Eddie Diaz

How To Retain Your Key Employees With Eddie Diaz

PSF 80 | Key Employees


When you only have a few employees, losing your top talent can be devastating and can set you back for years. In this episode, the People Strategy Forum welcomes Eddie Diaz, who breaks down the art of retaining key employees. He explores the biggest factors that impact an employee’s decision to stay or leave, and why it is not always about the compensation. Eddie shares different bespoke strategies that could help increase people retention, from deferred compensation plans to retirement plans. He also discusses the right way to provide company bonuses and create an effective contingency plan.


How To Retain Your Key Employees With Eddie Diaz

We believe that people are at the heart of successful organizations. Team members’ well-being rewards career development, they’re all essential to a happy, healthy, and highly productive workforce. This show discusses those practical effective leadership strategies for top executives, senior professionals, and talent managers that help them retain, attract, and motivate their overall people. I have a great guest I want to talk to you about.

Before we get there, I would like to introduce you to Char Miller. She is our host. We have a number of other hosts who are not going to be able to join us because they’re doing important project work and some other family events in the heart of summer. Char is a wonderful person. We’re just talking about how Char and I have been together for quite some time working together and doing these forums for years now. Char is an experienced HR professional. She’s a serial entrepreneur as she’s got a lot of irons in the fire doing different things. We’re very pleased to have her here. Thank you, Char.

Thank you. My pleasure.

Let’s get ready to discover the secrets of retaining key employees and developing their companies. To do that, we have a very important guest with a solid background in finance and a passion for helping people succeed. He’s a driving force behind Diaz Strategies Insurance and Financial Solutions, embracing the belief that people don’t plan to fail but people fail to plan. That’s what they do.

As a licensed agent and representative, he brings a wealth of experience to the table. We have the privilege of diving into the art of retaining top talent. We’re going to be doing this with some particular bespoke strategies. Let’s welcome the one and only Eddie Diaz. He’s going to be talking to us about a guide to building successful companies while retaining our people.

Thanks, Sam. I appreciate it. It’s always fun to be here with you.

As we get started, tell us a little bit of background and getting into this financial world first, and then what drove you to help people and companies succeed.

I was probably directly affected by the lack of business financial planning. When I was in college, I was originally getting my degree in Business Management because I was looking to take over my grandfather’s businesses. I was going to be an overseer of a few different businesses and each of his daughters was going to run each business.

Unfortunately, he had a major stroke and was unable to continue his business and the secession planning was never done so it just completely changed my projection life. Let’s say I was called to this. I essentially was called to teach small businesses, how to successfully pass their business on, financially plan with and through it, and so on. It’s become a true passion. I love it. It’s super fun.

One of the big things that a lot of small companies deal with is when you have only a few employees, losing a key employee can be devastating. It can set you back years, so it can be terrible. We’re going to be talking about some of that. What are the key things that you think are most important in retaining talent? What are the basics?

Number one is respect. A lot of employees are looking for respect from their management like, “Good job. I’m recognizing what you’re doing,” type of thing. There’s also a culture within the company. People love who they work with and they enjoy the environment. They’re going to be very motivated to continue to show up. You can’t ignore compensation. For the most part, some people are outliers. They’re worth way more than they are, but I feel a lot of people are pretty fair in what they’re worth. They don’t want to be undervalued. They want to be appreciated. Those three things are probably what I would think are the most important. Char, what do you think?

What are your thoughts, Char?

As a small business owner, at one point, one of my companies had about 30 employees, or around 23 to 30. We had six locations, and they were small teams, so scattered. If one person left that particular location particularly a more seasoned person or one that understood the compliance, it impacted productivity. The challenge was that we had to pay rent for those locations. If that productivity did not hit the target because of losing 1 or 2 people, it affected us big time. It was also costly for us to try to move some of our employees from a travel expense perspective, hotel perspective, and all of those travel expenses just to try to cover the small gaps.

Despite all of my talent management initiatives and retention initiatives, people’s lives have changed. We always talked about what I call career mobility. I encourage people to be prepared for something as catastrophic as what we went through starting in 2020. I knew that some of my employees may leave someday, but I always prepared them out of my compassion and respect that things may change. Sometimes some of my employees jump ship out of fear like, “I need more stable employment. If this company is going to shut down, I need something more stable.” It was a constant risk.

That’s a big thing. As HR and compensation practitioners out there, we often think of those main things like competitive salary, bonuses, maybe even some ownership in the organization, fair benefit packages, and those types of things. We also know that we need to have a positive work culture and an excellent workforce experience. That’s true. There are times when people get burnt out and lose faith. We need to carry them through that.

Sometimes, that’s encouragement that flexible work and time off and so forth. What Eddie’s going to be talking about with us is some unique programs that can help in retaining key people in the organization. What are some situations that you see with your clients when they’re saying, “If I lose this particular executive or if I lose this high-value employee, I’m going to be out of business?” What do companies do in a situation like that?

Identifying the value of the employee is critical. