How Do Bonuses and Benefits Affect Employee Turnover?

AE firms often use bonuses and benefits to reduce employee turnover.  But do they really accomplish this objective?  To answer this question, we recently surveyed 257 AE firms to determine which bonus and benefits options correlate with employee turnover.  A bit surprisingly, we found that the following factors did NOT correlate with employee turnover: 
•    Average amount of performance bonus paid 
•    Number of paid holidays 
•    Number of paid vacation or PTO days 
 
But we did find some correlations in some other areas.   
•    Firms with lower employee turnover reported that the structure of their bonus plans was perceived as fairer and more effective than the bonus plans of higher turnover firms. 
•    Firms with lower employee turnover spent significantly more on employee health insurance than firms with higher turnover. 
 
We also found significantly higher profitability among firms with lower turnover.  So, if you want to lower employee turnover and increase profits, focus your bonus and benefits programs on the areas that actually produce measurable results. 

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