Let's forget the cost of benefits for the moment and focus on the costs associated with not having benefits. Without a competitive benefits program you likely will experience:
Higher employee turnover
Increased pressure to increase benefits
Increased hiring and training costs
Reduction in employee morale
Reduction in employee production
The lack of communicating employee benefits and associated costs is much like not having benefits at all. If you have a benefit program and are not communicating this to the employees, then you aren't getting the maximum value from this substantial expense.
With Benefits...
Through a proven communication system, Employee Benefits Communications can help you achieve:
Lower employee turnover
Decreased pressure to increase benefits
Decreased hiring and training costs
Increases in employee morale
Increases in employee production
What Does Turnover Cost?
This is an estimate of the turnover cost of losing a non-exempt employee at a regional bank in the Southeast. It is an average cost for losing employees such as bank tellers, administrative assistants, data entry personnel and other assistants.
Compensation and Benefits
Self-Assessment
Take a moment to answer the following brief self-assessment questions about your company. If you answer "yes" to any of the questions, you will benefit greatly from making compensation and Total Rewards Statements available to your employees.
Does you company typically experience a high employee turnover rate?
Has the turnover rate been more than 10% in the last year?
Is employee turnover most acute in recent hires?
Is your company aware of the "true" cost of employee turnover (hiring, training, interrupted production, morale, etc.)?
Would you like to increase your employees' productivity without having to increase you employee benefits offerings?
Do you recruit employees by claiming to have a competitive salary and benefits package?
Do you wish your employees know how much your company pays for benefits?
Do you wish your employees could see this "hidden paycheck"?
It Is based on an average salary of $22,000. The cost assumes that after the employee left the position was open for five weeks, that benefit costs are 25 percent of pay and that the departing employee was as productive as the remaining employees.
1
The person leaves
2
Co-workers fill in while the position is vacant.
Cost of lost productivity of the vacant position while two other employees do their own jobs and try to fill in while the position is vacant
$3,100
Cost of turnover of other employees prompted by the employee's departure
$100
3
The Company finds a replacement
Cost of lost productivity while manages spend time recruiting and interviewing for the open position
$3,100
Advertising
$400
Recruiter's time searching for candidates, interviewing
$500
Administrative assistant's time scheduling interviews, travel arrangements, etc
$300
Other possible costs: headhunters, relocation, sign-on bonuses and referral bonuses
???
4
The new employee is hired
Difference between the new hire's salary and the former employee's salary
$700
Necessary salary increases for others who work side-by-side with the new hire
$1,400
Other employees filling in to meet demand while new employee is learning the job
$1,400
Training new hire
$3,700
Cost of pulling others away from their jobs to help the new hire
$600
Cost of lost productivity while the new hire gets up to speed (This is the cost of the new hire being half as productive as the former employee for six months. The formula assumes that a fully productive person is 213 percent productive versus how much they are paid, which means for every dollar they are paid, they produce $2.13 in revenue)
$15,100
Total:
$30,400
Source: William M. Mercer, as printed in The Charlotte Observer
