An Industry Watch + features a collection of stories, Q+A's, How-To's and more to give readers a 360 degree look at industries.
This month's Industry Watch + takes a closer look at retention, including results from our 100 Best survey on what employees really want and insight on choosing the right benefits for employees.
A Recipe for Retention
Rêve Consulting’s multifaceted approach to keeping talent happy
The talent gap, the bête noire of many an expansionary entrepreneur, isn’t going away. Actually, it’s getting worse. ManpowerGroup took a high-level look at the global talent squeeze, and it’s not pretty: some 40% of employers reported talent shortages in 2016. Software developers and high-tech manufacturers are especially hard hit, but no industry is unaffected.
Recruiting highly skilled workers has always been competitive, but getting them in the door is only half the battle. With suitable replacements in short supply, retaining high performers is just as critical. There’s no silver bullet, but can an optimal mix of compensation, benefits and workplace amenities boost recruitment and retention rates?
Thousands of small- and midsize-business owners lose millions of hours of sleep each year wrestling with that very question.
Some do better than others. Kristin Pardue and Brad von Bank, co-founders of Minneapolis-based strategy and service design firm Rêve Consulting, seem to be on to something. Here’s why the work environment at their 14-person strategy shop is the stuff of local legend.
LAY OF THE LAND
Rêve is “human-centered,” says Pardue. “We want to understand what our team members value and deliver value beyond traditional compensation and benefits.”
Turns out that’s a really research-intensive project. To make it happen, Rêve’s leadership draws from multiple data sources:
Job-leveling resources: For compensation research, Rêve uses open-source job-leveling websites such as Payscale.
Anonymous employee feedback: For a peek behind the curtain (at Rêve and competitors), Pardue and her team use employee feedback websites such as Glassdoor, where people can rate and comment on their work experiences anonymously.
Competitor research: Rêve benchmarks against companies that hire the same sort of workers, such as Amazon and Pinterest. Pardue and the team look at job postings, content on company websites and other public information sources.
Quarterly surveys: Rêve employees take anonymous, 15-question quarterly surveys about workplace conditions and employee satisfaction. Director of strategy and behavioral design Taylor Larson uses the responses (among a slew of other data sources) to develop and adjust employee-friendly initiatives.
Intake surveys: New hires also complete surveys. “This is an opportunity for us to really listen to new hires and set expectations for the relationship,” says Pardue.
The data doesn’t always lead where you’d expect. According to Pardue, an external survey indicates that new and veteran “Rêvers” consistently favor “making an impact” over financial compensation and traditional benefits, which came in fourth on a recent quarterly survey. Supportive management and likable coworkers scored second and third.
Another surprise: Amenities aren’t everything. Rêve’s leadership considered stocking the fridge with beer at one point, but employees weren’t in love with the idea.
It probably helps that Rêve is literally a stone’s throw from Able Seedhouse + Brewery — one of the many perks of its Northeast Minneapolis location, an amenity in itself.
THE GOOD STUFF
Once a new Rêver is in the door, he or she’s privy to the good stuff: Rêve’s comprehensive benefits packages, singular (and very supportive, from what I saw) corporate culture, and innovative workplace amenities.
According to Pardue, Rêve’s benefits packages follow two overriding directives. One, they’re compliant with current law — no surprise there. Two, they’re selected with the employee in mind. A quick rundown:
Health and dental: Until recently, Rêve offered a health reimbursement account benefit with Gravie, which allowed each team member to choose his or her own health insurance with a Rêve HRA contribution. Due to volatility in the individual market and escalating costs, the company moved to a small group health plan in 2017 (after “huddling with employees,” says Pardue), and now offers mainly low-cost, high(er)-deductible insurance plans. Health savings accounts (HSAs) and flexible spending accounts (FSAs) provide additional security and flexibility.
401(k) plans: You’re never too young to save for retirement. “Whether it’s $10 a month, $100 per month, or more, we strongly encourage our employees to save for the future,” says Pardue.
Cash balance pension plans: Most small companies don’t offer defined-benefit pension plans — heck, most big companies don’t anymore, either. Rêve does. Cash balance plans aren’t as generous as old-school pensions, which deliver set monthly income. Instead, the benefit is a cash balance, similar to (but more predictable than) an IRA or 401(k).
