Culture is key in company success -- How small businesses can improve their culture with benefits

Culture is one of the core components of what differentiates a workplace from others in its industry. Company culture can really make or break a business. A great way to develop your company’s culture is not just by getting a ping pong table for the office or weekly happy hours, it is to show you really care about employees by taking care of them with employee benefits — whether that be PTO, paid holidays, health insurance, retirement plans or more.

The problem with workplace culture relying on employer benefits is that some companies are not large enough to benefit from group plans or they simply do not have enough hands on deck to manage these costly benefits. As a result of the shortage of benefits that work for smaller companies, over 85% of small businesses don’t offer a 401(k) because the retirement plan is too costly to set up and manage, requires a lot of time and is one of the more daunting benefits for a company to offer. However, offering a 401(k) savings retirement plan is a great way to tell employees we not only care about you now, but we also care about you and your future.

Though some companies are actually not capable of affording a full portfolio of benefits, times are changing — starting with the SECURE Act. The Setting Every Community Up for Retirement Enhancement (SECURE) Act) was signed into law in 2019. In 2019, the SECURE Act put in place some regulatory changes that many in the industry see as paving the way for greater 401(k) adoption.The SECURE Act supplies a more simple way for small businesses to set up safe harbor retirement plans. This plan also allows part-time employees to potentially benefit from employer benefits. But, for now, PEPs are the talk of the town.

Pooled Employer Plans (PEPs) were introduced by the SECURE Act. 2021 is when PEP legislation kicks in, so it’s on everyone’s radar. According to SHRM, “PEPs allow unrelated employers that meet certain requirements (such as having the same ‘pooled plan provider,’ typically a bundled recordkeeper or third-party administrator) to band together to participate in a single retirement plan, in order to take advantage of their collective purchasing power to obtain lower fees and better services.” Prior to PEPs, companies could only join a Multiple Employer Plan (MEP) if there was some commonality (all part of the same trade association for example) with the companies. PEPs make it so any group of employers can join together and have a pooled plan. This leads to economies of scale and some administrative efficiency.

With the intention of providing the best benefit to employees, or even any retirement benefit at all, PEPs are certainly an improvement on MEPs in terms of inclusivity. But the PEP’s value-proposition is still at least a decade behind other modern alternatives.

Though more thoughtful and accessible retirement plans are available, it does not always mean that they are the best fit for you and your team. When it comes to retirement plans for small businesses, the biggest value that any pooled offering provides to smaller employers is that costs and administrative burden can be distributed amongst all companies in the plan. A pooled plan simply finds efficiencies in scale. However, fintech provides a superior solution where companies can have the flexibility of their own unique plan while costs and administrative burdens are reduced through technology and automation rather than scale.

At the end of the day, as long as you go into providing the best workplace possible for employees with pure intentions, employees will hopefully take notice and you will be able to attract and retain the best-of-the-best.

Daniel Beck has launched numerous businesses in a variety of industries. After multiple successful exits, his focus has shifted to helping hard-working Americans prepare for retirement and enabling small businesses to proactively help their employees work toward financial freedom. Daniel’s entrepreneurial success was the direct result of building a talented team of employees and partners. Offering a solid set of benefits was always a priority in his previous companies but a retirement plan benefit was always out of reach. Out of a sense of frustration with the financial industry and the realization of a big market opportunity, Daniel and his long-time business partner and brother, Nate, set out to create 401GO, the solution they wish they had as small business owners.