Human Resources News & Insights

Why pay and benefits aren’t enough to prevent turnover

Sure, competitive pay and top-notch benefits are great, but new research suggests they’re not enough to keep top performers from jumping ship.

Sixty-seven percent of U.S. employees are staying with their current employer because of a “work/life fit,” according to a recent study by the American Psychological Association.

That’s more than the number of workers who said salary (59%) or benefits (60%) were their primary reasons for their loyalty.

Worried about ‘critical-skill workers’

And it appears that employers will need every advantage they can get when it comes to retaining their top performers.

Reason: Companies are having trouble finding, hiring and keeping “critical-skill workers.” A separate report by Towers Watson and WorldatWork found that 50% of employers said they had trouble with critical-skill retention.

The study also found that 61% of U.S. businesses were having issues when it came to finding and hiring critical-skill workers. That’s the largest percentage since before the Great Recession.

Engagement drops, turnover spikes

An increasing number of employers have also reported having problems with employee engagement. In 2012, 24% of employers reported a reduction in employee engagement levels, which is a significant increase from the 13% that reported having problems in this area back in 2010.

And more than half of organizations (60%) are anticipating a bump in voluntary turnover as the job market and economy continue to improve.

These stats come from Mercer’s 2012 Attraction and Retention Survey.

The Mercer report also highlighted some of the tactics companies used to prevent engagement and turnover issues last year.

Example: 95% of organizations provided some form of merit-pay increase for 2012.

In terms of non-cash rewards, employers relied on a variety of strategies, such as:

  • Communicating total reward value to workers (25% of firms did this)
  • Using social media to boost employees’ work experience (25%)
  • Offering formalized career paths to workers (22%)
  • Internal/external training opportunities (22%), and
  • Special recognition initiatives to reward employees (22%).

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