Retaining top talent in the construction industry has always been the key to long-term success. However, in today’s competitive market, lucrative offers are enticing construction professionals to switch companies. Competitors might seek out your top performers, offering higher salaries or attractive retirement benefits.
Recently, Twelve Points worked with a mid-sized construction supplier to solve this problem. We helped this firm implement a Non-Qualified Deferred Compensation (NQDC) plan and provide solutions to retaining its top talent.
The Challenge
A construction supplier with around 60 employees approached us to assist them in helping to retain four key employees who had been with the firm for years.
These experienced professionals were instrumental to the company’s success, and the team needed to find an innovative way to secure their continued loyalty. At the same time, the company had to ensure any new incentive offered would still align with business goals.
Our Approach
When this company approached our team at Twelve Points, we applied our structured, results-driven approach to design a custom solution. First, we met with the construction supplier to gather preliminary information about the business’s finances, long-term goals, and workforce needs. This initial analysis helped us understand the specifics of the challenge.
From here, we worked with the client and its accountant to gather in-depth facts about company retention goals and the unique financial priorities of the four key employees. In doing so, we discovered that two of the employees had children that were 5 and 7 years away from college, which added to the complexity of their financial planning needs. These facts helped to clarify that the deferred compensation plan would be the most effective employee retention tool in this case because it allows for flexible distribution options for each participant. With this information, we built a customized strategy using a NQDC plan to incentivize the employees to stay.
The NQDC Plan would both allow the employees to defer some of their income now to save taxes and plan for things, like upcoming college expenses, and allow the company to provide an additional 15% of each key employee’s salary, deferred over time. Employees could then schedule withdrawals to align with major financial milestones, on a timeframe customized to their personal needs.
The structure provided a strong incentive for long-term loyalty for the employer. If an employee chose to leave the company before the 5-year vesting period had elapsed, the funds would be forfeited.
The Results
Through the implementation of the NQDC plan, the construction supplier has strengthened employee retention. The plan’s flexibility allows the four key team members to align their deferred earnings with personal financial goals, and the potential to save a significant amount of money toward long-term goals.
Company leadership is confident in its ability to retain critical team members now despite competing salary offers. By offering a long-term financial incentive, it has created a workplace that rewards loyalty.
The Twelve Points Difference
At Twelve Points, our clients value us as a trusted advisor. In this case, the company’s accountant recommended our team with trust in our level of service, detailed approach, and innovative ideas. Our collaborative approach with both the client and its accountant demonstrates our commitment to breaking down silos and finding solutions.
The construction supplier now has a powerful tool for retaining top talent while supporting business and employee financial goals. If your company is looking for creative solutions for employee retention, contact us to learn more about our advisory services. We look forward to helping you find the right strategy for your business and your team.
