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New Ways to Attract and Retain Employees


Tight Labor Market

Employment in America is at a record level: Over 95 percent of the workforce has a job, according to the U.S. Bureau of Labor Statistics. Even higher levels of employment exist in Southern California.

This tight labor market is great for employees, but a nightmare for companies trying to attract and retain a good workforce.


High Cost of Employee Turnover

According to a recent survey by the Families and Work Institute, employee turnover can cost a company up to 200 percent of an employee's annual salary. It estimates the cost of filling a $50,000-per-year position as follows:

Recruiting 33% of salary $16,500  
Training 10% of salary $ 5,000  
Learning Curve 50% of salary $25,000  
93% of salary $46,500  


Study Examines Ways to Attract & Retain Employees

William M. Mercer, Inc., a multinational consulting firm, recently completed a study entitled "Using Benefits to Attract and Retain Employees." It found that the three most important factors in recruiting are:

1.  Job responsibilities and pay
2.  Work environment
3.  Intangibles

Interestingly, the most important factor for retention is: work environment.


A New View of Employee Benefits

The Mercer study recommends a new way of looking at employee benefits - from the employee's point of view. Following are specific examples of the different considerations employers and employees typically have in mind when thinking about benefits:

Employer's View:
. Compensation
. Health care
. Retirement plans
. Paid time off
. Life & disability insurance
. Flex accounts

Employee's View:
. Financial life cycle needs
. Physical & mental health
. Saving time & money
. Culture & work environment
. Caring for dependents
. Making work more flexible


Ways to Align Benefits with Employee Needs

The study suggests asking three simple questions to help you figure out what to do about benefits:

1. Who are we trying to attract and retain?
Mercer suggests focusing on six or seven key employees when determining whom you are trying to attract and retain.

2. What do these employees want?
When approaching these key employees about their benefit needs, you should ask "Which benefits would you most likely use?" rather than "Which benefits you would like?" Most employees, of course, would like everything available.

3. What do our competitors provide?
The competition might offer expensive medical-plan and pension benefits, or it might offer non-traditional (and less-costly) benefits - which can help you decide what benefits your company should offer.


Benefit Preferences Vary by Gender, Income, and Age

Mercer's national survey of employee preferences found that:

 

Men have a preference for voluntary AD&D insurance and financial planning services.

 

Women have a preference for flex time, telecommuting, and employer-provided or -subsidized office equipment for work at home.

 

Those earning $20,000 to $30,000 have a preference for college loans or scholarships for dependents, dental care, and vision care.

  Those earning $100,000 to $150,000 per year have a preference for life insurance and leadership mentoring and training.
  Those age 25 to 29 have a preference for on-site conveniences such as a barber and banking and dry cleaning services, as well as tuition reimbursement.
  Those age 50 to 54 have a preference for the option of working part-time, an egalitarian culture, and alternative medicine.


Work/Life Programs Help in Many Ways

The Mercer study found that offering "non-traditional" benefits helped employers in the following ways:

. Improved employee retention & morale
. Improved employee productivity & performance
. Improved employee commitment & attendance
. Improved recruitment


Non-Traditional Benefits Most Commonly Offered

Mercer found that companies with more than 500 employees currently offered or were considering adding the following programs:

Non-Traditional Benefits Currently Offered:
• Unpaid Leaves of Absence: 85 percent of companies
• Casual Dress: 84 percent
• Tuition Reimbursement: 85 percent
• Child Care Flex Spending Account: 82 percent
• Health Care Flex Spending Account: 74 percent

Non-Traditional Benefits Under Consideration:
• Long-Term Care Insurance: 20 percent of companies
• Financial Planning Services: 12 percent
• Creating a Task Force on Work/Life Issues: 12 percent
• Part-Time Work Option: 12 percent
• Back-Up Child Care: 11 percent
• Telecommuting 11 percent


Key Points to Take Away

. Figure out which employees you need to attract and retain.
. Find out what these employees want.
. Find out what your competitors offer.
. Figure out what makes sense for your organization.

 

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