How can you reduce employee attrition? When a company has the best group health insurance plan that its competitors don’t have, it will be able to retain more of its employees.
In developed countries such as America, Canada, and Europe most employees check the health insurance coverage offered by the employer before deciding on joining the organization. Employees in these countries are ready to sacrifice a part of their salary growth in return for the best health insurance coverage. This is due to the high medical costs in developed countries where most people would not be able to afford private health insurance and would be largely dependent on the group health insurance offered by the employer.
In cases where the group health insurance is valued more than the other benefits, employees would prefer to stay with the company rather than change it, which helps reduce attrition in the organization.
In countries like India, healthcare costs are rising with medical inflation touching 15% which is the highest in the recent decades. Employees are now seriously considering group health insurance as a part of the employee benefits and paying attention to what is offered under the group health insurance policy.
Starbucks spends more money on group health insurance premiums than it does on sourcing coffee, which is their main product.
Group health insurance is now a part of the budgeting exercise for most of the companies. It is also a part of the strategic initiative to reduce employee turnover. Employee Turnover is calculated as the ratio of the number of employees who left the company to the average number of employees over a specific period of time. Any company would want to keep its attrition rate under control and limit it to a single digit as the cost of hiring and training them is higher compared to the cost of retaining an old employee
What’s on this page?
What Causes Employee Attrition?
Reducing the quantum of employee benefits can affect group health insurance and may cause more people to leave their jobs. Therefore, a good group health insurance policy that includes maternity coverage, hospitalization cover, no waiting period, and inclusion of parents can help an organization reduce attrition.
With the great resignations taking place in recent times, it is of utmost importance to have a good group health insurance policy which can reduce the attrition rate as the employees should feel the value of the group health insurance policy that is being offered to them.
Group health insurance is a boon for small companies to retain the best talent as they would not be able to offer benefits in competition with the big companies.
Factors that help group health insurance to Reduce Employee Attrition
Free Health benefits
One factor which helps an organization reduce employee attrition rate is the free health benefits offered by the employer as a part of the employee benefits under the group health insurance plan. Employees would prefer to stay with a company that provides them with free health care and competitive pay.
For example, if an employee has included his parents in the group health insurance policy and they have a pre-existing disease such as a heart attack, the employee would not leave the organization because obtaining a health insurance policy for his parents with such pre-existing conditions would be difficult.
The employee would not leave the organization, as only a few organizations offer health insurance coverage to parents. Employees may not be able to afford the healthcare costs that would be incurred in the absence of a group health insurance policy.
Peace of mind
The other factor that helps an organization reduce the attrition rate with the group health insurance policy is that employees get peace of mind with the group health insurance policy.
Group health insurance policies do not have a pre-existing waiting period, unlike retail health insurance, which gives more peace of mind to the customer.
The members of the group health insurance policy can avail of hospitalization benefits for all illnesses or diseases from day 1 as there is no waiting period which helps your organization to gain the trust of your employees and it reduces employee attrition.
Reduced Out-of-Pocket Expenses
Group health insurance significantly lowers the financial burden of medical expenses for employees. This is a major factor in employee satisfaction and retention, as it provides a sense of financial security and reduces stress related to healthcare costs.
Comprehensive coverage for ageing parents
The ability to include spouses, children, and most importantly parents in the group health insurance plan is a major draw for employees. Most employess would turn down an offer with a company that has lesser coverage as compared to the one they currently have, which includes comprehensive coverage for parents.
Outpatient expenses
Outpatient expenditure is a big drain on employees, especially when it comes to employees’ kids or parents. Employees would consider multiple times before switching jobs if the policy of the prospective employer does not cover for OPD expenses.
Conclusion
Group health insurance is a powerful tool for reducing employee attrition and fostering a positive and productive work environment. By providing comprehensive health coverage, financial security, and peace of mind, employers can demonstrate their commitment to their employees’ well-being. This, in turn, can lead to increased employee loyalty, reduced turnover, and improved business outcomes.
Frequently Asked Questions (FAQs)
- Is it more cost-effective to invest in a comprehensive group health insurance plan or to simply offer higher salaries to reduce attrition?
While higher salaries are undoubtedly attractive, they often don’t address the core concerns of employees seeking long-term stability and financial security. Moreover a higher salary is not an assurity that an employee will invest in the right group health insurance which will serve him appropriately in times of need.
- How can small businesses with limited budgets compete with larger companies in offering attractive group health insurance plans?
Small businesses can leverage the benefits of risk pooling by partnering with an experienced insurance broker who can negotiate competitive rates and tailor plans to meet their employees’ specific needs. They can also combine their health risk with lower risky policies like Asset Insurance to get a discount on their health premiums.
- If we already have a group health insurance plan, how can we assess its effectiveness in reducing employee attrition?
Conducting employee surveys and exit interviews can provide valuable insights into how employees perceive the current group health insurance plan. Analyze employee feedback to identify any gaps in coverage or areas for improvement.
- How can we communicate the value of our group health insurance plan to employees and reinforce its role in reducing attrition?
Clearly communicate the details of the plan to employees, highlighting its comprehensive coverage, benefits, and cost-saving features. Provide educational materials and resources to help employees understand the value of the plan and how to utilize its benefits effectively.
- Can implementing a good group health insurance plan completely eliminate employee attrition?
While a strong group health insurance plan is a significant factor in employee retention, it might not be the end-all solution to reducing employee attrition. Attrition is a complex issue influenced by various factors, including career development opportunities, work-life balance, company culture, and management practices. A comprehensive approach to employee well-being, including competitive compensation, benefits, and a positive work environment, is crucial for minimizing attrition.
