How do you benchmark and update your NQDC plan to stay competitive and attractive?

1 Understand your goals and objectives

Before you compare your NQDC plan to others, you need to have a clear vision of what you want to achieve with it. What are your business goals and strategies? How do you align your NQDC plan with them? How do you measure the success and effectiveness of your plan? How do you communicate the value and benefits of your plan to your key employees? These are some of the questions you should ask yourself and your stakeholders to define your NQDC plan's purpose and direction.

2 Review your plan design and features

Once you have your goals and objectives in place, you need to review your plan design and features to ensure they meet your expectations and needs. Eligibility should be considered; who can participate in your plan and how do you select them? Contributions should also be taken into account; how much can participants defer and how do you match or supplement their contributions? You should also review distributions, investments, administration, and compliance with relevant laws and regulations such as Section 409A of the Internal Revenue Code, ERISA, and state laws. By doing so, you can ensure that your plan design and features are up to date.

3 Benchmark your plan against the market

To stay competitive and attractive, you need to benchmark your NQDC plan against the market and see how it compares to other similar plans in your industry, size, and region. You can use various sources of data and information, such as surveys, reports, consultants, or peer networks, to get a sense of the trends and best practices in NQDC plans. You should look for gaps and opportunities to improve or enhance your plan based on the market data and feedback.

4 Update your plan based on your findings

After you benchmark your plan against the market, you should update your plan based on your findings and recommendations. You may need to make minor or major changes to your plan design and features, depending on the results of your analysis and your goals and objectives. You should also document and communicate any changes to your plan participants and stakeholders, as well as update your plan documents and agreements.

5 Monitor and evaluate your plan performance

Finally, you should monitor and evaluate your plan performance regularly to see if it meets your expectations and needs. You should track and measure key indicators, such as participation rates, contribution amounts, investment returns, distribution patterns, employee satisfaction, retention rates, and tax efficiency. You should also solicit feedback from your plan participants and stakeholders to identify any issues or concerns and address them promptly.

By following these tips, you can benchmark and update your NQDC plan to stay competitive and attractive to your key employees and achieve your business goals and strategies.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?