By Philip Roberts

As I work with my clients and run my own business one common theme I continue to hear is the struggle with retaining employees, especially after the pandemic. While there’s quite a few causes and no easy answers, I thought I’d share some insights into my conversations with my clients on this topic.

What is the value in investing in employee retention:

  • Improved culture and morale with longevity of employees vs high turnover employees
  • Saving time, energy, and money in recruiting and training
  • Deepening relationships with your customers and suppliers
  • More free time and less stress
  • Improved valuation of the business

Businesses where the owner is not actively working IN the business but is focused working ON the business allows them more freedom in their schedule. Additionally, a buyer can be confident that they can step in as a new owner and the wheels won’t fall off. The biggest element of having a well-oiled business that will continue to run if the owner is on a vacation or the ownership changes hands is the management team. Building and retaining a strong management team can be the difference maker to obtaining the freedoms in life and your business valuation goals.

What are strategies that can be utilized to retain employees?

  1. Retirement Plans
  2. Insurance Benefit Plans
  3. Personal Financial Planning Benefits
  4. Non-Qualified Deferred Compensation Plans

Today’s workers are as into the perks of the job as they are the bottom-line compensation. Of course, they will want to be paid well but they also want to have some of the helps that come through employer sponsored plans such as 401k, health insurance, disability and life insurance, and even financial planning services. A 401k match encourages the employee to contribute money to their retirement and a vesting schedule can incentivize the employee to stay with the company. Whether through their own calculations or through a personal financial planning benefit, if an employee knows that their current and future finances will be strong they are not likely to look elsewhere for their employment.

Lastly, companies can put in “golden handcuff” plans with their key employees in the form of non-qualified deferred compensation. This is a plan that has a few perks that don’t exist in traditional retirement plans.

  1. Focus Recipient of Benefit – An individual or group of employees can be singled out to receive this benefit. It does not have to be done equally for all employees like traditional retirement plans. This is a big advantage for companies that have larger number of employees with a smaller group of key or management level employees. Doing a 3-5% 401k match could be a huge number across their whole payroll when they really want to focus that benefit to their key employees any way.
  2. Flexible Design – The dollar amount, conditions to be met, and the time frame of payment are completely up to the employer to create. Common conditions to be met are longevity conditions such as saying with the company for a number of years or to a specific age. The benefit can be paid out as a lump sum or an income stream. This could look like a percentage of their income as a lump or an income stream in early retirement.
  3. Company Owned Asset – The company owns the funds set up to fund this future benefit. If the employee leaves prior to fulfilling the arrangement the business retains the asset.

I encourage you in this time to play offense to retain your key employees and build your management team. This can prevent the pain of losing key people, add time to your schedule, reduce stress, improve the value to your business, and help your employees in their personal financial planning!

Phil Roberts (CFP® CLU® ChFC® RICP®) runs a well-rounded practice of financial planning, investment management, and insurance solutions. He aims to deliver clarity, confidence, and peace to his clients as they move forward in life.  When he’s not working, he’s busy being a husband, father of four, Christian, drummer, and mountain biker.”

Philip Roberts is a registered representative of and offers securities, investment advisory, and financial planning services through MML Investors Services, LLC. Member SIPC Supervisory Office: 4695 MacArthur Ct, Suite 1000 Newport Beach, CA 92660 (949) 660-1717. Transactions may not be accepted by e-mail, fax, or voicemail. MassMutual Financial Group is a marketing designation for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliates and sales representatives. MassMutual refers to Massachusetts Mutual Life Insurance Company. CRN202506-2530660