This week, data on our internal dashboard report caught my attention.  Employees who work at Genesis client worksites have been employed for an average of 6.8 years.  Impressive.  This prompted me to check the data for our internal staff, which checked in at 7.1 years.  Also impressive.  This information led me to believe that these averages were on the high side.  My intuition was correct.

Later this year, the United States Department of Labor Bureau of Labor Statistics is scheduled to release its bi-annual “Employee Tenure Summary”.  The latest report, issued in September 2012 indicated that the median number of years that wage and salary workers had been with their current employer was 4.6, as of January, 2012.  In 2010, the median tenure was measured at 4.4 years.

Does this mean that employers who partner with a Professional Employer Organization (PEO), will experience less employee turnover?  I believe this to be true.  Employers who choose to enhance the employment experience for their workers by providing the human resource support and benefit offerings only an accredited PEO can provide will likely see happier workers, who are less likely to seek greener pastures.  Why should they? The grass is nice and green where they are.

Let’s consider the following scenario for an employer with the following profile:

  • 30 workers
  • Average annual wage – $45,000
  • Employee tenure at the 2012 national average – 4.6 years

According to the Center for American Progress, the cost to replace an employee who earns less than $75,000 per year (which includes 90% of U.S. workers) is 20% of their annual salary.  What would this mean if this same company could achieve the same employee tenure rate as the average Genesis client (6.8 years)?

  • Each month, (considering a 4.6 year average employee tenure), an average of 0.54 employees (30/(4.6 years x 12 months)) would have to be replaced.
  • The result would be an annual cost of $58,697 (0.54 employees x 12 months x $45,000 x 20%)
  • For the same company, using our own experience, the average monthly employee loss would be 0.37 (30/(6.8 years x 12 months)) .
  • The result for the same employer using our statistics would be $39,705 (0.37 employees x 12 months x $45,000 x 20%)
  • Under this scenario, this same company would save $18,992 ($58,697 – $39,705) in employee replacement costs annually.

There are a number of advantages for a business that partners with a PEO; administrative relief, sharing of liability, stronger employee benefits, and human resource support to name a few.  Another, less obvious benefit can be less turnover, which means big cost saving for small businesses.

If you have questions or would like to learn more about partnering with a PEO, please reach out to Genesis HR Solutions at or 800-367-8367.

Genesis HR Solutions is the premier PEO provider for Massachusetts based businesses.