How innovative health insurance benefits help reduce employee turnover and create efficiencies in your compensation budget.
It has become increasingly challenging to get the talented people you need—and to get them to stay.
Inflation, supply chain issues and people costs are increasing operating costs, making it even more challenging to invest in what you need to compete. And this year, the investment needed is more than previous years. According to the Bureau of Labor, compensation increases are now averaging over 5%, a 77% increase over last year.³
It’s a given that every company will experience talent turnover. However, when a company is experiencing high employee turnover, it can impact profitability in a number of ways. Obviously, there are the visible costs of recruitment and training, but then there are the hidden costs of disruption, customer dissatisfaction, lost institutional knowledge and productivity decline. The work falls to the employees who stay, who undoubtedly become stressed and burnt out, which can then lead to additional turnover issues. Once employers see an uptick in employee turnover, it can quickly become a vicious cycle that is difficult to break.
Burnout is a red flag to talent loss. In fact, employees who are burnt out are 3X more likely to leave a job. ⁵ Unfortunately, existing resources, such as EAPs and primary health insurance plans, typically fall short when addressing a growing mental health and burnout problem.
There is an often-overlooked answer to help stem the flow. Innovative supplemental health insurance benefits, as described in this report, are designed to help mitigate turnover by:
While companies often treat the various parts of total compensation in silos with recruitment, compensation and benefits managed separately, financial leaders are in a unique position to view compensation holistically. This vantage point enables CFOs to perform a critical review of traditional, one-size-fits-all approach to benefits, compensation and bonuses (whether sign on or reward incentive) and explore innovative approaches to achieve efficiencies and more effective recruiting (and retention) outcomes.
Employer-sponsored benefits are a valuable part of any compensation offering. Of the various types of employee benefits, the one that repeatedly rises to the top as a recruiting weapon is health for two key reasons:
The coverage in typical primary health insurance plans has lessened over the years, causing employees to shoulder more and more of the cost of coverage through deductibles or other cost sharing methods. In addition, many primary health plans lack coverage for mental health and executive-focused health, which are two areas that have grown in importance recently. This has further highlighted the value of robust health benefits to employees. While the need is known, achieving these better benefits via primary health insurance plans can become cost prohibitive.
BREAK THE VICIOUS TURNOVER CYCLE
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¹ ConferenceBoard,2022, ² ConferenceBoard,2022, ³ BLS,2022, ⁴ PWC, 2022, ⁵ Gallup, 2018, ⁶ SHRM, 2022
*This is not local, state or federal tax advice. This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied on for, tax advice. Each person and each company are unique with their own facts and circumstances. It is recommended that you seek the independent counsel of a professional tax adviser.