Acquiring & Retaining Key Talent – The Argument for the Ultimate Employee Experience

With the employment arena heating up and the war for talent becoming more intense, it is more critical than ever before to ensure that we are doing everything possible to entice employees to join the organization and once there, to stay and enjoy a long career. While progressive benefits packages are a given with the standard fare of medical, dental, vision, life and AD&D programs, those are just table stakes in our current economy. Successful attraction and retention strategies include deferred compensation plans (i.e., profit sharing, cash balance plans, executive and key contributor bonuses, retirement plans, etc.) for targeted individuals. Historically referred to as “golden handcuffs” since the mid-70s, these programs typically offer a variety of allurements that typically don’t mature until the eligible employees remain with the organization for an agreed upon period of time set at the time the benefit is offered. These programs include long-term bonuses (traditionally called Long Term Incentive or LTI), SERP or Supplemental Executive Retirement Plan usually entirely funded by the employer and executed through universal and variable universal life insurance plans. Excess Benefit Plans are also an option worth considering which are Non-Qualified Defined Contribution plans that target employees whose benefits are limited by section 415 of the IRS code. Most critical, when reviewing these creative compensation options for select employees, it’s important to complete a wholistic compensation assessment and valuation to be able to identify a clear roadmap on how to optimize compensation strategies for key talent.

By breaking total cash compensation into to individual components, it is easier to determine a strategy for all key employees. Retirement planning, for example, provides options available to employers to optimize their corporate contributions as well as ensuring that highly compensated employees have the ability to optimize their contributions, otherwise limited by Section 415. Employers can also compose key team contribution plans as a part of the non-qualified retirement planning aspect of the 401(k) program. These are often referred to as carve out plans and provide employers with a great deal of flexibility to create appealing compensation strategies.

Finally, the options related to deferred compensation plans offers yet another compensation alternative for executive and select key contributors. These deferred compensation plans, while they are longer in term than the short term or annual incentive plans, address retention as they do not pay out until a predetermined tenure has been met by the employee. These plans have a number of component design features to be used as levers to address the needs of the employer as well as the benefits of the employee. Using a combination of short-term and long-term incentive plans for select employees, employers can create a compelling case to retain talent. By deploying creative alternatives to traditional compensation plans, employers increase the employee experience and leverage their ability for recruitment and retention of key talent.

Published by Maggie Debner

HR Executive Coach & Consultant

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