Sponsoring retirement plans helps owners take care of business and their employees.

By Christine Ngeo Katzman

In order to keep customers satisfied, Steve Klein takes care of his employees. He provides paid vacations, an annual holiday bonus and a company-sponsored retirement plan - some atypical benefits for small building firms, he says.

"We want to do what's best for our employees," Klein says. "If we take care of our people, our people will take care of our customers."

Building Relationships
As president and owner of The Klein Companies in Victoria, Texas, Klein and his 25 employees provide residential development, architectural design, interior design and construction services. One arm of his business concentrates on designing and building custom homes.

To ensure quality, Klein keeps a staff of framers, painters, carpenters and superintendents on payroll instead of hiring contractors.

"When you do one-of-a-kind design/build customs, people have high expectations of what they're going to receive and the experience they're going to have while you're building their homes," he says. "In order to maintain the same quality and the same experience to the customer house after house, you need to keep the same craftsman house after house."

Although construction workers typically receive higher hourly wages when they work as contractors, his staff would rather be exclusively employed, Klein says. During a labor shortage several years ago, other companies tried to woo away many of his workers with higher pay. "We did not lose a single employee throughout that national crisis," he says. "It's because we take good care of them."

Klein started a 401(k) plan about five years ago to help his staff - a handful of managers and about 20 field personnel - save for retirement. "Typically construction people live from paycheck to paycheck," he says. "Unless something is taken out on a weekly or monthly basis, they'll never save money. We wanted them to be able to save money and someday be able to retire."

After one year of service, employees become eligible to participate in the 401(k) plan, and more than 70% do. Participants can contribute up to 15% of their compensation, choosing a variety of investments including aggressive stocks and more conservative bonds. The business, in turn, has the option of matching the funds or making other contributions. In addition, employers have the flexibility of creating vesting schedules to encourage long-term loyalty.

Klein chose Wells Fargo's retirement services because of his longstanding relationship with the financial institution. His company has been in business for 12 years, and he has been a Wells Fargo customer for more than 10. He has business and personal deposit accounts as well as a variety of commercial loans. "We do absolutely as much business as we can with Wells Fargo because we know we will be taken care of," Klein says.

A Simple Process
Similarly, Watsonville, Calif.-based Del Mar Food Products Corp. sponsors a profit-sharing retirement plan to help employees save for their futures. The company has processed frozen fruits and vegetables, including strawberries, peaches, spinach and bell peppers, on the same 12-acre facility since 1959.

Although union workers with their own pension program make up 80% of its staff, the company wanted to provide for everyone, says P.J. Mecozzi, the firm's president. Because of decreased profits, the company had stopped contributing to an existing profit-sharing plan for its nonunion workers-managerial, administrative and clerical, he says.

When he became president in 1986, Mecozzi turned around the business by investing in new crops and exiting from others. In addition, he phased out the previous retirement plan and started one with Wells Fargo. Del Mar Food has contributed the maximum 15% of employee compensation into the plan almost every year since the program's inception in 1989. Recent legislation increased the ceiling to 25% of total participant compensation with a maximum contribution of $40,000 for any participant.

As a Wells Fargo customer since the 1960s, the company has a revolving line of credit, property loans and its checking account with the bank, so "we had a lot of confidence in the [profit-sharing] plan when it was brought to us as a possible way for us to go," Mecozzi says. "I thought that the Wells Fargo plan made a lot of sense for us because it was reasonably simple, not complex."

Rewards and Incentives
The profit-sharing program rewards longtime, loyal staff members and helps attract new employees. "We had looked around for what we thought best suited us based on the growth prospects of the company and the needs of the employees," Mecozzi says. "We wanted to get a plan together that would hit the ground running for the folks that had been here."

In addition, prospective employees see the benefit as a huge incentive to join the company. "We have new employees that really see the value in the plan," Mecozzi says. "It's been a very good thing for employees, especially younger ones, to see how much wealth they can accumulate with this type of program."

Not only does the plan help Del Mar Food attract and retain employees, but it also serves as a tax deduction.

Educating Employees on Their Level
Both Klein and Mecozzi have been extremely pleased with their plans and the customer service they receive. Their Wells Fargo Investments financial consultants make an annual trip to meet with employees to discuss performance and investment decisions. "We're in a position to better understand what we need to do based on our time horizons to get the most out of the plan and make as intelligent decisions as possible," Mecozzi says.

Klein chooses to hold those meetings in a fun, casual atmosphere. Each year, he hosts a barbecue for his loan officer, financial consultant and employees to talk about business as well as socialize.

This summer, the financial consultant met workers at a job site. He stood in the Texas heat to discuss concerns over the falling stock market. Workers feel more comfortable and can become better educated when someone comes to their turf. "Construction people that work with their hands don't sit down and watch CNN financial news or look up their stocks on the computer," Klein says. When someone explains the process in person, "they listen, they understand and they learn," he adds.