I was reading an article the other day “Even 75% of Americans in the best 401(k) plans won’t have enough to retire” and its conclusion is that companies should increase their matching contributions and the government should limit retirement-plan withdrawals which focus only on the symptoms and not the root cause.
We are either an employee at the mercy of what is offered. or the employer unsure if the plan they have is the best option.
Now I am not saying that the 401k is bad, but I am saying that it does not solve the issue for why companies are unable to retain employees because after all, that’s the reason that most employers start a plan in the first place.
Look no further than the start-up culture, employees are willing to work for lower wages for the long-shot chance of making it big, beyond that is the sense of being in this together, sink or swim.
No, don’t start paying your employees less and give them stock, instead give them the next best thing, a profit-sharing plan which if it is implemented right can bring the result you have been looking for. But done wrong and your employees will see it as no different than a bonus that they don’t get unless they leave your company.
What leads to this perception, well if a profit-sharing plan is by itself, then that generally means annual statements that everyone forgets about it. Instead, employers that do it right, treat the profit-sharing process as they would an annual shareholder meeting.
But many business owners are very private with their business and money, read the millionaire next door and it documents that case alone.
Company structures are changing from the traditional hierarchy top-down approach to free-forming teams, i.e. doing what it takes to get the job done, no matter the department. Today’s workers are looking for a place they can belong; the traditionally adversarial relationship between management and employees is slowly becoming a thing of the past, good riddance. People don’t leave companies, they leave managers (owners for smaller companies).
Many employers gain their customers by some form of selling and do very little to continue to sell to their employees. Employers can do this by bringing on a proxy, a person that both knows the company and the employees. What I am talking about is a plan advisor, not the person that just explains what a mutual fund it, but instead sells the company and the plan to the employees with ongoing and personal advice.
Empower the right financial advisor with your profit-sharing plan and you will have employees for life, working towards your vision.
Tell me what you think or request a topic for my next article.