The No-Cost Solution to an Expensive Problem: Employee Turnover

BY Stephanie Reed | June 11, 2024

Employee turnover is too expensive for businesses not to find alternative solutions. The Society of Human Resources Management reported that it costs up to 9 months worth of an employee's salary to replace and train someone who leaves their position. On a broader scope, it’s a prevalent issue causing businesses to lose a trillion dollars yearly according to Gallup.

R.W. Holleman, director of strategic accounts at DailyPay, cautions that employee turnover is equally detrimental to a company’s financial stability and employees' successful workplace engagement. “The cost of employee turnover is not just a concern for HR departments,” Holleman said in a thought leadership spotlight at From Day One’s Dallas conference. “It’s a substantial burden on the financial health of the company, impacting the productivity of every single employee.” 

How can businesses stop spending more money, plunging deeper into debt, and begin reducing employee turnover? Holleman highlights a key employee benefit that addresses the leading cause of workers leaving their positions and offers a direct solution. 

Earned Wage Access: Solving Financial Burden 

Financial hardship is the leading cause of stress. In 2020, Purdue University cited survey results from CreditWise, revealing that people experienced more stress and anxiety over finances than work.. However, bonuses and pay increases aren’t an immediate solution for businesses nor employees. 

Businesses taking out more loans increases financial burdens and does not solve the core of the economic hardships of employees: the need for quick pay. Without access to quicker pay, workers must look for other side hustles and careers that provide same-day access to the money they need. 

“It’s not necessarily how much they have or how much they’ve earned. It’s about the access to the funds when you need it the most,” Holleman said.

R.W. Holleman of DailyPay led the thought leadership spotlight in Dallas 

“The American worker is being challenged like never before to pay those bills on time. They don’t wait. They’re bouncing from job to job. They’re taking on gig jobs.”

The solution is to provide Earned Wage Access (EWA), where employees access their pay as they earn it. EWA does not require taking out loans and is not an advance. It is money employees have already earned, making it a cost-effective solution for businesses and an inclusive benefit for all employees. 

An impressive 95% of DailyPay clients who previously relied on payday loans reduced their use or stopped altogether, and 97% of clients experienced less overdrafting, saving more than $600 yearly, according to research done by DailyPay. Other notable statistics include reducing turnover by up to 73% and 73% of participants citing they feel more confident managing their finances overall.

An Empathetic Solution 

“Think of a time [when] you were at a grocery store. Have you ever had your card decline?” Holleman asked. “We’re managers, directors, VPs, executives–we got our life going and figured it out. But what about others,” he said, citing other life stages like college, where financial security is less common. 

The strain on all resources when organizations have to replace employees is apparent: advertising, reviewing applications, interviewing, recruiting, onboarding, and training costs money and time. Consequently, the employee workload increases with a loss of expertise from occupied managers, risking customer relations and creating an environment of uncertainty among teams. 

EWA exemplifies a win-win situation: it provides financial wellness that sustains employees, helping them stay committed and engaged in their current positions instead of taking more sick days or switching to gig jobs entirely for quicker pay. EWA saves businesses from spending around $45,000 to hire and train a replacement for a previous employee making $60,000 yearly.

“It empowers them and provides them the flexibility they need over their finances. So they can bring the best version of themselves to work. And in turn, it can help your company be the best version it needs to be.”

Editor's note: From Day One thanks our partner, DailyPay, for sponsoring this thought leadership spotlight. 

Stephanie Reed is a freelance news, marketing, and content writer. Much of her work features small business owners throughout diverse industries. She is passionate about promoting small, ethical, and eco-conscious businesses.

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Enhancing The Employee Experience With Innovative Technology

