As part of our ongoing effort to better understand the state of the 401(k), we’ve been speaking with benefits decision-makers across industries to gather perspectives. Last month we heard from HR and finance leaders. This month, we sat down with a small-business owner who implemented a 401(k) for his team, and he didn’t mince words. 

Jim Brennan is the founder of PS It Matters, a mission-driven software company that partners with retailers to support nonprofits through everyday business transactions. He had some strong opinions on an employers’ responsibility to their workforce — an outlook shaped by decades of experience building and leading multiple software teams at scale. 

Brennan recently shared his thoughts with Basic Capital on retirement benefits, running a company that is in tune with its employees, and what he feels his responsibility is for his employees’ well-being after retirement. 

The following is our conversation, edited for length and clarity.  

Basic Capital (BC): So you offer a 401(k) to your 11 employees. What made you decide to do that?

Jim Brennan (JB): So whenever you’re looking at trying to put together a package of benefits, you’re basically trying to cover the waterfront initially, which I don’t think necessarily is the right approach. And by that I mean you check off a bunch of boxes and say, “Hey, we offer this as far as PTO, we offer these health insurance benefits, we offer this retirement benefit.” We offer these things so that when you've got the job description up on a job site, everybody goes, “Oh yeah, okay. They offer all that stuff.” 

If I were setting up a new company tomorrow, I would say we shouldn't have just checked off boxes. For example, for almost three years we’ve been on a four-day workweek. That has been an absolute home run as far as recruitment. It was the easiest decision yet. That worked in large part because it’s novel. What Basic Capital is doing by redefining the 401(k) would be something far more interesting to me than what we currently do. The biggest problem with 401(k)s generally is a lack of education. We held an hour-long meeting where somebody came in and explained it to them, which to me is again like checking off a box. 

BC: Tell me a little more about your thoughts on educating employees about benefits.

JB: If you’re not going to educate your employees upfront or ongoing about a retirement benefit, then I wouldn’t offer one. Because then all it’s doing is costing you money to set up and administer, and the business owner isn’t really getting the benefit of employee retention because essentially they’re just saying, “Yeah, I do it, but I don’t really care.” And if that’s the outcome of a benefit, something’s wrong.

BC: I see. You don’t offer a match to your employees. Do you think offering a match would change the value of the plan for your employees?

JB: Actually, when I was setting up the account I asked my employees if offering a match would impact their desire to participate or how much they diverted into their 401(k)s. I got kind of a ho-hum answer across the board, so I didn’t end up doing it. I’ve even considered adding one, but haven’t, because I’ve already included other benefits they’ve requested — ones which have nothing to do with retirement savings. Above all, it’s about listening to your employees.

BC: As the owner of the business, what responsibility do you feel you have to set up your employees for a financially stable retirement?

JB: The minute you start to think you have a responsibility to anything other than providing employees a great job, fair wages, great benefits, and a great work environment to advance their career, you’ve gone wrong. The minute you become social-services director for them at your own expense, assuming that it will somehow benefit you or the business, is illusionary at best. 

BC: You believe that your role as an owner has its limitations.

JB: They are there to work, and while I love my employees and they love me and everybody’s working together like one big happy family, it doesn’t always work out. That’s because they have their own families. They have their own dreams and aspirations. You don’t want to get into a position where someone leaves and you feel, Oh my God, I can’t believe they did that to me! They didn’t do anything to you. They did what you wanted them to do. They gave all that they could in that period of time, became better each step and now they’re going out on their own.

So, to tie it back to providing benefits like a 401(k), that’s a great way to set them up for success long-term. But it’s not to hold them. It’s not to control their future decisions. If you can get to a point where, when someone moves on, they can look back and say, “That was a fantastic opportunity. I really enjoyed going to work every day, and it set me up for my new opportunity,” then you’ve truly done your job as an employer.

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Brennan’s perspective challenges the conventional practice that retirement benefits are an employer’s responsibility. Instead, he leans in on asking employees their preferences and then offering those benefits. While he acknowledges the value of offering financial education, he prioritizes developing an environment and culture where employees can grow and thrive. 

What do you think? Is he wrong? We’d love to hear your stance, and if you’re a small business owner who offers or is thinking about offering retirement benefits to your employees, get in touch. We’d love to hear more.