Do Benefits Affect Turnover It Depends on How They’re Communicated

February 25, 2005
Offering rich benefits won’t be effective at reducing turnover if employers don’t do a good job of communicating the value of the benefits, according to Watson Wyatt.

Among employers who offer great benefits but have poor communication strategies, the average turnover rate is 17 percent for top-performing employees. For companies with worse benefits but better communication strategies, turnover averages 12 percent for top performers.

Apparently, few employees know what their benefits are worth. Only 29 percent of employees have a good understanding of the value of their total compensation package, Watson Wyatt says. In companies where they do understand what they’re getting, it’s often because employees receive "total compensation statements" showing how much their corporation is spending on them.

Also, Watson Wyatt says that the more a company spends on health benefits as a share of total pay, the higher the turnover of top-performing employees, perhaps because there’s less money to spend on actual wages.

Government spending up
In other health news, Reuters is reporting that health spending will "hit a record 18.7 percent of U.S. gross domestic product by 2014, up from 15.4 percent in 2004."

The share that the government is going to pay for health care, as compared with the private sector, is also rising. The new data is from the Centers for Medicare and Medicaid Services, a branch of the U.S. Department of Health and Human Services.