Ever think about the cost of not retaining employees? Though most companies have gotten rid of their defined benefit (DB) plan to avoid the long term financial liabilities, there is a significant price to pay other than the higher costs and lower productivity of older workers not able to retire: workers are more likely to change jobs. Think about the cost of recruiting and training a new employee not to mention potentially lower productivity for an extended period. According to research by AP/NORC, people who stayed with their employer for more than two decades cite benefits as the principal reason.
In a study with 1000 workers 50 or older, 40% have worked at the same company for 20 years or longer with 18% at 30 years or more. The big driver is the pension plan which covered just 18% or workers as of 2011 down from 35% in 1990. The older the worker, the more attachment to the company with 50% of workers 65 or older with 20 years of tenure compared to just one-third of workers 50-64 years old.
While tenure for workers 55-64 is 10.4years and 7.9 years for 45-54-year-old employees, tenure among Millennials is much shorter. Though there is less trust among younger workers who might have seen their parents laid off by bigger companies, there is no pension plan to keep them at a company for an extended period of time.
Which means that companies have to work much harder retaining employees, especially the more productive ones. Though defined contribution (DC) plans like 401ks are meant to be portable, companies that have attractive benefits including a healthy match are in a better position to keep the employees they want as more companies look to push the benefit cost to workers. Some companies are actually handing out a description of the total compensation workers receive, not just salary, to show the value of the benefits employees receive to avoid valuable workers leaving for a few thousand more. Are you?
