When you want to attract and retain the best talent possible the “usual” benefits aren’t enough. That’s when you need to put everything on the table and go beyond the standard health benefits, 401(k), and two weeks’ vacation time.
Some companies are sweetening their benefits packages with lifestyle perks, especially ones that help the candidates they want to attract to perform their jobs better.
- Sabbatical --this is more than an extended vacation; it should have a purpose. Perhaps valuable lessons can be learned and shared with colleagues upon completion.
- Training opportunities—Giving valued prospective candidates the opportunity to pursue an advanced degree, or certificate program, or attend conferences and other industry events. In the case of an educational benefit, such as an executive MBA, you can ask your candidate to commit to staying at the company for two to five years after completing the degree in return for expense reimbursement.
- Telecommuting--the ability to do work from somewhere outside the office helps bring some balance into the lives of these sought-after candidates.
- If entertaining prospective clients is an important part of the position--then the offer of a club membership for golf or dining might sweeten the pot. The same goes for positions that require frequent car travel: offering a company car or leased vehicle would be a nice benefit.
- Additional vacation time is always a plus--this is especially true if your candidate has children and receives parts of his vacation based on the local area’s spring break. This consideration will be perceived as targeted and special.
- Severance Pay--a guaranteed severance package and outplacement services. Severance costs the company absolutely nothing if it is never exercised but it does make the candidate feel safe and secure.
When you’ve identified impressive candidates and want to recruit them to your company, or if they’re already working for you and you believe losing them might be a huge blow to the company, or they could potentially be heavily recruited by your competitors, then you might want to consider the use of executive benefits:
- Incentives with a short-term focus, such as an annual executive bonus
- Incentives with a long-term focus, such as a retention/stay bonus, stock awards, and stock options
- Incentives with a long-term focus concentrating on retirement benefits and family protection with death benefits
These types of benefits can be complex for a number of reasons – including legal restrictions, tax consequences, financial reporting, and government regulations. An effective compensation plan looks at the current tax laws and take those laws into consideration. Plan updates are made when favorable tax benefits are found.
Short-term incentive compensation: Objectives for short-term incentives should be SMART — specific, measurable, attainable, reasonable and constrained by time. You either hit them or you don’t.
Long-term incentive compensation: These would be “golden handcuffs,” which ensure longevity and the creation of wealth. These incentives are typically subject to vesting requirements and performance objectives. The main function of the vesting period is to ensure that the executive remains employed by your company long-term and that there are financial consequences to leaving, such as the loss of benefits.
Disability Benefit: Another attractive option allows an executive to receive a benefit if he should become disabled. The disability is based on the executive's salary at the time of the incident.
Death Benefit: A death benefit can also be offered as part of the executive benefit program to ensure that the executive’s family is adequately protected from an untimely death.
In looking at compensation in general remember that these very attractive benefits have serious draw power for the executive or very talented individual you want to attract to your company or to retain with your company. Keep in mind that most executive benefits will occur over a period of years so the impact of time, changing tax policies, and inflation, must all be considered.
In the next issue, we’ll talk more specifically about the types of executive benefits programs available for your use. In the meantime, don’t hesitate to contact your financial services representative for more details and information.
Written by: Victor Ngai, J.D., CLU ®, ChFC ®, RICP ®- President VERITEX Advanced Planning Solutions LLC and consultant of WestPac Wealth Partners. WestPac Wealth Partners is an Agency of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Securities products and advisory services offered through Park Avenue Securities, LLC (PAS), member FINRA, SIPC. OSJ: 4275 Executive Square Suite 800 La Jolla CA 92037 619.684.6400. PAS is an indirect, wholly-owned subsidiary of Guardian. This firm is not an affiliate or subsidiary of PAS. | Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. This material was prepared by an independent third party It contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice. Victor Ngai is not affiliated with Guardian or any of its subsidiaries | CA Insurance License #0I29680 | 2018-64381 Exp. 08/20 © 2018 WestPac Wealth Partners: | WestPacWealthPartners.com