L&T Blog

Using The Power of Data and Technology to Improve Turnover During the Great Resignation

July 11, 2022

By JJ Joppru

With a record number of people joining the Great Resignation and quitting their jobs over the past year, employers are experiencing one of the most challenging recruitment and retention periods in history.

The challenges of the Great Resignation raise two key questions for employers:

1. How much is turnover costing us?

2. What can we do to correct it?

The Reasons Employees Leave

Numerous SHRM studies show employees leave an organization for many reasons, including lack of advancement opportunities, higher pay and workplace culture.

Additionally, the quality of benefits plays a significant role.

The Washington Center for Equitable Growth released a white paper of 31 case studies on the cost of employee turnover to businesses. It found the median cost of turnover was 23.5% of the workers' annual wage.

That’s not an insignificant number for most employers. Consider the following scenario:

A business employs 400 people at an average $50,000 in annualized income for a total payroll of $20 million. Let's assume that the employer has a 30% turnover rate, with this employer having to replace 120 employees annually.

At a median replacement cost of 23.5% of the annual wage, this translates to approximately $4.7 million in annual turnover costs. In addition to the salary paid, other elements include recruiting efforts, loss in productivity, training, background screening and benefits, among other variables.

Using Data to Improve Turnover

MMA is the world's largest aggregator of benefits data through Marsh McLennan Companies. The benchmarking data enables MMA to pinpoint by geography, industry, and company size, among other metrics.

The benchmarking data is staggeringly clear: Organizations offering benefits below industry standards have significantly higher employee turnover.

When visiting organizations, we ask, "When was the last time you benchmarked your plans?” and “How confident were you in the data quality?" Surprisingly, the answer is often a few years — or never.

Using Technology to Enhance Employees’ Perception of Benefits

MMA deploys multiple technology platforms for our clients to ensure the employees fully understand their benefits. A best practice is to share benchmarking with employees to demonstrate that your benefits are at minimum industry standard.

We’ve found that, although an organization may have above-average benefits, employees perceive them as poor due to a lack of an employee education/communication strategy.

Forward-thinking employers are embracing technology, apps and a detailed benefits education roadmap to highlight the strength of their benefits packages and improve employees’ perceptions.

Improving Benefits Through Reducing Turnover

As mentioned earlier, there are many reasons employees leave an organization. At MMA, we understand the financial impact on an organization is significant if the turnover rate is improved even nominally.

Many, if not all, employee benefits plans are the organization's second most significant expense — behind only payroll. If successful in reducing turnover, even by 5%, we can create a substantial reinvestment into an organization's bottom line.

These realized savings can be redirected into the benefits budget to absorb healthcare inflation and enhance existing plans.

If you want to learn more about using data and technology to build a strategy to stand out among your competition, we encourage you to reach out to our team.