Workforce development: Keeping key employees loyal
If you subscribe to the theory that happy employees are more productive employees, then your employee compensation and benefit package has to “look after them.” This is especially true for key employees.
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If you were to leave your current business to start a new business, whom would you take with you? That’s the question business owners should ask themselves as they begin to identify their key employees.
In this era of labor shortages and poaching, those key or most-valuable employees deserve a little extra consideration when it comes to compensation and benefits. Keeping key employees loyal to the business just happens to be one of six pillars identified in MassMutual’s 2018 Business Owner Perspectives study, and the key to keeping the “keys” is a bit of special tailoring.
If anyone on your staff has earned it, your key employees have. “I think that every business owner would admit that there is somebody in their business that is so key to the business, that has helped him/her grow over time to make it what it is today, and if that person is no longer part of that business, that would cause stress in the business, and the business would probably take two steps back,” notes Tim Powers, president/CEO of MassMutual Wisconsin. “Therefore, I think every owner has to take a really hard look at who are the key people in that business to ensure they are doing what they need to do to retain them.”
In the Business Owner Perspectives study, keeping key employees loyal is viewed as the most important, most top of mind, and most solvable of the core pillars identified, as 79 percent of small business respondents say they either frequently or often think about the issue.
However, a gap lies in what the respondents are offering in terms of benefits, and to whom. In many cases, there appears to be no difference in what is offered to all employees and what is offered to those who are most critical to the success of the business. That’s a mistake.
Not offering additional or specifically tailored benefits to key employees is a good way to lose those key employees. Whether they are valuable assets because of creative genius, relationship-building skills, or sales acumen, holding on to them requires a proactive approach to compensation and benefits.
Employers are giving it some thought. In the MassMutual survey, 43 percent of respondents say they offer generous salary with incentive compensation, 23 percent offer executive life insurance, 20 percent provide financial planning assistance, and 18 percent provide executive disability insurance. Only 9 percent offer the “golden handcuff” known as retirement plans.
To retain key employees, however, offering the right mix of benefits also is important because not all benefits are created equal. In fact, key employees might value certain benefits over others, and competitive pay is only a start. They might covet retirement savings plans, preventive health and wellness incentives, bonuses that are used to pay life insurance premiums, and financial education perks, as well. Benefits such as employer-paid disability and non-qualified deferred compensation can not only help retain the best and brightest, they can help attract them, as well.
What’s the best way to tailor your benefits to the workforce? Powers, an advocate of top executives providing a style of servant leadership that takes care of employees, recommends staying on top of what the local market is providing and internal surveying. “It’s a combination of both,” he advises. “I think you’ve got to look at the marketplace. If someone is going to leave, they are going to a competitor probably, if they stay in that industry. So, what are your competitors offering, and are you staying at least even with what the market is providing?
“The other thing — and we do this here at our firm on at least an annual basis — is to get feedback from our employees and make sure they are happy with the benefits. We’ve made changes over the years due to our dissatisfaction with carriers, and then we’ve made sure we’re providing what’s important to them.”
JP Aime, financial advisor and president of Focal Point Financial Strategies, says that in many cases, business owners rely on good, old-fashioned loyalty and just assume employees will be in play for them for an extended period of time.
“Obviously, there are key non-negotiable benefits that need to be in play for you to be competitive in the marketplace,” notes Aime. “But the above and beyond that, when you look at key employees, what we typically find is that most business owners have an understanding in their head regarding who those key employees are, but yet they don’t typically do a good job of identifying them and then providing additional benefits to those folks to keep them loyal.”