Profit-sharing plan helps boost staff retention
In-house plan similar to a 401k
Some non-physician employees of the Hedges Clinic in Frankfort, IL, have amassed a retirement fund that totals as much as $500,000 through the practice’s profit-sharing trust. That helps explain why turnover at the clinic is so low. The trust is similar to a 401k plan except that employees do not have to make a contribution. The employee share is based on a formula. Over the past 10 years, the employee share has come out to about 12.5% of gross wages. Some employees have between $250,000 and $500,000 in their retirement plans.
"The amount of money they can produce for their retirement can be quite sizeable," says Frank Schibli, administrator of the practice. However, he emphasizes that the plan "is not a get-rich-quick stock option type of plan."
Employees become eligible for the profit-sharing plan on their two-year anniversary date. They have to be 21or older and have to work 1,000 hours or more a year. They take their money with them when they leave the practice. The fund is self-directed, which gives the employees the opportunity to learn about investments. Employees can invest in whatever they choose, with approval of the plan’s trustees. "We leave it up to the individual employee. It forces them to learn about investing and everybody needs to understand about money to prepare for the future," he says.
The profit-sharing plan is in-house, so its administration costs the practice nothing. Schibli is the plan administrator and trustee and handles all the paperwork. The profit-sharing plan helps retain good employees but Schibli has an additional goal in mind. "I read a lot of financial journals and I am concerned at how low the median asset values of families are. It’s really scary. I made it my goal to make sure the people who leave here are beyond those numbers."