The unemployment rate is at its lowest since before the Great Recession. What this ultimately means is that job seekers are in the driver’s seat and they can afford to be more picky with job offers. Competitive pay is not enough in a market like this - what separates landing a potential star employee versus missing out on them often comes down to the tie breakers: employee benefits.
Competitive paid time off, health insurance and company sponsored retirement plans are critical for landing and retaining quality employees. Gone are the days where simply offering health insurance or a 401(k) was sufficient to attract and retain talent. Star employees know the market for their services is competitive and because of this many are all too willing to move on to greener pastures if lured with the promise of a better total compensation package.
While more time off and a better health insurance plan are additional costs that may not be in the budget, a better 401(k) plan doesn’t necessarily fall into the category of better equals more expensive. In the case of 401(k) plans in particular, cost and quality are often inversely related.
It’s very easy for an employee or prospective employee to check on the quality of most employers 401(k) plans. Services like brightscope.com not only provide publicly available information through the form 5500 filing but also rank plans using a proprietary methodology. A low plan ranking could be a turn-off to potential employees and may be taken as a sign that the firm is not serious about providing top quality benefits to employees.
Additionally, a quality retirement plan has secondary benefits as well. One of which is that reasonable costs not only contribute to higher balances and therefore higher employee satisfaction, all else being equal. A better plan also decreases the likelihood of a 401(k) related lawsuit from a disgruntled or dissatisfied employee. Such 401(k) plan lawsuits are on the rise recently and they are increasingly targeting smaller plans.
If you’re serious about attracting and retaining the best talent in your field then better employee satisfaction through higher quality benefits should be something you consider. Starting with the 401(k) is an added bonus as there are likely hidden savings and room for improvement in your current plan. Given renewed focus on retirement plans by regulators such as the Department of Labor (DOL) a regular review of the plan is not only a good idea but may be required as part of your regular fiduciary oversight anyway.
Putting your best foot forward to attract and retain star employees is something that can only be done one step at a time. It is critical to regularly evaluate whether benefits offerings are competitive just as one must do with compensation. According to a study recently conducted by MetLife, employees who are satisfied with their benefits are the most loyal; with over 70% percent of those surveyed reporting that they are “very loyal” to their employers. Improving your firm’s overall benefits package and starting with a 401(k) plan review is a quick and inexpensive way to make immediate improvements and retain happy and productive talent.