The idea that health, drug and retirement benefits draw in top executive talent is overly simplistic and worth delving into deeper, according to Jonathan Foster, vice-president of executive compensation at Accompass Inc.
The vast majority of organizations hiring executives offer a benefits plan, so having one is no longer a distinguishing factor for an employer, said Foster at an event held by Accompass in Toronto on Wednesday. Indeed, 99 per cent of respondents to the firm’s recent total rewards survey indicated they have a benefits plan.
As well, the traditional assumption that benefits plans are an excellent tool for retention should be continually examined, said Foster. He noted it’s become more of a trend for hiring employers to assess the benefits that executives were offered in their previous employment and match them accordingly, if not improve upon them. “If you have someone who is coming from 100 per cent drug coverage, coming down to 80 per cent is going to seem like a huge jump just because they have to open their wallets at the drug store,” he said.
In addition, being paid an executive-level salary doesn’t mean executives are any more secure about their retirement prospects, said Foster. While 80 per cent of survey respondents said they do provide retirement benefits, that leaves 20 per cent that don’t. Foster has had conversations with executive clients telling him they’re simply not ready for retirement.
Such executives are aware, as well, that they;re expensive for an organization to keep around if they aren’t confident they can stop working and retire, said Foster. “It may have been a candid conversation, but the point of this individual was that, a dollar is a dollar, wherever they want to put it towards incentive. What I’m looking for is to plan for my retirement.”
Ultimately, said Foster, it’s key to ensure the budget going towards compensation is actually providing the rewards executives find most desirable.