By Joe Gordon
Hiring a qualified candidate is hard work – time spent recruiting, interviewing, negotiating, and training. And as often is the case, especially in today’s work environment, the employee leaves. They leave for various reasons (more pay, better hours, remote work, chemistry).
What can an employer do?
More pay: often an elixir for finding talent; however, this can create escalating costs as existing employees demand higher compensation as well or, worse, leave.
Team building: have employees work together to increase job satisfaction
Flexible work schedule: allowing employees to have a flexible schedule can retain talent or alternative hours as well as work from home.
This approach does work, but not always practical, especially for small to medium sized employers. Employers employ these with various levels of success. But many take time and resources from current operations. Is there a better way?
Here’s an idea: establish an employer sponsored retirement plan. Today’s employees are savvy and recognize salary is just one part of the package. They also demand benefits such as health care, vacation, and retirement. By providing a retirement plan with matching contributions, you create an image of strength when recruiting. Forward looking companies with promising future prospects are attractive to job seekers.
Furthermore, a retirement plan creates an incentive for employees to stay, particularly if a vesting schedule is used (i.e. 20% vested each year for five years). This “golden handcuff” provides a disincentive to leave, but also rewards employees who save with a company match.
Lastly, after initial set-up, a retirement plan requires minimal effort to maintain. A win-win.
The IRS website highlights benefits to employers at this link: Benefits of Setting Up a Retirement Plan | Internal Revenue Service (irs.gov)
· “Employer contributions are tax deductible”
· “Assets in the plan grow tax-free” (Roth) and tax-deferred for pre-tax/employer match
· “Plan options are flexible”
· “Tax credits and other benefits for starting a plan may help reduce costs”
· “Retirement plans can attract and keep better employees, which reduces new employee training costs”
Having motivated and engaged employees benefits everyone. Having an edge can be the difference in success or failure.