Overcome Staffing Challenges with Customized Compensation and Benefit Plans

Overcome Staffing Challenges with Customized Compensation and Benefit Plans

Last updated on February 20th, 2024

As an accountant, I can always depend on numbers to make sense, until they don’t. Take the talent shortage, for example. According to the AGC 2023 Construction Hiring and Business Outlook Report,  69% of survey respondents expect to increase headcount this year. At the same time, 80% indicate they’re having a hard time filling some or all salaried or hourly craft positions. Results are higher for respondents in the Northeast (76% and 88%, respectively) and New York (83% and 86%, respectively).

Add to that the existing shortage of 650,000 construction workers, plus the expectation that more than 40% of the current U.S. construction workforce will retire in the next decade, and the math just doesn’t add up.

The equation gets even more complicated. There are 67 workers for every 100 open jobs in the U.S. according to the U.S. Chamber of Commerce. People are staying out of the workforce. Immigration is at an all-time low. Headlines are screaming about shortages in doctors and nurses, government employees, teachers, accountants, public service employees, techies, and more, making competition for limited human resources fierce and the need for a comprehensive, multi-faceted talent acquisition strategy table stakes.

Put simply, there are more jobs than people and that’s not going to change. What has to change is how companies acquire and retain talent, while reinventing how work gets done. This includes coming up with engaging compensation and benefits approaches that strategically differentiate your company from competitors’.

For example, what if an employer created a customized benefit for different employee classes that provides a modest benefit for less experienced team members, but grows as they become more experienced? It could have a multiplier effect based on length of service but allow the team member to receive payments at milestones so the benefit is real now and not 30 years away. The employer could contractually put money away for an employee, get a tax deduction, and gain a competitive retention and attraction tool.

According to Lou Bach who leads RBT CPA’s Spectrum Pension & Compensation affiliate, “These Non-Qualified Deferred Compensation Plans are usually reserved for top executives and have a salary deferral component, like 457 plans; however, since they are employment agreements, they are not limited to highly compensated employees. Rather than salary deferral, all contributions are provided by the employer. I’ve seen them referred to as ‘Tactical Employer Compensation Arrangements.’ We have actually done a number of these for clients, dating back over the last decade. Given today’s shortage of skilled labor, I believe we’ll be seeing more of these types of arrangements going forward.”

Willard Financial Group out of Springfield, MA, for example, has been custom designing select incentive plans since 1996 for key employees with specialized skills, ranging from executives and project managers to machinists and nurses. According to James D. Percy, J.D., CLU, ChFC, “Because these are non-qualified plans, such as deferred compensation and SERP (supplemental executive retirement programs), we can provide companies with the ability to pick and choose who participates and the benefit level for each employee. Once the company decides which employees will participate, we custom design a simple plan tailored to each selected individual or group.” That custom-designed deferred bonus plan with ancillary benefits can be tailored to the needs of each employee.

So, an employee with young children may find an agreement that pays a child’s college tuition in ten years, plus offers life insurance meaningful, while someone retiring in 10 years may prefer a payout equal to three times compensation at the end of a long-term project. The key is to design the custom plan to be meaningful and motivate each individual employee.

In addition to adopting creative approaches to pay and benefits, you may want to check out recruiting and retention resources at the AGC, U.S. Department of Labor, U.S. Chamber of Commerce, National Center for Construction Education and Research, and the Building Talent Foundation (BTF). Also find unique talent resources via organizations like Helmets to Hardhats, the Rework America Alliance, and Opportunity@Work.