Professional development: Rêvers get $2,500 per year for professional development. Each Rêver’s development plan is individualized; depending on specialty, plans might include conference costs, continuing education classes, certifications or professional society memberships. Team members are also encouraged to go to coaching training through The Coaches Institute. “Our team members co-create their professional development plan,” says Pardue. “We want them to be engaged in their own advancement, not waiting around for us to show them the way.”
Vacation: Rêvers start with three weeks’ vacation. Each year of service adds an added day. After five years, everyone gets a “Rêve Refresh,” a one-week sabbatical. Pardue passionately promotes generous vacation allowances; in a previous life, working at a to-remain-nameless conglomerate, her paltry time-off accruals found her working the day after Christmas.
Family leave: Rêve offers three months’ maternity leave and two weeks’ paternity leave. After new parents return, leadership is super-flexible on scheduling; about 25% of Rêve’s workforce works on modified schedules.
THE NOT-SO-LITTLE THINGS
Rêve’s above-average benefits are just part of the equation; at several points during our conversation, Pardue went out of her way to downplay their centrality. (Though she’s clearly, and rightfully, proud of what she’s built.)
The more exciting piece of the puzzle is Rêve’s holistic, science-based approach to employee well-being. Taylor Larson, director of strategy and behavioral design, is responsible for an impressively comprehensive (and ever-evolving) optimization strategy that draws on insights from behavioral psychology, neuroscience and the emerging field of neuroeconomics. Larson uses these insights to nudge Rêve employees toward positive behavior changes and blunt the negative impact of deep-set biases.
“We help Rêvers bring their best selves to work,” says Larson, “and we’re constantly running tests and making adjustments to find what works and what we can do better.”
Much of Larson’s work involves creating opportunities to give back. Rêvers are strongly encouraged to volunteer at Rêve Academy, a sister nonprofit that grooms promising, disadvantaged youth for creative careers. Thanks to productive (and deepening) partnerships with Minneapolis-area schools, Rêve Academy reaches some 1,000 kids annually, and Rêvers don’t even have to leave the office to do their part.
Larson indulges his fellow Rêvers, too. The FUN Team, an internal working group with a protected budget, plans monthly activities for the whole crew: happy hours, field trips, office parties, the like. Rêvers receptive to callouts earn public recognition for above-and-beyond work. And Rêve religiously recognizes each team member’s work anniversary, no matter how crazy things get in the office.
When it comes to motivating and rewarding Rêvers, no detail is too small.
LEADERSHIP: Kristin Pardue, Brad von Bank
DESCRIPTION: "A strategy and service design consultancy that helps people and organizations innovate and grow."
What do employees want?
Some candid comments from our 100 Best employee survey
The recipe for a great workplace goes well beyond the standard amenities of beer, snacks, foosball tables and beanbag chairs. The anonymous employee responses to our annual “100 Best Companies to Work For” survey go beyond superficial perks: Workplace friendships. Work/life balance. Support from peers and superiors. Open-door policies. Compensation and benefits. Professional development. Opportunities for advancement. These things matter, which is why we asked respondents to suggest positive changes — large, small, or in-between — that they’d like to see in the workplace. Here’s a small sample:
Higher pay. Shockingly, this was a big one. One respondent implored, “Pay [valuable employees] much, much more.” Others were more subtle: “higher wages would be nice” and “increase pay scale in line with local competitors” were commonplace.
Performance bonuses. Lots of respondents asked for bonuses tied to performance, or enhancements to existing incentive programs.
Profit-sharing. Another common refrain. Some respondents recognized the chicken-and-egg reality of profit-sharing programs: one said, “Increase profits and share them.”
Health benefits. Some respondents specifically called out the generosity of their employers’ health plans. Others advocated for more plan choice and lower employee contribution requirements.
Food. Some respondents clamored for free, catered lunches. Others just wanted a stocked fridge.
Tuition reimbursement. Professional development is expensive, apparently. Some respondents wanted their employers to foot a greater share of the bill.
Socialization. Some respondents characterized their workplaces as super-social, pointing to plentiful workplace friendships as proof. One claimed to have “40 to 50” friends at the office. But many others expressed feelings of alienation from their coworkers. Suggested improvements to the social fabric included team-building exercises, office or department happy hours, flexible scheduling, etc.
