Matt Tenney, Contributor
The lack of competitive salaries and good employee benefits has been a driving force in employee turnover.
While there are many other factors causing workers to leave their jobs in search of greener pastures these days, compensation, including salaries and benefits, is still the main driver of turnover.
Research has revealed that 12% of workers around the globe quit their jobs in 2021 and an additional 20% are expected to change jobs in 2022, with many workers hoping they have more leverage when it comes to pay and benefits.
While signs seem to indicate the “Great Resignation” may be turning into the “Great Regret,” many workers do not want to return to the “old normal” even if they are experiencing buyer’s remorse in their new jobs.
This is because data continues to show that burnout is a very real problem that isn’t going away, and workers are less willing to put up with toxic organizational cultures and the associated stress they engender.
In fact, according to a 2022 FlexJobs survey, toxic company culture was the top reason people cited as their reason for leaving, with low salary, poor management, and a lack of a healthy work-life balance also listed as contributing factors.
Many organizations are revisiting the compensation packages they offer in an effort to improve long-term retention and make them more appealing to potential recruits, and some experts have even suggested that employers should offer “retention raises” to long-serving employees.
Salaries still undoubtedly play, and will continue to play, an important role in retention for many, but the FlexJob survey strongly indicates that offering less tangible benefits that are aimed at improving the employee experience can also help organizations meet employees’ needs for a better work-life balance and lower stress working environment.
Leaders considering whether or not they can and will meet the demands of workers in an attempt to combat turnover and talent shortages should be aware of just how important competitive benefits packages are to holding onto talented employees.
Benefits help retain employees by meeting their needs in a way that is designed to engage them and keep them engaged. Competitive comprehensive compensation packages help organizations attract and keep top talent and can lead to greater employee satisfaction, making it more likely employees will stay.
In this article, we’ll look at the important role benefits play in helping organizations retain top talent.
Comprehensive Compensation Packages
Compensation includes the salaries, wages, benefits, bonuses, and incentives provided to employees by employers in exchange for the work they do.
Basic compensation packages consist of a salary or wages, without additional benefits. There are certain legal requirements and internal and external compliance standards that basic compensation packages must meet.
But attracting and retaining skilled, high-performing, engaged employees requires competitive comprehensive compensation programs with benefits that go well beyond salaries/wages or that meet the bare minimum legal requirements.
Comprehensive compensation packages may include benefits such as retirement plans, stock options, bonuses, commission, insurance, and other perks.
In addition to health insurance coverage and retirement plans, paid leave, wellness programs, flexible working schedules, stock options, and remote and hybrid work alternatives are additional benefits offered in comprehensive compensation packages.
The quality of an organization’s compensation package, as well as the benefits it provides, determines the quality of its employees, how well they perform, whether or not they are engaged in the work they do, and whether or not they will stay in an organization.
Benefits of High Retention
Retention refers to a company’s ability to retain employees. High rates of retention are the result of reducing employee turnover, which refers to the number of employees who leave a job voluntarily or involuntarily during a certain time period.
Turnover was the top workforce management challenge cited by 47% of human resource professionals in the SHRM/Globoforce survey Using Recognition and Other Workplace Efforts to Engage Employees.
Employee retention significantly impacts the long-term success of organizations because it is more efficient to retain qualified employees than to train and onboard new hires. Less turnover means less time and money expended on recruiting to replace workers who leave.
It has been reported that turnover costs companies, on average, six to nine months of an employee’s salary to replace them.
On top of the high cost of turnover, the time and effort managers have to spend on recruitment makes it harder for them to focus on other aspects of their roles and continue developing their current staff. When retention is high, this allows managers to spend less time and effort on the recruitment process and more time on helping employees thrive.
In addition to the financial cost, high turnover can hurt employee morale. Employees may feel overworked due to the increased workloads and responsibilities that turnover causes and feel that they are being underpaid for the hours they are putting in.
High retention rates can indicate a high level of engagement, superior performance, and better customer service. Engagement is particularly important as employees who care more about an organization’s mission feel a sense of purpose in their roles and will perform better and be less likely to leave for another job.
Benefits and Retention
Studies abound showing a direct link between competitive compensation offerings and higher rates of retention.
Salaries are, as usual, an important factor here, but benefits are increasingly important to workers who may be weighing their options.
According to a Workhuman survey from 2021, 66% of employees are waiting to review the new benefits their current organizations will be offering before deciding whether or not they’ll stay, a clear indication of the central role benefits play in the job-seeking habits of today’s workers.
While retention refers to keeping the employees you’ve hired, the retention process really begins before an employee is even hired. Less tangible benefits, like flexible work options that promote a good work/life balance, are becoming increasingly important to job seekers, and offering them can make a huge difference in your talent pool.
Establishing organizational cultures that value employees and offering benefits that are aligned with core values and meet employee needs are retention strategies that help organizations recruit the best workers and keep them.
This is why regularly reevaluating benefits to determine how well you are meeting the needs of current employees and how well you will meet the needs of future employees is essential to maintain high retention rates.
