Most business startups are focused on selling their products or services. That's understandable. If you're not selling, you're not generating revenue, and without reliable cash flow, your company struggles to survive. But not too long after launching a business, you're looking at hiring your first employees. You want to make sure you get the right employees from the beginning. Employee turnover is a costly proposition, especially for a fledgling business. It is estimated that it costs 2.5 times a person's salary to replace a lost employee. That's as much as $75,000 for an employee making $30,000 per year.
Retirement Services & Financial Advisors - Serving Columbus & Beyond
One of the best ways to make your employees happy and less likely to leave your company and take another job may be to offer a small business retirement plan. In fact, nearly half of American families have no retirement savings account, even though the average retirement savings of American families is $95,776. That number can be deceptive because the median amount of savings for families is just $5,000--hardly enough for a healthy retirement. That counts those with savings and those without. The median amount for those with savings is $60,000. It's no wonder many American employees surveyed have said they would leave their job that has no retirement plan if they had a chance take one with a good plan. Other reasons to offer a plan include the tax savings for business owners and retirement advantages for them.
The U.S. unemployment rate just dropped to 3.9%, a level not seen since the year 2000. While this is definitely good news, it also creates small business hiring challenges. Attracting top talent is hard enough, but it is even tougher in this kind of a marketplace, where nearly everyone who wants a job has one. So as a small business owner, you have to come up with innovative ways to recruit talented people. One way to do this is by offering a robust 401k retirement plan from a 401k company.
Considering the Millennial generation's detachment from politics, religion, and marriage compared to previous generations, it should come as no surprise that they also self-report a lack of engagement at work.
Companies looking to hire from the pool of 75 million young workers face increased pessimism about business's role in society as well as the one-two punch of low engagement and low commitment.
If there is a solution, it's to adjust to the times. That starts with understanding the root of the change.
Millennials, defined as those born between 1981 and 1996, are higher educated than any previous generation, and yet they enter a world that no longer offers the pensions that incentivized previous generations to stay at the same company for a lifetime. This factor contributes significantly to the "job-hopper" stereotype of younger workers today. Whereas Baby Boomers were rewarded for their life-long loyalty with a guaranteed monthly income in retirement, today's workers, particularly in private industries but increasingly in the government sector as well, are largely responsible for their own retirement. Add an average student loan debt of $50,000 and it's not surprising that young people are willing to jump ship if a new job offers even 25 cents more an hour.
Millennials also report low engagement at work, a costly revelation that's due in part to 60% believing that companies care more about themselves than society as a whole. Engagement, in practical terms, means caring. Overcoming this pessimism will take more than an offer of employment.
Lead by Example
To boost engagement, engage. A strong benefits package goes a long way toward building a strong team. And if retirement benefits are explained well, managed well, and regularly communicated to employees, they can become more than just a stack of paperwork filled out at the start of a new job; they can serve as a reflection of the company's commitment to its workers.
Communication is key. With consumer confidence soaring, there's no excuse for mediocre optimism among your staff. The stock market in 2017 experience a 20% gain in 401(k) accounts, the largest in four years and "the second-longest in history." There's money to be made in well-managed 401(k) plans. One problem is that employers aren't communicating this as a perk akin to salary.
A Pew study in 2016 found that "Younger workers are generally confused about many aspects of their plans, and more than a third of those under 30 could not name the type of retirement plan their employer offers."
The survey also found that young workers want to be able to take their retirement with them if they do leave, because 60% of those under age 30 don't anticipate working for the same company into retirement.
"Less than half of workers under 40 said they understood their retirement plans well enough to be able to estimate how much they would get at retirement. Those in their 20s were less likely to be able to estimate their benefit than those 30 to 39 (28 percent vs. 57 percent, respectively)."
In a low-unemployment economy, it's more important than ever to stay competitive. You can't keep Millennials from shopping the market for a different job, but with a genuine investment and competitive benefits, you can show them that different isn't necessary better. You do that with high quality, well-managed plans.
Life Inc., Retirement Services can serve as both advisor and third-party administrator, offering the perks of high-end, well-managed 401(k) plans, as well as the tax benefits normally reserved for large companies. Contact us today to find out how your retirement plan can attract and retain new talent with a local 401(k) plan.