About 4.5 million workers in the United States quit their jobs in 2022, continuing a trend that began after the 2007 Great Recession. Despite better labor conditions and the pandemic's decline, many adults are still less willing to return to work compared to previous recessions, making it harder for companies to attract and retain top talent. Moreover, voluntary turnover – when an employee quits their job as opposed to being fired or laid off – costs U.S. businesses more than $1 trillion each year.
Beyond recruitment and training expenses, turnover disrupts operations, damages customer relationships, and often leads to further departures. Replacing an employee can cost as much as a full year's salary.
The impact of employee benefits on voluntary turnover, especially the role of paid time off (PTO) and flexible scheduling, is underexplored. Research has yet to fully examine whether PTO influences turnover through job satisfaction or necessity, or how modern benefits like flexible scheduling complement or substitute PTO.
PTO offers time away from work without the loss of wages or job security and includes paid sick leave and vacation time. Flexible work arrangements may include employee choice of location, amount of time at work, or the start and end times of work.
A study by Florida Atlantic University and Cleveland State University, using a nationally representative sample, explored how benefits like PTO and flexible scheduling affect an employee's decision to quit, particularly in relation to job satisfaction. In addition to PTO and flexible scheduling, researchers also considered other perks like tuition benefits, health insurance, retirement benefits and employer-sponsored training. Demographic controls included gender, age, marital status, race/ethnicity and level of education.
The findings reveal surprising differences in how these benefits impact men and women, providing valuable insights for employers aiming to reduce turnover.
Results, published in the International Journal of Manpower , show access to time away from work is associated with lower turnover for all workers, both men and women. Offering PTO reduces the likelihood of quitting by 35% overall, with a greater reduction for men (41%) than women (28%). However, PTO does not affect job satisfaction, and job satisfaction independently reduces turnover by 30 to 40%. While flexible scheduling also reduces turnover, it does not interact with PTO to amplify its impact. Both PTO and flexible scheduling independently reduce voluntary turnover, but they do not enhance each other's effect. These findings hold true for both men and women.
"Our findings indicate that paid time off does not primarily affect turnover through increased job satisfaction," said LeaAnne DeRigne , Ph.D., co-author and a professor in the Phyllis and Harvey Sandler School of Social Work within FAU's College of Social Work and Criminal Justice . "While workers may feel satisfied with their job, the absence of adequate resources like PTO can still drive them to quit. Even when employees are content in their roles, the lack of sufficient time away from work can lead to burnout, stress or a sense of being undervalued, ultimately prompting them to leave. This highlights the importance of offering PTO as a key resource for retaining talent, beyond just enhancing job satisfaction."
Researchers also found flexible scheduling to be as impactful as benefits like retirement plans in reducing turnover. For women, it is as valuable as tuition assistance and PTO.
"Business owners should weigh the costs of offering flexible scheduling against the expenses of employee replacement," said DeRigne. "Additionally, research shows that older Americans are particularly responsive to flexible schedules, with many willing to return to work even at a reduced wage if given this flexibility."
The researchers say replacing desirable employees can be a costly process, and the costs of losing high-performing employees due to inadequate resources, such as insufficient PTO, can be even more significant, as it often leads to a greater impact on team performance, morale and overall business operations. In fact, losing valuable employees can result in higher costs than losing employees who are already dissatisfied, as it can trigger additional turnover and disrupt ongoing projects.
"Research has shown that voluntary turnover is not inevitable, with many employees saying that their decision to leave could have been prevented. This suggests that companies have an opportunity to address the underlying causes of turnover and retain key talent," said DeRigne.
While offering PTO comes with its own costs, the expense is relatively low – around $2.94 per hour per employee – especially when compared to the far more substantial costs associated with turnover, such as recruitment, lost productivity and the potential damage to client relationships.
"By investing in benefits like PTO, organizations can reduce the risk of turnover and improve employee retention, ultimately saving money in the long run," said DeRigne.
Study co-authors are Candice Vander Weerdt, an assistant college lecturer; Vasilios D. Kosteas, Ph.D., dean of the College of Graduate Studies; and Patricia Stoddard-Dare, Ph.D., an associate professor of social work, all with Cleveland State University.
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