The concept of "coaching" has become overused, and even abused, in the business world in recent years. That's unfortunate for a company like ours, Coaching Financial Concepts. We've been around for over 20 years, and we apply legitimate coaching techniques that we've adapted from a sports environment to give our client companies that winning edge.
For instance: To turn your company into a champion, you need the best players. And just as professional sports teams will offer creative deals to sign the top free agents, businesses at every level need to offer the best possible benefits package to lure the top talent in their given field.
The Difference Between 'Perks' and 'Benefits'
Different generations often have different priorities. Many articles have been written about the importance of company culture to millennials, for example. One recent study even found that many millennials would be willing to take a $7,600 pay cut in exchange for an "improved quality of work life."
Some companies package those improvements in the form of things like flextime, company rec rooms, casual Fridays and free pizza at meetings. And while those things might be nice short-term enticements, in the end they're really just perks — not actual benefits. In truth, millennials want the same things from their careers that members of every other generation want: the opportunity to do rewarding work while being treated with respect and paid fairly for working a specified number of hours.
Beyond that, what employees value above all else are good traditional benefits packages. That means healthcare coverage and retirement planning. So those are the areas where you have the greatest opportunity to enhance recruitment and retention of top talent. You just have to be smart about it from a financial standpoint.
Healthcare Coverage Is No. 1
As a business owner, you need to carefully evaluate exactly what you're getting with a given healthcare plan. Too many businesses think they need to offer a package with a low deductible, for instance. But in most cases, they're overspending for no reason other than their broker hasn't educated their employees on the difference on the costs vs. benefits.
It's also possible, however, to spend too little on a plan. For example, you might see a rate on a healthcare plan that seems really affordable … until you realize that it doesn't cover specialty medications. For some prospective employees, a plan that excludes their specialty meds could be a huge disincentive.
Also, employers of all sizes are considering beefing up their benefits by including things like dental plans and disability coverage or by offering vision care coverage to the approximately half of the population that wears glasses. That could well be worth the additional cost to gain an edge in today's ultracompetitive job market.
Plan on Offering a Retirement Plan
Every growing company should consider offering a retirement plan. In fact, in some states, once you have a certain number of employees, you're required to offer a retirement plan. In Illinois, where our company is located, the threshold is 25 employees. And just as with healthcare coverage, the quality of the retirement plan can go a long way toward helping to retain most of those employees for a good many years.
But again, do your due diligence. Some employers get in trouble because they have plans that are top-heavy, meaning the owner has upwards of 60% of the plan assets. In these cases, the employer is required to make a 3% contribution to the plans of all eligible employees. So bad management of a 401(k) plan can be costly.
How Do You Sign That Star Player?
Is there anything you can do to retain (or hire) that one employee whose value exceeds all others? Well, you can offer an attractive salary, obviously. Beyond that, you can work in something like a life insurance policy that builds cash value. You have to tread lightly, however, because the law prohibits you from discriminating, or showing favoritism, in how you dole out benefits.
Some employers resort to offering equity, but I would advise against that with a new recruit. To me, it doesn't make sense to give someone a stake in your company until they've proven their worth over an extended period. To use a sports analogy: How many times has your favorite team overpaid to sign a "star" player who has just had a career year with another team … and they never come close to matching that performance once they get the big bucks from your team?
The bottom line is this: You want to reward that star recruit based on what they do for your company — not what they did for someone else's company.
John Gotschall founded Coaching Financial Concepts in 1997.