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The Impact of Losing an Executive
Every enterprise has select individuals who are ultimately responsible for building shareholder value, company growth, corporate culture and the vision for the future. If anything happened to them, how difficult would they be to replace?

gettyimages-174647227-compressorWhether they are referred to as executive, chief officer or another title, these employees are the strategists and visionaries, the owners of vital client relationships and the ones who move the company toward a profitable, successful future.

Losing these types of strategic leaders is never opportune because of the critical role they play. But have you considered the actual costs of such a loss? While the direct costs associated with an executive search can range from $50,000 to $300,000,1 that’s only a small part of the picture.

The Hidden Costs
Executive turnover has a far-reaching ripple effect on the company. Four out of 10 companies cite lost institutional knowledge as a considerable problem when a strategic leader leaves. More than 70% of companies see low morale and degrading culture as having an even greater impact.2

“Learn How to Protect, Retain and Enhance Productivity of Your Top Executive Talent: Complimentary Webinar. Click here.”

Other factors that add to indirect costs can include:
• Disruption
• Lost productivity
• Reduced or lost business
• Team members leaving
• Customer dissatisfaction

While it’s difficult to pinpoint the exact figure for the hidden costs of executive turnover, research indicates it is between 200% and 400% of the executive’s salary, or $1 million to $2 million if the executive makes $500,000.3

Recruitment Challenges
The potential loss is devastating, but it’s not the only reason to avoid executive attrition. The ability to regain what you lost is just as difficult. After all, it is becoming more and more difficult to find talent to replace those who leave. As baby boomers age and retire, the pool of available executive talent is dwindling. The next few years will present challenges that many companies simply aren’t prepared for: a talent vacuum.4

Total Compensation Designed for Executives
With all the associated risks tied to losing leaders, companies are re-examining the strength of their retention strategy, including total compensation packages. Since simply increasing pay can land your company in a bidding war with the competition, the focus turns to other rewards and benefits. The most important question to ask is what do executives highly value? Healthcare coverage is increasingly placed at the top of the list.5

Supplying additional healthcare coverage just for executives is possible with a fully insured supplemental healthcare reimbursement plan. Unlike primary health insurance, this type of reimbursement plan is excepted from healthcare reform and not subject to nondiscrimination rules. Plus, with the fully insured structure of the plan, the 105(h) allows premiums to be tax deductible for the employer and benefits to be non-taxable for employees. So that means that while ordinary compensation will be subject to payroll and other taxes, the supplemental reimbursement plan comes with tax-efficiency.

Companies that plug in this type of solution to their total compensation package for executives find that it has more value than taxed compensation, can be used as a constant year-long reminder of the company’s appreciation (unlike a one-time bonus) and offers important health support to protect key employees at home and abroad through

  • Interested in learning more? Click here to watch a video.
  • To participate in an informative webinar, “Executive Health, Productivity and Your Bottom Line”, click here.

“Executive Search Prices: What Does Executive Search Cost?”
2 “The Dirty Truth: Employee Turnover Cost.” Talent Keepers.
3 “There are Significant Business Costs to Replacing Employees.” Center for American Progress.
4 “As Baby Boomers Retire, It’s Time to Replenish Talent.” Gallup.
5 “These Are the Best Employee Benefits and Perks.” Fast Company.

You might also like:

Executive Travel: The Risks Are Real
Executive Health: Their Health Is Your Business
Avoid the Corporate Risk: Proactively Protecting Executive Health


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