The Challenge

An established building products manufacturer was recently faced with two major business issues: escalating health insurance costs and significant turnover. While skyrocketing healthcare costs had to be controlled, management feared that any adjustment in benefits would accelerate the loss of skilled personnel. The company also needed to understand what was causing high turnover and identify alternatives to attract and retain its valuable employees.

The Process

Extensis and the manufacturer conducted a "Client Needs Analysis" and determined a course of action consisting of the following steps:

• Perform a 12-month Turnover Analysis, by department, by supervisor
  
• Conduct an Area Wage and Salary Survey to determine competitive wage rates
  
• Prepare and administer an Employee Pulse Survey designed to identify specific health insurance needs
  
• Conduct employee focus groups to validate survey findings

The Results

The Turnover Analysis revealed that many employees left the company prior to becoming eligible for benefits. According to the Area Wage and Salary Survey, the company’s entry-level wage rates were below the local standard. This group, it was determined, was concerned mainly with compensation levels. However, according to the Pulse Survey and focus groups, long-term employees, supervisors and management were equally concerned with the quality of the
company benefit package. To address the needs of both groups, Extensis recommended:

• Extend the waiting period for benefit eligibility by three months for new hires
  
• Raise entry-level wages to competitive market levels
  
• Introduce a new cost-effective benefit program designed by Extensis, featuring both company-subsidized and voluntary benefits
  

Turnover reduced significantly across all departments, allowing the company to retain and attract a skilled workforce. Moreover, while improving health coverage and raising the hourly wages for new workers, the company lowered its benefit costs by over 15% annually.