Designing employee benefits to optimize turnover: A prescriptive analytics approach

Abstract

Employee turnover significantly impacts organizations, particularly those with substantial investments in training their workforce. To mitigate these effects, we propose a Prescriptive Human Resources Analytics approach that optimizes employee benefits to minimize total costs, focusing on turnover management The methodology models employee decision-making using a discrete choice model, with parameters estimated through maximum likelihood. We solve the resulting nonlinear optimization problem with a heuristic tailored to the problem’s complexity. We applied this methodology to a hospital case study, which was used to enhance the transportation system as an employee benefit, considering the associated turnover costs. The results demonstrate that our approach can reduce total costs, optimize the usage level of the designed benefits, and increase employee satisfaction. This research provides a robust framework for data-driven decision-making in HR, offering practical tools for improving employee retention strategies.