Do Employee Benefits Reduce Labor Turnover?

Sutton, Nancy A.
June 1985
Benefits Quarterly;1985 Second Quarter, Vol. 1 Issue 2, p16
Academic Journal
Firms that offer higher levels of insurance and retirement benefits generally experience lower rates of voluntary labor turnover. However, employee benefits are only one of a complex set of interrelated factors that may influence labor turnover. The results of the survey reported in this article indicate that the size of a firm and position of the employees may influence the relationship between employee benefits and labor turnover. Employee benefits appear to modify the quit behavior of employees in large firms considerably more than employees in small firms, and wage employees more than salaried employees. Accordingly, a strong relationship was found to exist between a high level of employee benefits and low labor turnover, and vice versa, among wage employees in large firms. At the opposite end of the spectrum, however, a significant relationship between low benefits and high turnover for salaried employees in small firms was not found. Although the results support the conclusion that employee benefits may be a useful tool in managing retention and turnover, this tool may be most useful in reducing labor turnover among wage employees in large companies.


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