As a small-business owner, you’re likely always thinking about how to attract the best employees, and how to keep them with your company. They are, after all, one of your greatest assets.
Today’s workforce — and especially tomorrow’s workforce — is more attuned to what companies are doing to improve the quality of life for their employees.
According to a survey published in Plan Advisor magazine, 40% of small-business employees would leave their current job for one with better benefits, like a retirement plan. Honestly, why shouldn’t they? That’s not a bad thing. After all, nobody wants to work the rest of their life, and we’d all prefer to set sail into retirement as soon as possible.
One of the best benefits you, as an employer, can provide for employees is a 401(k) retirement savings plan. A lot of smaller companies don’t offer a 401(k) plan, because they feel it’s too complicated and expensive. However, setting up and maintaining a company 401(k) is actually quite simple and affordable.
In fact, most small businesses are eligible for a special tax credit for starting a 401(k) plan — up to $500 per year for the first three years. (Business owners should consult with their tax adviser regarding tax matters.) As the business owner, a 401(k) plan helps with your own retirement needs.
More importantly, seen as an investment, the amount you put toward a 401(k) plan to match your employees’ contributions eventually will pay for itself, and more, considering the more talented employees you’ll be able to recruit and retain for years to come.
Remember the 40% of employees willing to leave a job for better benefits? Wouldn’t you rather be on the desirable side of that equation, positioned as a preferred and valued employer? The best way to avoid turnover, and keep current employees you’ve already invested so much time, energy and trust in, is to invest in their future before they consider leaving the company.
To help company owners with the 401(k) plan, your corporate partner should conduct employee education meetings. Doing so helps ensure that participants understand the importance of saving for retirement, how the plan works overall, investment options and how valuable the 401(k) plan benefit is that your company is offering.
Staying knowledgeable about the company 401(k) plan and its status is a must for an owner, or “plan sponsor.” I meet with company owners on a regular basis to make sure the plan design is accomplishing their goals, that the investment options in the plan are still performing as expected, and that participation is where it should be.
Make sure your plan sponsor reviews your plan often in order to stay aware of trends in the industry, such as offering Roth deferrals, auto-enrollment and target date funds. As funny as it may sound, planning for life after business is a big part of running a successful business. Don’t be afraid to embrace this new workforce’s demand for excellent benefits. Invest in them, their future and their well-being. Doing so will make them more invested employees, which will help the business’ bottom line. Employees who are less stressed about their financial future are more productive.
By helping employees prepare for retirement, you’re doing the right thing for them, yourself and your business.
Editor’s note: Rob Frits is a vice president and senior regional investment officer at Arvest Wealth Management in Bentonville. The opinions expressed are those of the author.