3 Ways LGBTQ Business Owners Can Recruit and Retain Top Talent
Savvy business owners realize that recruiting and retaining top talent is a key ingredient in the success of their business. While talented employees may be the most important asset, losing them could also be its biggest liability. An organization’s best and brightest minds often have many employment options, and recruiters could be knocking at their door.
Looking for an original way to persuade key contributors to stay or to attract new superstar employees? Non-qualified benefit plans allow employers to reward the commitment of their most valuable employees with supplemental retirement benefits at a future date. And unlike qualified plans, like a 401(k), which must be made available to all employees, employers can select which employees will receive these benefits and determine the types of benefits provided. Consider the most common non-qualified benefits:
Supplemental Executive Retirement Plan (SERP): A SERP is a type of deferred compensation that is funded by the employer. With a SERP, the employer agrees to pay supplemental compensation in the future, usually at retirement, to select employees – in addition to their current salary and benefits.
Employers can contribute to these plans in a variety of ways. Life insurance is a popular method for informally financing a SERP because it provides a couple of benefits to the employee: The employee’s beneficiaries receive a payment in the event of his or her death, and the policy’s cash value grows tax deferred and can be used to help the employer pay the SERP benefit at some point in the future. In certain instances, the policy can be structured in a way that allows the company to recoup its cost.
A SERP provides key employees an additional financial perk, letting them know their company has an interest in their future, while allowing employers to retain control of the plan payout.
Elective Deferred Compensation Plan (EDC): Unlike a SERP, an EDC is funded from the employee’s salary or bonus, and it allows key employees to defer a portion of their income until a later date, which is usually retirement. These plans provide a sound option for the employees who want to set aside pretax money for their retirement, beyond the maximum contributions they can make to their qualified plans. An even greater benefit to the employee is that employers may choose to match the employee’s deferral up to certain limits, similar to a 401(k) plan.
Bonus Plan: A bonus plan allows an employer to provide added compensation to their key employees. With this kind of non-401qualified plan, employers are able to take tax deductions on the paid compensation, while the bonus amount is taxable to the employee.
As employers sit down with a prospective new employee or strive to retain their top performers, these incentives can be used to sweeten the pot. If you are considering these types of plans, make sure to talk with a financial professional to create a plan that’s right for your business.
Article prepared by Northwestern Mutual with the cooperation of Keller Lindler. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Keller Lindler is an Insurance Agent of NM and Northwestern Long Term Care Insurance Company, Milwaukee, WI, (long-term care insurance) a subsidiary of NM, and a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS) (securities), a subsidiary of NM, broker-dealer, registered investment adviser and member FINRA (www.finra. org) and SIPC (www.sipc.org). To contact Keller Lindler, please email her at firstname.lastname@example.org or visit her website at www.kellerlindler.nm.com. Representative of Northwestern Mutual Wealth Management Company®, Milwaukee, WI (fiduciary and fee-based financial planning services), a subsidiary of NM and federal savings bank.