The High Cost Of Cheap Benefits: Why Retention Is Your Best Investment

Employee turnover is always a hot-button issue, even in decline. Gallup reported in 2017 that turnover rates averaged about one quarter of employees each year, and iMercer noted that number has sunk to 13% in 2025. Of the employees who stay, only about one in five are truly engaged.

That’s why companies should take it seriously whenever a talented employee abandons ship. A happy employee is an engaged worker, raising productivity and contributing to a positive workplace culture. For many, the deciding factor is benefits. With this guide, businesses will know how to tailor benefits to attract and retain top talent.

Turnover vs. Retention

When companies compare turnover and retention, retention is a clear winner. Gallup estimates that employee turnover costs the company at least half and as much as twice their annual salary. Hiring someone new to replace an employee is more than just costly, however. It requires months of work to recruit applicants, go through the interviewing process, select a candidate, and onboard them. If businesses could just keep their employees in the first place, they could avoid that expense while building institutional knowledge and maintaining consistent productivity.

Benefits as a Retention Tool

Just because more people are staying at their jobs doesn’t mean they are engaged, so promoting employee engagement should be a primary focus of companies. Since overall engagement is dropping, particularly in management, it’s important to evaluate why this happens. Gallup reported that disengaged employees often feel like no one cares about them or that they are separated from goal-setting that affects their daily tasks. Tailoring benefits to these common issues could yield greater engagement and productivity.

How to Tailor Benefits to Retain Top Talent

Ask for input

There is a range of benefits that companies can offer, but they should start by getting their employees’ input first. Many workers expect to receive small business health insurance, but the options do not stop there. Businesses should get input on benefits such as:

Paid time off
Paid family leave
Health and wellness programs
Discounts with local partners, like a nearby gym
Retirement planning
Professional growth and mentoring

Allow the employees to vote and then make decisions based on the results.

Remember non-monetary benefits

Paid time off, bonuses, and health insurance are fairly standard in many industries, but non-monetary benefits also help with retention and engagement. A company that has an onsite gym or daycare can save workers hours of commuting time, which is a real advantage. Bringing in meals for employees who work long hours can save them money and help them maintain their energy. Even implementing a practice of telling people when they’ve done a great job can help boost engagement.

Allow room for flexibility

Benefits have to be useful to work, so companies should allow some room for flexibility. Some employees might prefer to use flex time instead of a higher amount of PTO. Remote workers who cannot attend a company party might appreciate a delivery of goodies on the day.

Increase benefits with tenure

Staying with a company saves money, and it must be rewarded. Businesses should tier benefits based on tenure, such as raising PTO or bonuses over time. Increasing benefits, especially with milestone rewards, can inspire employees to stick with the company and help with long-term growth.

Communicate benefits to staff

The Gallup survey noted that employees are less likely to engage when they feel like they aren’t connected to the business, through their daily responsibilities or benefits. Positive, honest communication can help to solve this problem. In many cases, employees who are struggling may not know about the programs that their companies offer to help. Making sure that workers understand their options and have the freedom to make decisions can help them utilize those benefits to everyone’s advantage.

Keeping employees is more than just a convenience. It helps companies to save money while making a valuable investment in their workers’ well-being. By prioritizing benefits as part of the retention plan, businesses can improve their retention rates while promoting employee engagement.

Author bio: Steven Wendlandt is the Agency Founder of Selected Benefits, Inc., which serves the health insurance needs of Texans in Houston, Dallas, San Antonio, and Austin. Wendlandt founded Selected Benefits, Inc. in 2002. He is also the founder of Wendlandt Investments, LLC; and co-founder of New Century Realty Group; Lillian Nicola Asset Management, LLC; and iSure, LLC. Wendlandt has a bachelor’s degree in economics from Mississippi State University.

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