Do You Know the Employee Benefit With the Highest Correlation to Turnover Rate?

PSMJ Resources, Inc.
Posted on: 10/29/24
Written by: PSMJ Resources, Inc.

A PSMJ PRO member recently submitted this question: “I’m wondering what my peer firms are contributing towards employee health benefits. We feel like we have a really robust program but…with insurance costs skyrocketing, we are considering stripping it back a bit.”

PSMJ Managing Director and Senior Principal Dave Burstein replied, “PSMJ has studied various employee benefits to see which ones correlate with reduced employee turnover. It turns out that the only employee benefit that correlates with low turnover is the amount that firms pay for health insurance.”

Here is the result of our analysis:
•    The median firm in our study had 12% employee turnover. They paid an average of 90% of employees’ health insurance premiums and 64% of dependents’ premiums.
•    A group of high turnover firms (averaging 24% annual turnover) paid an average of 85% of employees’ health insurance premiums and 55% of dependents’ premiums.
•    A group of low turnover firms (averaging 3% annual turnover) paid an average of 99% of employees’ health insurance premiums and 65% of dependents’ premiums.

“The study shows that firms that pay more for their health insurance had lower turnover,” says Burstein. “Stated a different way, the lowest turnover firms paid more for employee health insurance and dependent health insurance than the high turnover firms. Is that cause and effect? Hard to say. But that's a pretty strong’ correlation. So if you're going to spend money on benefits trying to reduce turnover, that's probably a pretty good place to spend it.”



Source: PSMJ Benchmark Surveys


PSMJ Pro logoThis exclusive content is included in our monthly PSMJ PRO newsletter - a benefit for PSMJ PRO members only. Want more content like this? You can access this plus much more when you become a PSMJ PRO member.

PSMJ PRO is the online business success community just for architecture and engineering firm executives. Start your no-risk 50-day FREE TRIAL ACCESS today and start benefitting from expert insights, eye-opening AEC industry data, peer advice, and proven tactics from leaders who are achieving breakthrough growth and profits. LEARN MORE.

SUBSCRIBE TO BLOG:
November 14, 2024

Tips for Establishing a Technology Council and Get Your Firm’s Technology Act Together.

PSMJ Senior Consultant Brian Burnett says that Deltek’s most recent Clarity: Architecture & Engineering Firm Study vindicates the position that AEC firms need to focus more on..

Read More
November 11, 2024

Unpacking The Post-Election Impact for AEC Firms

After the larger-than-expected Republican election victory, let’s step back and look at what it means for the U.S. AEC industry. The three biggest drivers for our industry are (1)..

Read More
November 7, 2024

PSMJ16 vs. SPY

How is the A/E/C industry doing compared to the overall economy, and how can you apply stock price trends of publicly traded companies to making better strategic decisions for..

Read More