For the modern CNC machine shop, offering employees comprehensive benefits such as a 401(k) plan and health insurance isn’t just the right thing to do—it’s also good business.
When it comes to machine shop management, small and medium-sized precision manufacturers can leverage benefits to attract and retain talent and ensure long-term growth and stability. Here, we’ll explore five strategies for offering benefits that grant you a competitive edge.
1. Choose a Competitive 401(k) Plan
As precision manufacturers tackle how to run a machine shop and which benefits to offer, one thing has become abundantly clear: one-size-fits-all pension plans are now dated, impractical solutions.
This reality makes 401(k) plans more important than ever. Full-time employees often expect to be offered one, so it’s up to employers to choose a competitive plan that maximizes benefits, optimize it for their workforce, and periodically revisit it to ensure functionality and compliance.
Unfortunately, many CNC shops make the mistake of choosing a plan and forgetting about it. Don’t wait until it’s too late—review your 401(k) offering in detail up front, then again every few years, so your employees know their futures are in good hands.
2. Simplify Retirement Plan Administration with Turnkey Solutions
For many small and medium-sized precision manufacturers, benefits administration can be a difficult part of machine shop management. When you don’t have the capacity to pay a dedicated HR representative (let alone a full department) to handle this task, the responsibility often falls to those who already have too much on their plates.
Thankfully, there are more and more turnkey products on the market that simplify retirement plan administration. While choosing the right option might take a bit more legwork up front, machine shop management and employees will both benefit in the long run.
3. Generate Savings by Covering Your Financial and Legal Bases
When considering which benefits plans and products to invest in, remember that you have a duty to offer diverse, low-risk investment options that will protect your workers’ retirement savings—and you from potential lawsuits.
Diversifying your offerings will save both parties money down the line. You could, for example, choose to provide pre-tax contributions to retirement or flexible health-spending accounts for your employees, or you might set up a forfeiture account to support your own administration of these solutions.
4. Think Outside of the 401(k) Box
Remember that your 401(k) offering should be just the start. Staying competitive in the precision machining industry might also mean exploring other benefits options, such as profit sharing, deferred compensation plans for key employees, different health insurance options, or voluntary benefits such as dental or vision (if they aren’t already part of your base package). The right configuration can give your employees more flexibility without significant cost to you.
It’s also a smart move to offer less obvious kinds of benefits, such as those that improve employees’ work-life balance, provide them with non-monetary bonuses, or extend benefits to their partners or spouses. For instance, there is considerable value in offering (when possible) comprehensive benefits packages that include mental health and wellness or flexible scheduling options, some of which won’t cost you a dime.
5. Harness the Power of Education and Communication
Even if you’ve landed on a creative and robust benefits package to offer your employees, don’t forget that education and communication are also essential aspects of machine shop management. Establish a strategy for educating employees about the benefits available to them and make sure they fully understand the financial fine print of their retirement savings.
For example, we know one NTMA member who has breakfast with each of his employees every year to go over benefits and promote financial literacy, which maximizes their participation and appreciation of the program.
If you’re running a modern CNC machine shop, it’s also critical to educate yourself. Create a strategy for staying up-to-date with government trends and any present or future mandates; if small businesses are suddenly required to offer specific retirement savings options, for instance, your employees (and their retirement funds!) will thank you for taking preemptive action.
Interested in learning more about how to choose and administrate a competitive benefits package for your employees? Join the National Tooling & Machining Association today!
