Sunday 26 May 2019

How to retain your key people with a pension

Losing talented staff costs businesses time and money - here are five tips on how to hold on to valued employees

'Losing talented staff costs businesses time and money' Stock image
'Losing talented staff costs businesses time and money' Stock image

Alan O'Neill

Alan O'Neill, author of Premium is the New Black is Managing Director of Kara Change Management, specialists in strategy, culture and people development. Go tokara.ie

Retention of key talent is a key issue for many organisations. Because our economy is strong, unemployment levels are at a low. From the employee's perspective, in most industries - it's easier now to get a job. In contrast, some employers are really suffering as they struggle to fill key posts.

It's worth giving some thought to what you need to do to retain your key talent. In doing that there are a number of issues to consider, such as the role itself, the level of challenge in the role, the team dynamic and the reward structure.

For older staff, pensions and other protections can be useful incentives, although this is a complex area which requires professional advice.

The Business Risk of Losing Key Talent

Before we get into the options, remember there are lots of negatives that go along with losing key employees.

  • Firstly, the status quo is disrupted. When a key employee leaves, they bring with them all of their years of knowledge, skills and understanding of your business. That along with their goodwill, can leave a big hole in your 'system'. Even if everything that they do is documented and handed over to another employee, it could take a good year or more to rebuild continuity and a rhythm back into the role.
  • If this leaver was particularly effective and popular, their departure can cause an atmosphere of 'mourning' with the rest of the team that can take time to recover from.
  • It can send a negative message to your customers and suppliers and even impact on the reputation of your organisation. You can manage this by publishing an agreed statement, but people will naturally be curious and can often make false assumptions beyond your statement.
  • There can be significant cost in hiring a new key employee. If you have to use a search agency, then there will be a fee for that. When you do find a recruit, they might have to give up to six month's notice to their current employer before they can start with you. If you're poaching that person from a competitor, most likely they will enforce the full notice period. (You'd probably do the same in similar circumstances).
  • When you do hire a new person, they will need time to settle in. That could take anywhere between six and 12 months. In the meantime, the business is being held back from progressing as it should.
  • In addition, the leaver is also taking a risk. They are joining a company that will most likely have a probation period. What if it doesn't work out? What if they just don't settle in?

I should acknowledge here that it's also good to have some turnover of your talent over time. New people bring freshness and new ideas to a team.

After all, there are risks associated with a team where there is no rotation of talent. Complacency can increase, while the level of challenge and newness can decrease. It's a question of balance.

All of this said, it is also fair to acknowledge that you may be glad to see the back of this person.

Not every departure is a negative. But if you value this person highly, there may be some other things you can do to retain them and prevent them even considering a move.

Retention Tips with long-term benefits

Colm Roantree, senior executive, wealth management in Irish Life Financial Services this week shared some thoughts with me on how to meet this challenge of rewarding staff.

1 Look at your key employees through their eyes and make it harder for them to leave you.

It's highly possible that they are getting calls from your competitors, suppliers or even your customers with a view to being poached. Then consider the impact of that.

2 Recognise that your key employees have a life beyond their time working for you. They have families, mortgages and all sorts of commitments.

"Specifically, they have concerns about income protection in the event of illness or death. And as they get older, they will also have concerns about maintaining a certain lifestyle in their retirement," said Roantree.

3 At the very least, remember that you as an employer must provide the facility for a PRSA scheme.

This is a personal pension arrangement where on behalf of the employee, you the employer hold back an agreed amount of money from their salary and pay it into their preferred fund.

4 Consider the options where you as an employer can extend beyond a PRSA scheme. "Options here might include all sorts of income protection for illness and/or death in service.

"And a pension will give comfort and security for their retirement," said Roantree.

5 Importantly, run your numbers and see what the business can afford. Bear in mind that there are options whereby pensions and income protection can be paid for by either or both parties.

The Last Word

If you believe that there is more that you can do for your key employees as suggested above, then seek professional advice.

This is a very technical field that has all sorts of tax implications. So careful planning for the long-term benefit of you the employer and your employees, is critical.

Whether you go this route to retain your key employees, or explore other options, give consideration to what their personal and family needs are.

That will go a long way.

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