How to use the Group Gratuity Fund as Retention Tool for curbing the attrition rate?
One of the key worries of any organization is how to retain employees, more so the deserving employees. Not just that it is a setback but also the company has to start afresh with hiring new talent, grooming and nurturing them. This kind of turnover is extremely expensive. By some estimates, it can cost an employer double an employee’s salary to replace them when they quit. That cost varies across different industries, but for some employers, it can be even higher.
According to a collection of recent surveys on employee retention in India,
1. Only 24% of “Generation X” employees say that financial stability motivates them to stay in a job.
2 56% of employees say that health care and insurance concerns keeps them in their job.
Benefits that are actually beneficial matter. What you offer your employees in this area must be comparable to other businesses in your industry in your region.
I am giving you brief of “Group Gratuity Scheme”. This Scheme can be used by you as an important part of “Effective Employee Retention Strategies” your organization
Group Gratuity Scheme of LIC provides for employee welfare measures with built-in insurance cover, which provides insurance coverage to the employees to the tune of future service gratuity subject to certain limits. The insurance cover can be flexible depending on the requirements of the Trust. The Group Insurance premium will be commensurate to the cover provided.
An employee joined the service at age -25 years
Retirement age - 60 years
Death at age- 35 years
Anticipated service - 25 years
Salary at the time of death - Rs.10000/-per month
Gratuity on the accrued basis - Rs. 57692/- approx
Gratuity on anticipated basis - Rs.2,01,923/- (accrued Gratuity plus life cover of Rs. 1,44,231/- approx)
The above feature of Group Gratuity Scheme gives a sense of Financial Security to his Family in any unforeseen events and similarly the investment made in the Group Gratuity Scheme secure his Gratuity Benefits in event of Insolvency of Company as it is invested in Group Gratuity Scheme through an irrevocable trust. Hence it helps the organization in curbing the attrition rate.