Landing high-quality hires is one event that's a business owner's equivalent of hitting the jackpot. Attracting highly desirable candidates and then onboarding them is where most of your business-owning clients spend their time and money. Now, give them some new options to help retain them.
"Most employee turnover is voluntary."
Highly skilled professionals have more job opportunities to apply their talents, thus requiring a greater focus on employee retention strategies. According to the ADP Research Institute, the monthly turnover rate among business owners in the U.S. runs around 5 percent. When positions become vacated, workers leave voluntarily 60 to 70 percent of the time.
Job-Hopping as A Lifestyle
It's incredibly challenging to find affordable methods for employee retention when job-hopping is considered customary. Seventy-five percent of 18- to 35-year-olds consider changing roles every few years as professionally beneficial, an opinion that's shared by 59 percent of Generation X (35- to 54-year-olds) and 51 percent of baby boomers (55 and older).
Paul McDonald, Robert Half senior executive director, said business owners must never lose sight of the importance of keeping valuable employees happy and satisfied.
"In today's candidate-short market, keeping key performers engaged should be top of mind for managers," McDonald advised. "Businesses worried about losing talent to the competition should focus on improving corporate culture and strive to be the type of company employees want to stay with long term."
Whether your clients feel like their key employees are dipping their toes into the job search waters or your clients want to take a more proactive approach to retention, here are a few strategies for using life insurance to help keep employees content where they are:
1. Split-dollar plans
A split-dollar plan consists of a company-owned life insurance policy on an employee, with the company and the employee generally splitting premium payments. The agreement can allow the employee to name the beneficiary or have the company and employee each name a beneficiary for a specific share. If the employee leaves the company, the policy can be surrendered by the company in exchange for its cash values, essentially reimbursing your clients for their investment. If an employee dies while covered by a split-dollar plan, the company and beneficiaries generally split the death benefit as agreed.
2. Supplemental executive retirement plan (SERPs)
Show your clients how to offer their employees a deferred compensation plan funded with life insurance with a supplemental executive retirement plan (SERP). This strategy allows your clients to pay the premiums on a life insurance policy designed to accrue cash values that are paid out to the vested employee once they reach a qualifying age. Upon death, the company is the beneficiary.
Protecting Your Business With Premium Financing
When workers are truly indispensable, their leaving can be a major setback to a company's ongoing performance. But when you have a thriving business and your financial resources are tied up ensuring its continued growth, where do you find the money to pay for the premiums on your employees' life insurance?
Implementing a premium financing plan through Global Financial Distributors, your business owner clients can get the funds they need to pay premiums on employee life insurance policies, key person life insurance policies and policies funding buy-sell agreements without tapping into the company's capital.
Learn more about key-person insurance and the employee-retention opportunities premium financing can make available by reaching out to a GFD financial services advisor today.