Monetary compensation reduces attrition rate to 5% — study
NEW DELHI, INDIA — Providing monetary compensation to employees can significantly reduce attrition rates to five per cent, said employee management platform Advantage Club.
In a study of over 100 firms and one million employees, Advantage Club revealed that the attrition rate among employees without any form of reward was 38%. In contrast, the attrition rate dropped to five per cent for employees who received monetary rewards.
Meanwhile, employees who received non-monetary compensation had an attrition rate of 11%.
According to Advantage Club, the study has highlighted the importance of a resourceful Rewards and Recognition (R&R) strategy in reducing attrition rates. Companies that allocate a portion of their total payroll (around 2-5%) towards R&R initiatives saw the most significant impact.
At the same time, Western countries were found to allocate a higher budget for R&R compared to their Asian counterparts.
The research further revealed that larger firms with an employee size of over 50,000 experienced the highest average attrition levels at 31%.
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