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
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