Businesses all over the United States are seeing changes in their workforce as baby boomers begin to retire and more and more millennials enter the workforce. In fact, according to a U.S. Bureau of Labor Statistics study, millennials became the largest generation in the labor force as a whole in 2016.
At times, millennials have been criticized for their performance in the workplace. Some employers take issue with their work habits, their work/life balance requirements, their professionalism, and their responsibility. Other employers welcome their fresh perspective, modern market insight, commitment to creative solutions, and forward-thinking nature.
Millennials also have their share of gripes with the more traditional, older work force. Many younger workers participate in the “gig” economy as opposed to looking for full-time jobs, or become entrepreneurs themselves so that they can build their dream life. Many younger workers are dissuaded from joining the full-time workforce due to low starting pay coupled with high employment prerequisites. Low starting wages also lead to high turnover as millennials often bulk up their resumes only to move on to greater opportunities. Misconceptions about retirement also leave millennial workers feeling jaded and fearing that they will never reap the benefits of saving for retirement.
Whatever your take on millennials in the workforce, this younger generation will be the one to inherit your small business’ legacy within a decade or three. And, business owners must act as fiduciaries for the company, which means that they must focus on retirement plan management in a way that solely prioritizes the financial well-being of their employees.
So, how should 401(k) plan management be explained to this younger generation of workers, given the current complicated (and occasionally tense) relationship between older and younger members of the labor force?
The most important factor to consider is that the millennials in your office represent the future of your company – because when it is time for your retirement, a younger worker will likely take your place. Whether your millennial employee has an entry-level job, or has been hired into a middle management position, they deserve just as much financial security and well-being as your employees that are closer to retirement age.
Take the time to explain your retirement plan design to your millennial employees. Many companies simply hand out a pamphlet or brochure about 401(k) plan design and choosing a 401(k). This is a bad practice for ALL of your employees – not just your millennials! A retirement plan consultant can help you educate your employees by simplifying the information about your retirement plan design so that it can be easily understood. The knowledge you gain from 401k consulting is absolutely worth sharing – your millennial employees will appreciate your care and attention.
When you provide employees, especially younger employees, with good wages and competitive, generous 401(k) packages, those employees become increasingly loyal. For millennials, who are infamous for jumping from opportunity to opportunity, loyalty is a resource that must be cultivated in order to secure your company’s future.
Lastly, be open to feedback from your younger employees and prioritize promoting them. Millennials have just as strong of a desire to build their financial futures as older employees, and if their contributions to the workforce are not commensurate with employer contributions to their retirement plans and annual salaries, the millennial worker will be more likely to jump ship and leave you with a vacancy.
Proactively including your millennial workers in your retirement plan design is a matter of respect. There will always be tension and resistance between workers of different generations – and each has much to learn from the other. A 401(k) consulting service can help you identify the best retirement plan designs to avoid employee turnover and cultivate a generation of workers that are loyal to their employers. Remember, an employee in their 50s will have very different retirement plan design needs than an employee in their 20s – and if your 401(k) plan design mainly benefits your employees that are closer to retirement, you may not have any employees left to run your company when your staff retires.