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.
(page 2 of 2)
Andrew Klein, financial advisor and CEO of Focal Point, says most clients actually have covered the basics such as health insurance and 401(k)s, but struggle to identify key employees. They might have an idea in their own minds, but they haven’t identified those in writing and with the executive team or their management team. The question of who you would bring with you if you left not only is a good place to start, but it also makes the process simpler.
The answer of which benefits to offer, Aime notes, “is all over the map,” depending on what truly motivates your key people. “For instance, one of the things a client did is buy life insurance on their key employee for the benefit of their family,” he notes. “It wasn’t any additional compensation. It wasn’t anything like that, it was just something that he [the business owner] deemed as something that would get a response that he was looking for, which was continued loyalty and service to the organization.”
Deferred compensation comes up pretty often, Aime adds, but in different industries. Depending on who those key folks are, deferred compensation might not be enough. “They may be in a position where they prefer immediate gratification, as much of our society does today, so having to wait five, 10, or 15 years to cash in on some deferred compensation — you’d be surprised how many people would walk away from that just because it seems too far out in the future.”
Beyond the keys
The focus on key employees isn’t meant to suggest that other employees should be ignored on the benefit front. For all employees, 54 percent of MassMutual survey respondents say they offer health insurance, 48 percent provide flexible work schedules, 34 percent offer retirement savings, 29 percent supply life insurance, and 28 percent offer disability income insurance. Only 10 percent provide financial education programs. (For what it’s worth, 43 percent claim to offer a generous salary.)
Nathan Brinkman, president of Triumph Wealth Management, provided a case in point and suggested a broader view that extends beyond key employees. After losing a key employee in September 2017, Brinkman was able to hire her back a year later, but an important lesson took hold. “Part of it was me not paying attention to how our business has evolved,” Brinkman acknowledged. “We’re advising business owners that they have to take care of those who are taking care of your business. In this study, it’s certainly key employees, but I would submit in this economy, it’s really all employees because if you lose people that are anywhere near the heartbeat of cash flow in a business, you’re going to feel it.”
Another client, this one in the transportation industry, told Brinkman they could hire 10 semi-truck drivers tomorrow, but they are just not out there. That caused a real shift in thinking about how to retain existing drivers, he notes. “They said, ‘We better keep the truck drivers we have because although we’d love to hire more, we better make sure we don’t lose any on the backside of this thing.’ So, you get more creative in terms of how you leverage your benefits and how you leverage that relationship.”
Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.