Personal development. Many respondents sought opportunities for personal development on company time, perhaps following Google’s famous 80/20 allowance. (Spend 80% of your time on company work and take 20% for your own projects.)
Workplace design. Turns out lots of workplaces don’t make a whole lot of sense. Design-related complaints included gripes about closed-off floorplans, open floorplans, poor break room placement, cramping or overcrowding, too few quiet areas, too little opportunity for interaction and much more. Some advocated starting from scratch in new buildings.
Ergonomics. Requests for ergonomic workstations proliferated. Standing desks, comfortable chairs, flexible workspaces — is a remodeling boom on the horizon? Some requests were probably not realistic. One asked for a private chef, on-site massage and daily naps. Many respondents didn’t leave any feedback, but some went out of their way to praise their employers:
“I think we got it figured out here.” “[Let’s] continue to grow and [sustain] the upward movement we are on.” “I don’t know if it could [get any better].” “I’m impressed on almost every level.” “Great place to work!”
Beer is pretty common: Respondents report that 32 of the 100 Best Companies keep beer on tap at the office. But it’s important to note that amenities aren’t always available consistently or in all departments. Plenty of others, like Rêve, are within sight of craft brewery taprooms — almost the same thing.
Choosing the Right Benefits Provider & Packages
Thanks to employee feedback websites like Glassdoor and centralized job boards like Indeed, information (and misinformation) about compensation and benefits flows more freely than ever before.
When prospective and current employees can compare their benefits packages against peers at dozens of comparable companies in a matter of minutes, it’s important to get it right — at least, as “right” as possible with resources on hand.
So, yeah, the stakes are pretty high.
We spoke with Mark Baumann, lead employee benefits attorney at Maslon LLP, to learn what employers can do to make sense of their obligations and ensure competitive benefits packages for their teams. With the crucial caveat that every employer is different and there’s no one-size-fits-all solution, Baumann identified some key questions for business owners and HR professionals to address:
What do my employees do?
Plenty of corporate benefits packages go above and beyond the call of duty, and Rêve’s experience suggests that that’s a solid long-term strategy. But the hard truth is that your company’s benefits need only be as generous as the market will bear.
If you operate in a labor-intensive industry with relatively low prevailing wages, like food service, you probably don’t need to offer a 401(k) match or gold-plated health insurance plans. Where talent is at a premium — advanced manufacturing, IT — you need premium benefits.
What are my employees’ needs?
Assess your workforce’s needs. If the average age of your employees is higher, you’ll definitely want to offer a wide range of health benefits. Defined-contribution retirement plans, such as 401(k) and 403(b) plans, are basically table stakes at this point. Without them, you run the risk of missing out on qualified hires.
If you employ lots of risk-takers, you might want to offer special forms of insurance. For instance, Eden Prairie-based Horizon Agency offers outdoor sports insurance for skiers and other daredevils.
How can I reduce my costs?
Look into cafeteria plans, which allow employees to make before-tax contributions into accounts earmarked for healthcare and dental expenses, insurance premiums, or both.
Cafeteria plan contributions reduce employees’ gross income, trimming their end-of-year tax obligations and reducing employers’ required FICA and Medicare tax payments — a classic win-win.
“Cafeteria plans don’t look great to employees, but they’re very attractive from a tax perspective,” says Baumann.
If you choose not to match or supplement employees’ contributions, the only costs to your company are administrative. Major payroll servicers, such as ADP, handle administration at a reasonable cost.
How do I pick the right partner?
“Picking your outside [benefits] provider is the hardest part,” says Baumann. “One thing you don’t want to do is say, ‘Hey, my brother-in-law does this and I want to give him some business.’ You must do your due diligence.”
You get what you pay for.
In Baumann’s experience, cheap administrators are cheap for a reason: they’re prone to sloppy work that can be very expensive to clean up.
On the insurance front, look for benefit insurance agents that follow the fee-only model, as most financial advisors do these days. Failing that, look for agents that rebate or credit their commissions to value-added initiatives. Baumann recalls an agency that used a portion of its commissions to fund workplace safety programs for clients’ production facilities — a preventive measure that likely reduced insurance costs in the long run.