|
Employers Should Consider Front-End Planning Rather than Tail-End Outplacement Services To Retain Key Executives John P. Beavers Employers are coming to the conclusion that tail-end outplacement benefits have much less value in retaining key executives than front-end planning benefits. As a result, employers are re-thinking the package of perquisites offered to key executives in an effort to encourage their retention rather than promote their departure. During the 1980s, before lateral moves became more common, executives who were enticed to positions with new employers negotiated for and were given outplacement benefits to aid in their departure if expectations were not met. Employers willingly agreed in advance to pay for outplacement consultation and headhunter fees, office and secretarial services, income tax preparation fees, severance pay, and other benefits to facilitate a subsequent move by an executive if he or she quit or was discharged. Many of these employers are now finding more value in spending money up front for benefits and services in order to assimilate key executives with the employer and its community. The cost of these benefits and services, especially when they are designed to cover a group of key executives, is not as substantial as the cost of having to replace key members of the management team. Often, the employer finds that it receives "double" value for providing such benefits and services: The new executive will not only be better assimilated with the employer and the community, but will also have more time to focus on employer and community activities. Employers have found that helping executives with personal investment, compensation, estate, and financial services over their careers is a valuable tool in retaining these key executives. Often these services include assisting executives with planning for:
These services typically include finding investment advisory services to fund necessary savings. Most employers have found that the cost of providing these benefits and services for a group is often less than what it would cost the executives to obtain these services separately as individuals. The cost is even less when the employer can find a single source to coordinate the provision of these services. Employers have also found it advantageous to find a source for these benefits and services that is not represented on the employer’s governing board. One of the disadvantages faced by any executive is the expectation of doing business with the institutions or companies that the board members represent. This conflict can be avoided by going to an independent source. Because confidentiality is important to any executive, especially to those with employers in small or rural communities, some employers have found it propitious to use a law firm to coordinate perquisite benefits and services. The attorney-client privilege will increase confidentiality and, perhaps more importantly, protect confidential information from being discovered in the event of any unforeseen litigation or enforcement action. Employers in small or rural communities have found it beneficial to give access to such benefits and services through larger financial and commercial centers. This has helped overcome executives’ perception that working in a smaller or rural community where such services are not as available will result in a competitive disadvantage over working somewhere else. Many employers are discovering that being on the leading edge of employers offering these benefits and services has given them a competitive advantage in retaining their key executives. These employers are finding that an executive is more likely to remain if he or she cannot get comparable benefits or services elsewhere. Finally, employers are realizing that helping executives plan for education savings, retirement savings, tax minimization, survivor protection, estate success and transfer, and asset protection over their careers results in the executives’ having more time and better attention for the employer’s business. Because of our client demands for such benefits and services, Bricker & Eckler has teamed with Merrill Lynch to provide executives with integrated planning over their entire careers from a single source. For more information, interested employers or executives should contact John Beavers at Bricker & Eckler or Clayton ("Rusty") Jones at Merrill Lynch.
|