Your company’s leadership team includes some of the most critical hires your organization can make. Recruiting, retaining and incentivizing these top employees is often a top priority. But how do successful companies attract the needed talent, especially when need for such talent is in high demand?
The Society for Human Resource Management (SHRM) provides an annual benefits survey in determining whether various employee benefits are leveraged to recruit and retain top talent. The survey discovered that 39% of HR professionals indicated their organization altered their savings and retirement planning to better recruit highly skilled employees. At least three-fifths of respondents expect retirement savings and planning, financial benefits and health care benefits will increase in importance to recruit highly skilled employees.
Nonqualified plans provide a competitive benefit for recruiting top talent. In fact, one study shows that 92% of companies offer such plans.1 These plans allow employers to create enticing compensation packages aligned with individual and company values. For example, the plans can be customized to each executive, providing compensation in a variety of ways for performance-related benefit. At the same time, nonqualified plans give the organization the ability to spread out the compensation expense — often over the span of years — and receive complete cost recovery plus a cost of money.
Recruiting top employees becomes easier with nonqualified plans:
1. Reduce the risk that your competition might get the top talent.
2. Provide a permanent benefit that cannot be matched by your competition.
3. Tailor each plan to meet the specific needs of your prospect.
4. The plan can provide cost recovery to your business and even provide for the cost of money.
5. The plan is balance-sheet-neutral and self-completing when paired with a life insurance policy insuring the top performer.
A retirement plan may be one of the most valuable benefits of employment. The terms of the promise are limited only by the company’s compensation objectives and creativity. You can promise to pay a retirement, survivor or disability benefit; provide life insurance protection; or provide some combination of benefits to the key employee or the employee’s beneficiary. In return, the employee must meet some performance criteria or agree to remain with your company for a certain number of years (or to a specified age) in order to receive the benefit.
By understanding the advantages and risks of these plans, you can ensure that you’re putting them to the best use for your company.
1: Current Practices in Non-Qualified Deferred Compensation. Newport Group, 2019