Understanding what the competition is paying caregivers will help you make the most informed decisions to stay competitive in hiring the best talent.
In any discussion on caregiver turnover, there’s an elephant in the room: the fact that one of the most effective long-term strategies to increase retention and hire better talent is simply paying caregivers more. While it’s not in the cards for most agencies to simply start paying caregivers significantly more without charging clients more, it’s important to track what competing agencies and other sources of competition are offering and frequently evaluate whether it’s time to increase your wages to stay competitive.
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What are the advantages of paying caregivers more?
Besides making your caregiver recruitment efforts more competitive, paying more can save you money by reducing turnover costs. The average caregiver costs a hefty $2,600 to replace. Hidden and indirect costs add significantly to the cost of constantly hiring new caregivers. Long term, raising caregiver pay may be the one of the best things you can do to stay financially even.
This data from the 2018 Home Care Benchmarking Study shows the effects of increasing wage on turnover:
Wondering what to take from this? Being one of the 10%-highest-paying agencies can reduce your turnover by over 40% compared to the 10% lowest-paying agencies. If you’re an agency with 100 caregivers, that’s a difference of about 40 caregivers each year, or a whopping $104,000 in estimated annual turnover costs. Even the difference of a dollar increase, while adding to your wage expenses, can substantially reduce your turnover.
Are you paying your caregivers competitively?
While it can be difficult to determine exactly what your local competitors are paying, you can get a strong idea of the ballpark you should be in by using benchmarking data. Here’s some more very useful data from the 2018 study showing median hourly pay ranges:
Obviously, geographic location makes a significant difference in what kind of pay can be expected. Here’s the median hourly wages for caregivers classified as companions/homemakers by region:
- Northeast: $10.50
- Great Lakes: $10.50
- South: $9.50
- Central: $10.50
- Pacific: $12.00
It’s also interesting to note that the turnover rates in these regions correspond strongly to how much they pay caregivers. For more data—including region-specific data for other types of caregivers, regional turnover rates, and information on 24-hour shifts and overtime pay, purchase a copy of the 2018 Home Care Benchmarking Study.
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Let’s shift gears and talk about caregiver benefits.
Benefits that Home Care Agencies are Offering to Caregivers
Benefits can be a useful way to increase the competitiveness of your compensation package without adding too much cost. While smaller agencies have less leeway than larger agencies to offer heavy-hitting benefits like insurance plans, every agency should carefully consider options and evaluate which benefits they’re able to offer. For instance, a small agency that is well-connected in their community might be able to offer a variety of discounts and perks at local businesses for relatively little cost. In addition, home care agencies should strongly consider offering benefits like sick days and paid vacation time.
Here’s a list of some of the benefits being offered by different agencies throughout the country:
1.5x pay on holidays
Paid vacation and sick leave
Training and advancement opportunities
Discounts at local businesses (movie tickets, oil changes, gym memberships, haircuts, items at restaurants, etc.)
Employee appreciation events
Paid time off to volunteer
Investing in Your Caregivers
A good retention strategy relies on a variety of factors including strong training programs, frequent recognition, and good communication among others. One of the most important ingredients in this mix is competitive compensation. While wages and benefits add significant cost (caregiver wages account for over half of the average agency’s expenses), it’s important to recognize the value of investing in your caregivers. Beyond reducing turnover costs, providing competitive compensation will help you attract better caregivers, raise morale, and result in better care for your clients. Evaluate what your agency can afford to offer, but remember that it’s also an investment.
What have you done to stay competitive? Let us know in the comments!
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