Question

Human Resources

Manor Care Changes Its Benefits and Reduces Turnover When Manor Care, Inc. set out to become one of the world’s great service organizations, it decided to find out what would motivate its front-line service employees to stay with the company. At 72 percent, employee turnover was a big problem for the Springfield, Maryland-based parent company of Choice Hotels International and Manor Health Care Corporation. After conducting extensive surveys and studies, the company concluded that to reduce turnover, it needed to offer its lower-paid front-line employees a benefits program they could afford. For instance, while Manor Care’s 401(k) plan was a good one, only 20 percent of employees making $12,000 a year were participating in it.

The company decided to redesign it benefits program, and the result was a program unlike any before it. For instance, in contrast to most defined contribution pension plans, which make contributions based on a uniform percentage for all participants, Manor Care adjusted its contribution percentages according to employee salaries, paying proportionately higher amounts at the lower salary ranges. But Manor Care did not stop there. It also revamped its medical benefits in a similar manner, so that the more an employee earns, the higher his or her deductible and co-payments are. Long-term employees pay less for their benefits as their years of service increase. Since the company redesigned its benefits package, turnover among front-line employees has declined by 25 percent. In turn, customer service quality has increased, according to surveys completed by 10,000 of Manor Care’s health-care customers.

A. Do you think Manor Care could have reduced turnover just as much by raising front-line service employees’ compensation? Why or why not?

B. What other steps might Manor Care take to reduce turnover?

Answer 1

A. if we go by the human psyche, it is well noted that immediate relief or immediate satisfaction is one of the driving forces that lures humans to do certain things, job switches is among one of them. The Company could have reduced teh attrition by ofering a better compensation to the frontline workers as well. Since any organization works on a pyramid basis, it is safe to assume that maximum number of employees will be in front line worker category. Therefore it would have been possible to reduce the trun over by increasing the compensation. However, it would have brough in a huge cost. Therefore, any organization that is planning for a retention program needs to focus both on compensation and benefits along with a promise of employee development.

B. Other things that the company could have done to reduce the attrition is:

1. Assess Employee Engagagement and how it is contributing towards turn over and then design a suitable engagement intervention

2. Come up with an incentive plan that is lucrative and target based

3. Introduce long term career development plan spanning over years

4. Allowing flexible working hours in case, working hours is one of the concerns for turn over