Investing in Employees: 10 Best Companies for Employee Financial Security
|October 28, 2011 11:30 AM
Despite a tough, volatile economy, 10 small to midsize companies have been able to run successful businesses while bringing stability to employees through strong benefits programs. These businesses have made Principal Financial Group's 2011 10 Best Companies for Employee Financial Security list.
While many companies cut back on health care options, freezing contributions to 401(k) plans or low-balling salaries, Western National Mutual Insurance Co. is applying its slogan, "The Relationship Company," to its 425 employees by offering deluxe benefits to recruit long-term, reliable employees
The Edina, Minnesota-based property and casualty insurance company invests 25 percent of an employee's total compensation on benefits. It pays 84 percent of workers' insurance premiums, and 100 percent of premiums for short- and long-term disability as well as long-term care. The 401(k) plan offers a 100 percent company match up to 3 percent of the employee contribution, and then a 50 percent match up to the next 2 percent of the employee contribution.
In this volatile economy, offering great benefits is a challenge for many small- to midsize companies. Yet despite hard times—the cost of benefits still outstrips the cost of living adjustments, according to a recent Mercer study—10 businesses, including Western Financial, were recognized for their commitment and were named to the Principal Financial Group's 10 Best Companies for Employee Financial Security 2011 list. These companies have shown that a commitment to outstanding benefits can be a factor in having a successful business.
"Companies have been through a lot and have had to make difficult decisions," says Luke Vandermillen, Principal's vice president of marketing for retirement and investor services. "These companies have remained committed to investing in the well-being of the most important asset of the company, and that's their employees."
Western National also offers free loans of up to $1,500 and doesn't ask what the money is for. Employees can get one loan at a time, and payback can be as long as two years through payroll deductions.
One result of these benefits is a 2.8 percent employee voluntary turnover rate, Henderson says. Compare that with the national average of 21.2 percent.
According to data from Principal, its top 10 invest an average 26 percent of total compensation on benefits and have a 9.3 percent turnover rate. All offer health benefits and a defined contribution plans with an 88 percent average participation rate and a 7.6 percent average employee salary deferral rate. In addition, four companies offer a defined benefit plan.
The winners this year come from various industries and average 272 full- and part-time employees.
The winners were:
Associates for International Research Inc.—Cambridge, Massachusetts
For example, workers at the Philadelphia-based Educational Commission for Foreign Medical Graduates get discounts on health care premiums if they complete health risk assessments. Also, employees participating in the company's Total Health Rewards program earn points toward prizes for participating in wellness programs.
Consolidated Federal Credit Union—Portland, Oregon
Educational Commission for Foreign Medical Graduates—Philadelphia
Greeley and Hansen—Chicago
Home Builders Institute—Washington, D.C.
Postal Credit Union—Woodbury, Minnesota
RED F Marketing—Charlotte, North Carolina
Veridian Credit Union—Waterloo, Iowa
Water Environment Federation—Alexandria, Virginia
Western National Mutual Insurance Co.—Edina, Minnesota
At Western National, employees are notified when they are not contributing the maximum amount to their 401(k) plan. While the company recently started automatically enrolling employees and increasing salary deferrals to the 401(k) plan, Henderson attributes the notifications to the 8.9 percent average employee deferral and 96 percent participation rate.
Instead of passing on a packet of retirement plan information, all of Principal's winners offer one-on-one meetings with financial professionals.
Corey Rosen, senior staff member for the Oakland, California-based National Center for Employee Ownership, says providing financial security for employees does help attract and maintain better workers, and ultimately helps the company's bottom line.
"The model that prevails in corporate America today is backwards," he says. "The most important factor [for business success] is employee engagement. When people are distracted and not fully at work every day, they aren't contributing ideas and aren't wanting to stick around."
Source: The Principal Financial Group and Workforce
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