrum of industries to compare the retention rates of employees who leverage the PTO Exchange solution versus those who have not made an exchange.
Across all industries, the turnover rate for users of our platform is 54.63% lower than their colleagues who did not opt in. And even using the most conservative of replacement cost studies on the market (six months of an employee’s annual salary), these 30 clients have achieved more than $28.6 million in replacement cost savings.
The bottom line
There will always be a war for talent, regardless of your industry, company size, or mission. Supporting employees with a well-rounded total rewards package is the best way to engage those employees, retain your top performers, and positively impact your bottom line. This is a case where the return is certainly worth the investment.
Download our whitepaper to learn how we help companies combat employee turnover and contact us for a demo of the PTO Exchange platform today.
Published on Aug 15, 2024 by Josh Reinhard
