Breaking The Vicious Turnover Cycle

How innovative health insurance benefits help reduce employee turnover and create efficiencies in your compensation budget.

A Convergence Of Business Challenges

Regardless of company size or type, total compensation is one of the largest—if not the largest—expense. However, in today’s competitive talent market, losing talent can also be costly. How can you avoid the impact of turnover and gain efficiencies in your compensation budget in a macro environment that presents challenging new forces beyond your organization’s control?

War On Talent

It has become increasingly challenging to get the talented people you need—and to get them to stay.

  • More than 60% of CEOs said they had trouble hiring in Q2, 2022; double the number from the same quarter last year.¹
  • Retention and recruitment of talent tops the list of concerns for CEOs.²
Business Challenges Cycle Diagram

Financial Pressures

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

Vicious Turnover Cycle

The more who resign, the more pressure on those who remain, leading to further retention issues. A recent PwC survey revealed a staggering 88% of companies are experiencing higher turnover rates than normal. ⁴

Combating Spiraling Turnover Costs

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:

  • Enabling organizations to boost benefits (a key retention driver) in a targeted way for positions with high turnover or to protect key talent.
  • Delivering meaningful compensation value via tax-efficient reimbursements of a broad range of out-of-pocket healthcare expenses.
  • Providing whole-person support: physical, financial and emotional well-being to drive productivity and mitigate burnout.

The Benefits-recruiting and Retention Connection

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.

business woman signing paperwork

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:

  • It’s the type of benefit that employees value the most. Health benefits are the #1 want for employees. According to SHRM, 90% of employees rank quality healthcare benefits over a pay raise, and 56% say they decide whether to stay or go over health benefits. ⁶
  • It’s in the best interest for employers to protect talent since health issues can have a negative impact on business productivity.

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.

Read on to discover how to


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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.