By Matt Redshaw
Last week my friend Nicholas Aultman and I presented to business leaders in Vancouver.
We asked the question: Why do you spend money on group retirement and benefits? They gave two basic answers, which reflect attitudes of other business leaders.
1. Attract and Retain Employees
2. Do Well for Employees
We then asked: Are your employee benefits and retirement plans actually achieving these two goals?
If you ask employers whether they are getting a return on investment (ROI) on their employee compensation investment, they might be unclear on the answer. If you ask their employees, the answer may also be fuzzy.
If you are going to spend money on your employees, don’t waste it. Make sure you are getting full value, and they are too. Here are 3 ways to maximize value for you as an employer and 3 ways to maximize value for your people:
How to maximize value for your organization
1. Best Bang for Buck: Do you have a process to benchmark the features of your plan, and how much you are paying relative to the market? Having a robust review process can save you money, or help you deliver more value for the same money. We come across organizations spending too much for what their staff are getting.
2. Only Vacuum When Your Wife’s Home: I read an article once by a guy who only vacuumed when his wife was home. She didn’t believe or notice that he’d done it if she didn’t see it. Similarly, employees won’t know what you’re doing for them unless you tell them. Communicate to your staff how their benefits packages help them. It will give them a sense of the value you’re delivering.
3. Bring It Up in the Dating Process: When you are courting a new employee, talk about the benefits (literally) of being part of your organization. Use clear communication materials to get them excited about the plans you provide. If the plan isn’t exciting, maybe you need a new one!
How to maximize value for your employees
1. Best Bang for Buck: Same answer as above. Don’t just spend money on health and retirement benefits because you feel the need to have a plan. Get as much as possible for your staff. A little bit of research and intelligence yields much greater results for the same amount of money. For example, “Administrative Services Only” benefits plans can allow employers to lower the cost of providing benefits, or give more benefits for the same cost. These options should be explored.
2. Encourage Them to Participate: I spoke to a friend the other day who has been eligible for a 5% matching Group RRSP for 15 years. He has never been part of the plan. Assuming a salary of $70,000, and that he maxed the contribution limit (5% employer + 5% employee), with an investment return of 7%, he would have $187,718 in his RRSP today. He has missed out on something that would have benefitted him massively. You do well by your employees by helping them understands the benefits of participating.
3. Education: We know from research that 47% of Canadians aged 55-64 have never saved at all for retirement. Yet nobody sits down with their spouse at age 25 or 45 and says “let’s have no money when we retire”. It happens because of a lack of education and urgency. Educating your staff on their benefits, insurance and retirement options will help them be more confident and at ease. This is good for them, and helps them perform better at work. Work with a provider that knows how to help you educate and empower your employees.
Are you wasting money on your employees? If you don’t see a clear ROI for you and your staff, you might be. Make sure the money you are investing in your people is actually returning value to you, by helping attract and retain staff, and also to them, by putting their health, finances and state of mind in a better place.