Employee Retention and Non-Qualified Plans
Updated: Oct 8, 2019
In today’s business environment with low unemployment rates and key skills in short supply, key employee retention probably makes more impact on the bottom line profit than any other factor.
According to the Society for Human Resource Management:
It costs and average of 6 to 9 months’ salary to replace an employee
According the Center for American Progress:
It costs as much as 213% of annual salary to replace a high earning key executive
Actual costs are much higher while the employee is being replace and trained because of lost productivity and customer frustration at the missing service provided by the key employee.
Actual costs are much higher for a missing key executive because usually the CEO or owner has to divert their time to cover for the key executive and this detracts from overall company growth and planning.
What is the solution? How to keep great key employees at every level of the company?
Higher salary and 401K plans seem to do little to encourage employees to stay.
Group benefits and 401K plans are highly regulated and can’t be customized for a particular employee.
The complex ERISA rules prevent flexibility and are enforced jointly by three of your favorite friends – the IRS – Internal Revenue Service, the DOL – Department of Labor, and the PGBC – Pension Benefit Guarantee Corporation. Not a combination that is going to generate lots of flexibility.
How would you like a patch of blue sky?
Non-Qualified Employee Benefit Plans can benefit both the employer and the key employee:
How Both Employer and Key Employee Benefit
Employer
Key Employee
May select which employee can participate in the plan
Feels valued and encourages loyalty
Not subject to ERISA restrictions of qualified plans
Plan benefits are not limited
No IRS approval of plan needed
Gives key employee something to fill retirement income gap
Flexibility to customize plan in any way
Ability to customize to each employee's actual needs
Ability to include any restrictions to encourage employee retention
Customization can give employee more eventual benefits than they ever expected
A Non-Qualified Plan gives both the employer and the employee so many more features than an ERISA restricted qualified plan
Dave Gillespie of GTED is a Non-Qualfied Plan Adviser certified by NAPA, the National Association of Plan Advisors.
Click below to set up an in-person, phone, or online meeting to plan how a Non-Qualified Plan could help your business succeed.
Contact me by email at dave@gtedllc.com or text or call me at 817-881-5631.
Let us help you customize your own Personal Financing Solutions.