Granted, most employees now move companies about every 3 to 6 years so you could pose the question “What happened to Employee Loyalty?”  Well, I can tell you…

It went to the same place as pension funds, retirement funds, employer provided insurance ( all forms Health, Life, Vision, and Dental ).  These were replaced with things like “profit sharing”, “401K contributions”,  “Employer subsidized Insurance”.  So now employees are giving half-hearted devotion to employers and are moving on to the next better thing (whatever that means, and it is different for each employee).  Long gone is the idea that a company will take care of you and so you can work for and retire with one company. (Nothing new, I know)

As more and more of the benefits that our grandparents received disappeared for our parents, we became skeptical that employers cared about employees at all.  We watched as our parents scrambled to start private retirement accounts, paid more for health care, and now face very uncertain post-retirement lives.

We, hopefully, started 401K’s, IRA, and Roth IRA’s either with an employer sponsored program or privately in our twenties.  The recent down turn in the economy erased about half of mine but hey, I still have a few years and hopefully it recovers before I want to retire.  Now employers are dropping even the limited contributions they were making to our future.  Companies are scaling back on Employer contributions to 401K’s and Profit Sharing programs citing that it is a cost savings measure to get through the current economic crisis.  That implies that once the crisis is over the benefits will come back.  Wake up!  The benefits wont come back.

Most employer sponsored 401K programs have a 5 year vesting schedule, it is my belief that this is a main reason most employees hang in for 5 years.  It is generally accepted that the best way to get a pay increase is to find a new employer, and it creates some excitement about the new situation, it doesn’t seem like the same old day-to-day as the last job (even if it is).  With minimal or non-existent employer contributions to retirement accounts we are stuck with private accounts with no vesting schedule (no reason to stay with the employer).  I predict that employees tenure with companies will drop in the future to 2 to 3 years instead of the 3 to 5 years currently.  Why?  When you take away a 3% match in 401K your just gave your employees a 3% cut in pay because they now have to make up the difference towards their retirement out of their own pockets.  Your employees will need to make more money, and like I said above, new employer = more money.

Employers ask yourselves what is the higher turnover rate going to cost you in recruiting, training, lost productivity, lost client relationships, and lost knowledge?  Is it really worth cutting these benefits?  I think these maneuvers are very short sighted, and will cost you more in the long run.