Some say high turnover is simply the cost of doing business, and for many industries, that will always be the case. But the numbers tell a different story. Disengaged workers cost the world economy $8.8 trillion in lost productivity, according to a 2023 report from Gallup.“A number like this shows that the opportunity cost of not investing in the employee experience fully outweighs the investment that you would make. 8.9 trillion dollars [is] 10% of the world’s economy. That’s a staggering number to think about,” said Josh Parente, the director of sales at LineZero. Parente spoke about the cost of employee disengagement, and how to re-engage them during a thought leadership spotlight at From Day One’s Salt Lake City conference.Doing Employee Engagement WellLineZero is passionate about the employee experience: “We live our values of ‘People Matter.’” “We focus on building and enhancing the employee experience through technology,” said Parente. LineZero has a long-term partnership with Meta’s Workplace and current partnership with Workvivo, and they’ve taken that experience to new organizations they work with. “Our objective when we work with a lot of our partners is to act as an extension of their organizations. We work with our partners to help them build and deploy their employee experience through technology.”Parente says they start with an employee’s experience from day one, “not just throughout maturity.” They focus on that starting point and “continue to push that positive momentum throughout the lifecycle [of the employee].” HR professionals and leaders should think about how connected their employees are to the mission and whether or not they're “excited and inspired” to clock in every day.During an impromptu survey with the audience, Parente sussed out a few key items that highlighted the lack of employee engagement and what companies are doing about it. Building trust turned out to be the number one challenge attendees were facing in their organizations. Email was how they were dealing with it. And, budget was one thing they'd increase to mitigate disengaged employees, if a “genie” was available. “Investing in the employee experience leads to 43% less turnover, an 81% reduction in absenteeism and a 20% increase in productivity. So if we’re looking at the budget and we’re looking at the opportunity cost, not investing far outweighs the cost of actually making the investment.”Slide from Parente's presentation, highlighting statistics shared When asked whether the above statistics shocked anyone, not a single hand went up. “80% of employees feel lonely. 3 out of 5 are burnt out. These are statistics that clearly articulate that we are facing a massive problem when it comes to the labor market today. So the question is, what are we going to do about it?”Looking back at the Great Resignation of 2022, the data paints a clear picture. Many boomers took early retirement, while millennials left their jobs in droves. But one statistic stood out to Parente. “Of the millennials that turned over during the 2022 Great Resignation, 47% of them were high performers.” That’s a big deal. “High performers outperform the average employee at a rate of four to one, and they make up about 15% of your organization.”If companies want to build strong cultures and retain top talent, they need to invest in the employee experience—especially for those high performers because they will help drive the employee experience and "push the [company] culture forward." Millennials, on average, change jobs every two to three years, meaning another wave of turnover is coming. “There’s a good opportunity here for us to start diving into ways to stop this mass turnover, especially with our high performers,” Parente said.Parente shared another chart inspired by Simon Sinek’s work with Navy SEALs. The takeaway? “The high performance, low trust person—this is a toxic team member. Even though they’re driving high performance, they would sooner select somebody that has low performance, high trust over somebody who has high performance, [low] trust.”Parente's slide on the relationship between trust and performance Take that to heart: The most elite teams prioritize trust over raw talent.Encouraging the Entrepreneur to be an IntrapreneurAccording to a chief people officer at a major enterprise Parente and LineZero works with, “Within the U.S. economy, [that company] [does] a really good job of inspiring and encouraging entrepreneurship,” the officer said. But when companies invest in employee experience, they don’t just keep workers—they create “intrapreneurs,” employees who think like entrepreneurs but stay within the company.The key is investing in high-trust employees.“Those high trust categories are those intrapreneurs that you want to encourage within your organization,” Parente said. “Those are the 15% that you want to continue to keep and continue to encourage to be part of the culture.” The solution Parente says is better technology. Right now, organizations juggle multiple platforms—productivity suites, HR systems, endless apps—but they don’t talk to each other. “What if we had one? One that connected everybody, our cultures, our productivity tools, and our HR systems? The truth is, we have that at our fingertips today.”Yet, many companies still rely on outdated communication methods. “Email is still number one." But mass emails with critical company updates? They get buried. “I don’t know if you guys read them, but they usually fall to the bottom of my inbox.”Parente says we all need to move in a different direction. “Legacy and top down communications [are] something that showed hierarchy. It showed clear efficiency, but it's not effective. It’s not inspiring, it’s not empowering our employees and our team members to go out and be entrepreneurs for the business.”As organizations look to the future, the way they communicate and engage employees must evolve. Creating an environment where employees feel encouraged, not overlooked, when sharing ideas is (or should be) the future. “If we’re not evolving and moving our organization forward, those statistics are going to stay at 60% of burnout. They’re going to stay at 80% of loneliness,” Parente said. “I don’t know about you, but if I go into work and I know that 80% of my coworkers feel lonely. That’s not an inspiring thing. We're not inspiring change. 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Prioritizing Benefits That Drive Impact for Your Employees: A Successful Case Study

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With approximately 850 employees across the U.S., UK, Canada, and Poland, Marqeta exemplifies the challenges faced by growing international companies.When Nadendla joined Marqeta two years ago, she found herself in a scenario familiar to many benefits professionals: excellent offerings that went underutilized because employees simply didn’t understand them. "The sheer volume of benefits information was overwhelming," she recalled. “Employees weren’t utilizing them effectively and didn’t understand the value of what was being offered, which created a lot of frustration,” she said. As the sole benefits professional at the time, Nadendla methodically rebuilt the company’s approach from the ground up. She transformed vendor relationships from transactional to collaborative partnerships, establishing regular meetings and leveraging vendors to help educate employees. Britt Barney of Northstar spoke with Preeti Nadendla of Marqeta during the webinar (photo by From Day One)With open enrollment looming just months after her arrival, Nadendla orchestrated multiple virtual education sessions with partner vendors, created accessible FAQs, and ensured recorded sessions were available across global time zones. The results were immediate–employees began actively engaging with previously underutilized benefits, reducing confusion and frustration while increasing the return on the company's benefits investment.From Theory to Practice: Benefits Strategy in Real MarketsNadendla’s approach to measuring success goes beyond typical utilization metrics to focus on meaningful understanding within employee healthcare networks.“For me, it’s not just utilization but the actual engagement and frequency,” she said. "Working with a mental health benefits partner, we want to track the frequency of interactions. Are they doing only one coaching session, or is there an uptick in therapy sessions? Is it only a certain subset of employees using it and not the entire organization?”This nuanced approach to measurement extends to the company’s cross-border benefits strategy as well. While many companies struggle to provide equitable benefits across different regulatory environments, Nadendla has developed a philosophy where benefits should be “globally competitive but locally relevant.”Northstar, the financial wellness platform, provides personalized guidance to employees through dedicated advisors, helping them navigate their benefits options and broader financial decisions. As Barney of Northstar says, the platform focuses on building relationships. “In my 13 years of working in financial services, there isn’t a single question that doesn’t tie back to money. So from a benefits perspective, we'll talk about budgeting and saving for emergencies, paying down debt and having a family retirement, all of those types of things. But we’ll also talk about which health plan you should choose,” she said. Marqeta and Northstar put Nadendla’s principles to the test when addressing issues within the UK’s pension program. 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