Is your small business planning to hire soon? If so, you need a way to attract qualified employees as job candidates. Maybe you’re not planning to hire—but if so, chances are you’re concerned about retaining the workers you already have. Either way, the Transamerica Center for Retirement Studies’ 15th annual Transamerica Retirement Survey has some useful advice for you.
First, you’re right to be concerned about keeping your current employees, because hiring is on the rise. The survey says 72 percent of companies polled have hired new employees in the past 12 months. In addition, salary competition is heating up, with more businesses rewarding existing employees with raises. A whopping 74 percent of companies have increased salaries in the past 12 months.
Beyond raises, another way companies are retaining qualified workers—and attracting new ones—is by offering retirement plans.
Some 79 percent of companies overall now offer 401(k)s or similar plans, up from 72 percent in 2007. This isn’t limited to big companies, either: Among companies with 10 to 99 employees, 73 percent offer a retirement plan.
Not only are more companies offering retirement plans—they’re also being more generous. Nearly 80 percent of companies that have plans offer matching contributions, up from 70 percent in 2012.
Even if you can’t afford to give your team raises, implementing a retirement plan is a smart way to reward them (and to attract new job candidates).
The economic recession brought savings to the forefront of many workers’ minds. The study found more employees are participating in retirement plans than in years past, and they’re saving a higher percentage of their salaries, too.
Retirement plans aren’t only for big companies. Today, you can find 401(k) plans even for one-person businesses. Instituting a retirement plan benefits you, too, since a raft of studies have shown that small business owners often fail to plan for their own retirements, assuming they’ll sell their businesses and live off that income. Check out the IRS and SBA websites for guidance on choosing the right type of plan for yourself, your business and your employees.
You say you already offer a retirement plan to your staff? Here are some ways the study suggests you can make it even better:
- Make it more convenient for employees to save. Consider automatically enrolling employees into the plan or automatically increasing their savings annually (with opt-out options, of course).
- Make it easier for employees to invest wisely by offering professionally managed accounts or asset allocation suites. About two-thirds of companies with retirement plans offer the services of a professional investment advisor, while slightly more than half offer target date funds that change allocation percentages as participants get closer to retirement age, and 56 percent offer target risk funds or strategic allocation funds that match investments to participants’ tolerance for financial risk.
- Make 401(k) plans open to part-time employees. Currently, just 49 percent of companies do this.
- Educate employees about the value of their retirement benefits. Bring in experts from your retirement plan to periodically talk to employees about the plan options and encourage employees to contact the plan administrators for more information and advice.
These days, employees will get retirement plan options at most big employers—and most small ones. Don’t put your small business out of the running when it comes to attracting and keeping employees by failing to implement something so simple.
Your SCORE mentor can help you figure out how retirement plans and other benefits fit into your employee attraction and retention strategies. Visit www.score.org to get matched with a mentor today.