Advantages of a Retirement Plan as an Employee Recruitment Tool
Among the many advantages of a retirement plan for employers is its great potential as a resource for new employee recruitment. In today's overheated job market, top candidates weigh the pros and cons of many different employment possibilities, and often an overall benefits package can be a key factor in their ultimate choice.
Retirement plans can hold tremendous sway, since job seekers may look to employer-sponsored savings and financial planning guidance to help them plan for their future. For many individuals, such plans represent a reliable and convenient approach to saving money for later in life – something they may struggle with if left to their own resources.
Businesses wishing to keep a competitive advantage should strongly consider leveraging their retirement plan as a way of attracting potential new hires, while also enhancing their brand as an "employer of choice."
Start by designing the best possible 401(k) plan for your team. Then you can frame a compelling recruitment message around that plan.
Build in the most attractive retirement plan features. When employees enroll in a plan and contribute via payroll deductions, they can steadily build up their 401(k) investment with minimal hassle or inconvenience. Automatic enrollment features make the process straightforward, particularly if they have the choice to opt out if and when they no longer care to participate.
Key design elements of a 401(k) plan may include:
- Automatic enrollment: An employer can make automatic deductions from an employee's earnings, unless the employee opts not to contribute.
- Automatic escalation: An automatic escalation feature in 401(k) and other similar plans increases employees' automatic enrollment contribution by a certain percent annually, until they achieve a set deferral rate. This option is entirely voluntary on the employee's part.
- Qualified Default Investment Alternative (QDIA): This feature provides the investment selection for participants that have not made a choice, while offering fiduciary protection to plan sponsors.
Match your employees' contributions. A matching contribution to a retirement plan by the employer can be a powerful resource in recruiting and retention efforts. In this arrangement, employees get a company match on their contribution up to a certain percentage as defined by the employer. An employer's matching contribution – up to applicable limits – is tax-deductible.
Incorporate profit-sharing into your plan. With profit-sharing, eligible participants receive a contribution to the plan based on a pro-rata allocation of a specified dollar amount, or a percentage of their compensation. Day-to-day operations and procedures should be in place for all features of the 401(k) plan. The plan document will dictate how the profit sharing contribution is calculated.
With a high-quality retirement plan in place, the next step is a major commitment to marketing this benefit wherever your recruitment efforts take place. Communication steps can include:
- Encouraging your employees to spread the word about this great retirement plan throughout their personal and professional social media networks.
- Preparing written and online materials outlining the key features and advantages of the plan. Provide the written materials to interested applicants at tradeshows and job fairs, as well as during individual job interviews.
- Creating a special "Save for Your Future" page on your careers website, with all the relevant facts and statistics you can provide for a broader picture. Including an easy-to-read FAQs page allows job candidates and other site visitors to quickly research the plan.
A company's investment in a comprehensive 401(k) is considerable. But the advantages of a retirement plan are well worth the time and expense if the result is increased job recruitment efforts and – just as importantly – successful long-term employee retention.