Employers are increasingly offering improved benefits like flexible working arrangements, career development opportunities, and health care benefits to retain valuable employees, as retaining current staff is more efficient than hiring replacements. A survey found that over a third of employers had difficulty retaining skilled workers, and nearly one in five changed their benefits plans in the past year, most commonly improving health care benefits. Career development and flexible working arrangements were seen as particularly important for retaining millennial and highly skilled employees.

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It's a lot more efficient to retain good employees than to find and hire new
ones. The Society for Human Resource Management (SHRM) recently asked
its members how they are adapting their employee benefit programs to avoid
losing quality workers. Two-thirds of respondents in the study represent
employers with fewer than 500 employees.
SHRM's "Strategic Benefits" study set the stage by asking employers how
many are having a tough time retaining highly skilled employees. Fully 37%
reported that this is a problem for them — up from 27% only four years ago.
That challenge was more acute among self-described "high-tech" companies.
More than one-third of respondents reported difficulty retaining employees
at all levels within the organization, up from 25% in 2012.
Nearly one in five surveyed employers changed their benefits plans within the
last year. And among high-tech companies, one in four did so.
How many companies have changed these benefits in the past year?

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Employee Segment
Benefit category All High performing Highly skilled
Health care benefits 61% 44% 44%
Flexible working arrangements 37% 31% 35%
Retirement savings plans 35% 25% 27%
Leave benefits 34% 27% 28%
Career development 34% 36% 34%
Wellness 26% 23% 23%
Family-friendly benefits 14% 10% 10%
Source: SHRM 2016 Strategic Benefits Survey
What did employers change? As the table above indicates, among the
employers that made changes, health care benefits were altered by the
majority. Some employers differentiated benefit plan changes for the various
employee segments.

4. Employee Segment Targeting
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As the table shows, 44% of the employers made changes particular to high-
performing and highly skilled workers. Also, career development plans were
more prevalent for high-performing employees among employers that
changed those benefits.

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That finding was consistent with a widely held view that professional and
career development benefits are becoming more critical to employee
retention. Slightly smaller majorities of respondents also believe that flexible
working benefits, health care benefits, retirement savings plans and wellness
programs will become more important.
Family-friendly benefits are seen to be dropping in importance, with only 28%
believing they will grow in value (vs. 55% 2013).
When asked which benefits will be more critical to helping employers retain
high-performing employees, respondents overwhelmingly identified career
development (70%), and slightly smaller majorities named health care
benefits, retirement plans and flexible working arrangements. Similar benefit
priorities were ascribed to high-performing employees.

6. Millennial Priorities
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Career development and flexible working arrangements were also considered
vital to the retention of millennial generation workers, with 83% and 80% of
survey respondents, respectively, identifying those benefits.
The SHRM survey asked employers the same set of questions with respect to
recruiting new workers. Their responses generally fell into the same pattern.
One noteworthy finding, however, is that employers see the primary bread-
and-butter benefits — health and retirement plans — gaining importance in
the recruitment of employees at all levels of the organization, but career
development and flexible working arrangements as becoming a larger draw
for millennial and highly skilled employees.

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The survey did not get "into the weeds" on the kinds of changes survey
respondents made to their plans. The general trend with health plan changes
in recent years has been a shift to high-deductible health plans (HDHPs)
paired with health savings accounts. However, that's been a mixed bag for
employees.
According to the Kaiser Family Foundation, in 2016 the average employee
contribution to HDHP premiums was $943 for single coverage and $4,289 for
family coverage. Those numbers are 16% and 19%, respectively, lower than
the average of all health plan types. However, employees who incur higher
than average number of medical claims typically wind up paying more under
HDHPs than HMO or PPO plans by virtue of the higher deductible.

8. Relative Competitiveness
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Employers who consider health benefits as a vital tool for retaining and
recruiting employees need to only make their plans less costly to employees
than their competitors do, even while overall costs to employees are on an
upward path.
Expanding flexible working arrangements, in contrast, doesn't necessarily
entail an increase in employer costs, so long as there's no productivity drop
among employees who use these programs. In general, with proper
supervision and the appropriate kind of job (that is, one in which employees
don't need a lot of facetime with colleagues), the productivity issue goes
away.

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Similarly, career development benefits, which are so cherished by millennials
(as are flexible working arrangements) don't need to add significant costs to
your employee "total compensation" budget.
Making an effort to sketch out a probable career path for talented employees
may not cost anything. And while additional training programs do increase
costs, if the net result is better trained and more loyal employees, that
expense becomes a long-term investment in the future of your organization.

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