How HR and Finance Departments can Collaborate on Better Retirement Programs
With fear of outliving savings on the rise, Americans are now reevaluating their job market priorities, with retirement benefits taking center stage. Retirement programs have become a crucial consideration for job seekers, with nearly two-thirds (65%) factoring them into their job offer decisions, as revealed by a 2023 Buck survey.
Surprisingly, 61% of the respondents believed they could secure a more favorable retirement package with a different employer, despite an overwhelming 91% of HR professionals believing their company's retirement packages are competitive in the job market.
As an HR executive, one of your responsibilities is ensuring employees understand and appreciate the company's rewards offerings. This is a crucial step in retaining key employees and their institutional knowledge. However, your audience isn't limited to employees. You also must effectively communicate the value of their retirement plans and any potential improvements to key stakeholders, especially finance executives.
We asked two of our partners, Phil Merdinger and John Lowell, to reference their decades of success helping HR departments design effective and rewarding retirement plans for some advice. Here’s what they say about bridging the gap between HR and finance leaders to create retirement programs that are more beneficial for employees:
When speaking to a CFO, make sure you have hard costs and benefits, not abstract or theoretical ideas.
Directly measuring the ROI of retirement plans is challenging, but it isn’t impossible. There are ways you can demonstrate their effects, such as unwanted turnover, lower labor costs and employee satisfaction and retention.
When it comes to designing retirement plans, it's not just about cost. An effective retirement program delivers what your employees perceive as significant added value.
Surveys can be extremely valuable tools in identifying and incorporating employee preferences and priorities into your plans. Seeing their thinking on tradeoffs is valuable; understanding the features that your employees consider valuable is important.
Collaboration between HR and finance is not just beneficial; it's essential. This partnership is vital in balancing affordability and sustainability when designing retirement plans, making both you and the finance team feel valued and integral to the process.
More companies are rethinking their retirement plan strategy and looking for ways to help employees build a solid foundation for retirement while providing the company with predictable, stable costs. New plan designs, such as market-based cash balance plans, can help achieve this goal.
In conclusion, with Americans growing increasingly concerned about affording retirement, offering and promoting a solid retirement program is the perfect opportunity for you to make your company more competitive in the job market.