Tipping the Talent Scale: Robust Retirement Plans
Business owners, CEOs, and human resource managers know that human capital is an organization’s most valuable asset. And when it comes to attracting the high-quality employees who will propel your company ahead of competitors, factors such as compensation, culture, perks, and career advancement opportunities are pivotal. But they’re not the whole story. There’s another key tool for talent acquisition and retention—your company’s retirement plan. Let’s review how (and why) this benefit could tip the talent scale in your favor.
According to recent U.S. Bureau of Labor statistics, unemployment rates are at historical lows and hiring trends remain strong. Yet wage growth is tepid, and employees are leaving jobs for better opportunities. Job candidates have choices, so employers need to be creative to win them over. In a survey conducted by the Society for Human Resource Management (SHRM), organizations that offer benefits such as a retirement plan reported better overall company performance than those that did not (58 percent versus 34 percent). The SHRM survey also reported above-average effectiveness in recruitment (19 percent versus 8 percent) and retention (28 percent versus 11 percent) between these groups of organizations. And 72 percent of survey respondents indicated that their organization increased benefits in the prior 12 months to retain employees.
Powerful Plan Designs
So, how can you leverage the power of retirement plan benefits? What will influence the decision-making of future and current employees? Here are four persuasive features to consider:
- Focus on financial wellness. Step outside the traditional box of retirement planning education and deliver guidance on other financial topics as well. Help employees save for college expenses, manage debt, and handle estate planning. Programs like this do more than improve financial literacy—they foster employee loyalty, satisfaction, and productivity.
- Take a fresh look at your company match. Is the matching contribution an attractive incentive for top candidates? How does it measure up against industry-peer averages? Are employees immediately eligible to receive the match, or do they have to wait a year?
- Go beyond the 401(k). To attract top executive candidates, profit-sharing, cash balance, defined benefit, deferred compensation, and employee stock ownership plans are effective benefits. Think about alternative plan designs that give key talent a bigger slice of the pie.
- Offer a generous vesting schedule. When comparing two job offers, employees may consider the length of time required to become 100 percent vested in the employer’s retirement contributions. Adjusting the schedule (e.g., changing a five-year schedule to a three-year schedule) may turn the decision in your favor.