Retaining top-tier talent in specialized roles typically requires more than standard benefits. Offering thoughtfully designed, customized retirement plan options is a way to address the unique needs of these professionals, helping ensure they feel valued and motivated to stay.
Nearly every industry has those critical roles that are challenging to attract and retain. Such positions have a limited talent pool that can create an intense competition for talent. Because of this, traditional recruitment and retention strategies often fall short in enticing these specialized employees. Competitive compensation matters, but they also seek benefits that offer unique advantages to their situation.
Losing employees in such positions can be costly. Depending on the position, the cost to replace a highly specialized employee can be up to 400% of their annual salary. This is much higher than the cost of replacing other types of employees, which can range from 30–50% for entry-level employees and 125–150% for mid-level employees.
Creating an innovative retention strategy
To address such challenges and costs, employers tend to always be looking for creative benefit strategies to help retain these specialized roles. Strategies that can offer real and attainable rewards directly tailored to address the retention concerns of such a unique group of employees.
One way to get started creating this strategy is by reviewing the wants, needs, and goals of these in-demand employees. Analyze their priorities and what you know about why they leave or stay in their roles. Using this information, an employer can tailor benefits to help address their specific needs and preferences.
Possible elements of a customized retention strategy:
Enhanced retirement plans
Customized retirement plan options can help meet the unique financial and retirement planning needs of employees in specialized roles, making them a valuable tool for retention and job satisfaction.
- Custom vesting schedules: Use tailored vesting schedules for in-demand roles that may have longer training periods or require specific skills, providing an incentive for employees to stay longer.
- Dynamic contribution schedules: Use tiered matching or non-elective contributions to reward specialized roles who dedicate their working careers to your organization.*
- Cash balance plans: Integrate a hybrid defined benefit (DB) plan that acts like a defined contribution (DC) plan, but with the predictability of annual retirement income. This can be appealing to employees in specialized, high-stress roles who value stability.
- Equity-based retirement plans: Provide stock options or an equity stock plan to employees in specialized roles to align their retirement benefits with the company’s long-term success.
- Non-qualified deferred compensation plans (NQDC): Offer higher earners the ability to defer more income than allowed in qualified plans.
- Specialized retirement planning services: Present targeted retirement education and one-on-one financial planning services that cater to the unique financial goals and retirement needs of those in a specialized role.
- Phased retirement programs: Allow employees with in-demand skills to transition into retirement gradually, combining part-time work with access to retirement benefits to retain their valuable skills longer.
* May require additional testing and costs.
An example of a customized retention strategy: Hanging on to helicopter pilots
The challenge:
A health care organization needed to recruit and retain helicopter pilots, a skillset that was extremely difficult to find.
The primary obstacle was that the pilots were W-2 employees and didn’t meet the ERISA definition of “members of a select group of management or highly compensated employees.” This meant they were unable to be added to either a 457(b) or 457(f) retirement plan, making additional benefits difficult to deliver.
The solution:
A non-ERISA retention bonus plan was created. This enabled the organization to offer employer contributions to almost any employee in the organization, alleviating the need for the employee to be in a managerial position. As such, a program specific to helicopter pilots was created, with shorter term repeatable bonuses paid every third year. This kept the benefit attainable for the targeted employees, while always keeping a retention bonus in front of them.
The results:
The bonus improved pilot retention. Eighty-three pilots have received or are on track to receive bonuses through the program.
Not indicative of future results. Results will vary based on retirement plan characteristics.
Additional options
Student loan repayment assistance
If the role requires certain education and training, student debt may be a top financial concern. Updated legislation lets employers modify their plans to match student loan payments with contributions to the employee’s retirement account.
Sign-on bonus
These can influence not only recruitment but encourage certain tenure if a repayment is required for someone who leaves before a certain period.
Non-ERISA incentive bonus
Use current turnover data to encourage retention over a length of time where a bonus outweighs the cost of turnover.
Combined sign on and retention bonus
Consider using a sign-on and retention bonus together to provide attainable benefits and the desired retention. For example, to retain an employee for 3 years, a sign-on bonus could be offered that the employee must pay back if they separate employment within the first 12 months. In addition a retention bonus would pay out after 24 months and again after 36 months of employment. The idea being to provide easily attainable benefits that are always close to paying out.
Home down payment assistance program
A unique spin on a retention bonus. Such a program would provide benefits towards saving for a house down payment. It can also have the added value of helping in-demand employees establish roots in the community, which could be particularly helpful for roles in geographically remote or rural areas.
Going beyond the basics with enhanced plan design
Successfully recruiting and retaining such specialized roles requires a thoughtful, and strategic approach that goes beyond the conventional processes. By understanding and addressing the unique challenges associated with these positions, organizations are likely to not only fill these critical roles more effectively but also help ensure these talented individuals are integrated and retained within the company.
It’s important to work with a retirement service provider who understands and has the expertise to consult on options to help deliver the desired results. If you’re looking for options that could work in building a customized retirement plan for specialized, niche roles—reach out to your Principal® representative.
