Employee retention is best described as a formula for keeping/retaining employees. People are hard to replace, and it’s tough to train new people. Employee retention is something that every industry can take note of in terms of best practices, and the construction industry is no exception.
At MBI, we have put together a series of member retention resources that can be found on our website here: https://mbi.build/login/. All members have access to these resources and can be manipulated and/or changed to fit your mission. This article discusses how construction companies can leverage retention as a tool for risk management and cost savings.
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Title: How Workforce Retention Can Slash Workers’ Comp Costs in Construction
By: PMC Insurance Group
November 12th, 2025
Construction companies face one of the highest rates of workplace injuries across all industries. According to the Bureau of Labor Statistics, the construction sector consistently reports a higher-than-average incidence of occupational injuries, which drives up Workers’ Compensation (Workers’ Comp) claims and premiums. While safety programs and proper training are foundational, an often-overlooked lever for reducing WC costs is workforce retention.
Retaining skilled employees not only ensures project continuity; it can materially lower your company’s Workers’ Comp expenses. Read on to find out how construction companies can leverage retention as a strategic tool for risk management and cost savings.
The Financial Impact of Workforce Turnover on Workers’ Comp
High turnover in construction doesn’t just disrupt projects — it directly impacts Workers’ Comp experience modification rates (MODs) and claims frequency. New or temporary workers are statistically more likely to be injured on the job, in part because they are less familiar with site-specific protocols or safety culture.
Studies show that employee tenure strongly influences workplace safety. According to the Workers Compensation Research Institute (WCRI), nearly half of all workplace injuries occur within the first two years of employment, and about one-third happen in the first year. High-turnover environments amplify this risk, as short-tenured employees are more likely to experience severe injuries requiring emergency care. Retaining experienced employees fosters a safer, more predictable work environment, reducing both claim frequency and severity—and ultimately lowering MODs and Workers’ Comp premiums.
(Source: WCRI FlashReport: Overview of Workers’ Compensation Claims Composition, 2017–2022)
Safety and Training as Retention Tools
Investing in safety and training programs not only prevents injuries, they help to enhance employee loyalty. Skilled construction workers are more likely to remain with a company that demonstrates a commitment to their well-being.
Key initiatives to consider:
• Structured onboarding: Even for experienced workers, site-specific training on equipment, safety procedures, and protocols is critical.
• Regular safety drills and refreshers: Reinforces habits and signals that a company prioritizes safety.
• Certification support: Providing access to OSHA or trade-specific certifications demonstrates investment in employees’ career growth.
• Recognition and reward programs: Incentivizing safe behavior improves adherence to safety practices.
When employees feel supported and safe, they are less likely to leave, and construction companies benefits from fewer claims and a stronger safety record, which directly lowers Workers’ Comp costs.
Quantifying Cost Savings: Retention vs. Turnover
To illustrate, consider the following simplified example:
| Metric | High Turnover Company | High Retention Company |
| Number of Employees | 50 | 50 |
| Annual Turnover | 40% | 10% |
| Expected Claims per Year | 10 | 6 |
| Average Claim Cost | $25,000 | $25,000 |
| Total Annual Claim Cost | $250,000 | $150,000 |
Annual Savings from Retention: $100,000
This example doesn’t even account for the long-term MOD reductions and premium savings that occur when fewer claims are filed year over year. Over time, retention can compound savings, making it a powerful strategy alongside traditional risk management.
Real-World Example: A Case Study
Consider XYZ Construction, a mid-sized contractor in the Northeast. Facing rising Workers’ Comp premiums and frequent new-hire injuries, XYZ implemented a targeted retention and safety program:
1. Enhanced onboarding and mentoring for new employees
2. Biannual safety training sessions and regular toolbox talks
3. Incentives for employees with no lost-time injuries
Within 18 months, XYZ achieved:
• Turnover reduction: 35% to 12%
• Lost-time injury reduction: 18%
• MOD improvement: From 1.15 to 0.92
• Estimated annual WC premium savings: $75,000
This example demonstrates how strategic retention paired with robust safety programs can produce measurable financial benefits.
Key Takeaways for Construction Leaders
1. Retention is a risk management strategy: Keeping skilled employees reduces exposure to workplace injuries.
2. Safety + Training = Loyalty: Programs that enhance safety also improve retention, creating a positive cycle of lower claims and premiums.
3. Turnover is expensive: High turnover increases claims, raises MODs, and inflates Workers’ Comp premiums.
4. Invest strategically: Onboarding, mentorship, certification support, and recognition programs are relatively low-cost initiatives with high ROI.
5. Track and measure: Monitor claims frequency, MODs, and turnover metrics to quantify savings and refine strategies.
Conclusion
Workers’ Compensation costs are a significant line item for construction companies, and they are not fixed. By focusing on retaining skilled workers, investing in safety & training, and reducing turnover, companies can achieve meaningful reductions in claims and premiums. In an industry where every dollar counts, workforce retention is a proven lever to protect employees and improve the bottom line.
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