The Best Retention Strategy: Offering Benefits Employees Want
Employee-focused compensation programs feature benefits that meet a variety of employee needs. Organizations that offer them will have a competitive advantage in the fight for talent.
Being well-compensated, through pay, benefits, and other employee perks, for the work they do motivates employees to do their work well, and being offered benefits that meet their needs and help them thrive will make them more likely to stay with an organization.
Organizations that understand the benefits of high retention and the impact of high turnover on team morale and profitability know that a competitive compensation package consists of a good mix of tangible and intangible benefits that are designed to help employees succeed.
The search for better compensation will always drive much of the voluntary turnover we see in organizations, but there are other drivers that are becoming more prominent in the wake of the pandemic.
Along with a competitive salary that at least keeps pace with cost of living increases and good medical coverage, today’s job seekers are looking for other kinds of perks in their job search. Consider the tangible and intangible benefits that employees value.
Many employees who leave their jobs aren’t just seeking better pay; they are seeking professional development opportunities, remote or hybrid work options, more purposeful work, greater autonomy, and other benefits that promote a better work/life balance.
According to Kathleen Steffey, founder and CEO of Naviga Recruiting and Executive Search, benefits provide a good opportunity for organizations to set themselves apart from competitors:
You can get really creative when it comes to the benefits and perks of working for your company. Aside from the traditional benefits, your company may offer, like stock options, 401k, company vehicles, and health insurance, offering perks such as flexibility in work hours, options to work from home one day a week, work/life balance are all very attractive to potential job seekers. Even raffles for season tickets to a local sporting event and gym memberships are becoming more influential in attracting top talent.
Staying in touch with what your workers need to thrive and be engaged with their jobs can help guide compensation-setting and help you identify the best benefits to offer.
Here are just a few benefits organizations can offer employees that will boost their engagement, improve their job satisfaction, and make them more loyal:
Flexible Work Options
Flexibility is now high on the list of intangible benefits employees seek.
Flexible work options were a necessity during the pandemic and have become so popular with workers that many in jobs that do not have to be performed in an on-site work setting want to retain this flexibility in their work schedules because it improves their work/life balance.
Some organizations are responding to this demand.
According to SHRM, 42% of organizations that experienced higher or much higher turnover in early 2021 have added remote or flexible options to boost retention.
Allowing employees to work from home if possible gives them the flexibility to take better care of their families and personal needs—employees are better able to do this when they aren’t having to spend hours every week making those long commutes to an office to do work they can do just as easily from home.
Whether it’s offering remote or hybrid options, flex time, or compressed work weeks, offering flexibility can help cut down on the burnout and stress that come with long commutes, toxic office environments, and long hours.
Learning and Career Development
Research compiled by LinkedIn has shown that employees who spend time learning on the job are:
- 47% less likely to be stressed
- 39% more likely to feel productive and successful
- 23% more able to take on additional responsibilities
- 21% more likely to feel confident and happy
People need to feel that they are growing professionally and developing their skills and intellectual capabilities to fully engage with their jobs.
Organizations that provide learning opportunities and encourage employees to take advantage of them will see improved employee satisfaction, engagement, and retention.
Creating an atmosphere that fosters learning and development helps employees grow and develop new knowledge and skills that will help them engage and excel in their jobs.
Leadership development and career pathing are great ways to provide development opportunities for employees that are good for retention.
Developing leaders within the organization demonstrates to employees that leadership is invested in them and that they have a future with the organization. This goes hand-in-hand with career pathing.
Career pathing is the process of aligning opportunities for employee career growth with organizational talent priorities.
It is driven by the employee’s skills, interests, and career objectives, and it can include mapping the employee’s career direction based on vertical, lateral, and cross-functional roles.
If employers want to retain employees and help them perform at their best, they need to be supportive of their employees’ well-being.
Employees aren’t going to perform well or remain engaged when their well-being is suffering, and they feel excessive anxiety and stress.
Whether it is stress in their personal lives, the stress of working in a toxic environment, or the stress that builds during difficult times, such as a global pandemic, stress can significantly impact an employee’s well-being.
Employees can’t engage in an environment that has a negative impact on their physical or mental well-being.
As Business Leadership Today contributor Ciara Ungar tells us, “While having benefits that serve an employee’s basic needs to ease life’s burdens is without a doubt a valuable element for attracting quality talent, it’s equally important to pursue strategies that create an environment that supports employees on a deeper level.”
Beyond ensuring the work environment is positive, leaders should foster well-being for employees, make it a top priority, and be unwilling to sacrifice the well-being of employees for short-term financial gain.
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Matt Tenney is an active CEO who aspires to create the best workplace culture in the world. Matt is also the author of Serve To Be Great: Leadership Lessons from a Prison, a Monastery, and a Boardroom, and The Mindfulness Edge: How to Rewire Your Brain for Leadership and Personal Excellence. Matt is frequently invited to present keynote speeches at leadership conferences and meetings. His TEDx Talk has been viewed over 1,000,000 times since January, 2020.