401(k)s ‘Essential Tool’ for Recruitment

Employers have always been competing to hire the best. And employers use various tools to attract and retain them. One of the most important, argue recent blogs, is the 401(k).

“Offering a high-quality 401(k) plan is an essential tool to add to your HR toolbox,” writes Roger Lee in “How 401(k)s Can Help Recruit and Retain Employees,” posted recently on Workforce magazine’s blog. Lee argues that doing so is a way to meet the challenge of a “tight labor market,” as well as retirement-related concerns.

The “Human Interest” blog offered by San Francisco RIA Human Interest Advisors agrees, noting in a recent post, “How a Smart 401(k) Investment Strategy Can Help Recruit and Retain Workers,” that small business owners can better compete with “big players” in a time of low unemployment and a small pool of highly skilled workers in some fields if they offer a 401(k).

“Recruiting and retaining top level employees is a complex task for the employer,” the post asserts, adding, “many smaller employers avoid the entire 401(k) issue due to fears and concerns about cost.” Nonetheless, it argues that “There are strategic and financial benefits to using a 401(k) to recruit and retain workers” and that offering one can give an employer “a unique competitive advantage.”

Lee identifies three ways that he believes a “high-quality 401(k)” can help an employer to attract and keep employees:

1. Attracting “top talent” and building teams that have a high level of performance. Lee contends that through a “top-notch” 401(k) an employer can demonstrate that it is “committed for the long term.”
2. Tipping the balance. When potential employers offer comparable salaries, a 401(k) can help set an employer apart and convince an employee to accept an offer.
3. Increasing retention. Lee argues that a 401(k) can be “a great safeguard” by serving as an arrangement that employees “would lose out on” if they left and worked elsewhere.

And what are the features that can make a 401(k) “top notch”? Lee says that they include:

• immediate eligibility to participate in the 401(k);
• offering plan options that have low fees, allowing employees to retain more of their earnings; and
• an employer match or contribution.

“The bottom line is that your company’s success is tied directly to the quality of its workforce,” says Lee. But the Human Interest blog adds that there is another, broader benefit: enhancing retirement readiness. “The retirement crisis can be helped by small and medium business owners,” it suggests.