Employee retention has become the top priority this year for both operations (51% of respondents) and HR (66% in turn), according to Gallagher’s 2023 U.S. Organizational Wellbeing Report.
More than half of employers (51%) experienced a turnover rate of at least 15% in 2022, inching up three points from 48% in 2021. In response, companies are adjusting compensation and benefits to improve retention rates.
“An organization’s ability to retain employees ultimately impacts its bottom line because hiring and training a new employee usually costs much more than retaining someone who is already on the payroll,” William Ziebell, CEO of Gallagher’s benefits and HR consulting division, said in a statement.
“The workforce makeup and employee needs are evolving at a rapid rate,” he said. “As a result, employers have to consider more comprehensive benefits and compensation offerings that can enhance the overall employee experience.”
Based on data from more than 4,000 U.S. organizations, the report examines how employers are adjusting compensation and benefits, as well as organizational wellbeing through HR technology, healthcare cost control and diversity, equity and inclusion efforts.
Overall, employers are focusing on total rewards and the employee experience. The majority of employers have enhanced existing employees’ base salaries, and 40% have enhanced variable compensation. Similarly, 39% of employers expanded medical benefits and 38% upgraded their wellbeing initiatives — with both measures up six points from 2022.
In addition to the major focus on retention, most employers envision growth in both revenue and headcount by 2024. About 63% predicted a revenue increase and 57% envisioned a headcount increase.
When it comes to DEI initiatives, employers said genuine and consistent communications are necessary to create an optimal employee experience and positive culture change. Employee communications around talent management and total rewards should incorporate DEI messaging as well, employers said, including around succession planning, benefits, compensation and performance management.
“Now more than ever, it’s important for organizations to ensure their benefits and overall vision are well matched with the interests of employees,” Ziebell said. “While diverse benefits may come with more complexity, providing a people-first framework helps to address differing employee needs and interests.”
Despite concerns, HR leaders appear to be optimistic about employee retention improving this year. The priorities for doing so, they said, include developing talent internally, strengthening the leadership pipeline and improving organizational culture.
In addition, employee retention and attraction efforts require more emotional intelligence, according to a new report. By focusing on employee wellbeing and satisfaction, employers improved retention through flexible work options, better communication, strong onboarding, DEI efforts and employee development programs, the report said.