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
This tight labor market is great for
employees, but a nightmare for companies trying to attract and retain a good
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:
||33% of salary
||10% of salary
||50% of salary
||93% of salary
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
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:
. Health care
. Retirement plans
. Paid time off
. Life & disability insurance
. Flex accounts
. 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
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
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
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
Mercer found that companies with more
than 500 employees currently offered or were considering adding the following
Non-Traditional Benefits Currently
• Unpaid Leaves of Absence: 85 percent of
• Casual Dress: 84 percent
• Tuition Reimbursement: 85 percent
• Child Care Flex Spending Account: 82
• Health Care Flex Spending Account: 74
Non-Traditional Benefits Under
• Long-Term Care Insurance: 20 percent of
• 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
. Figure out what makes sense for your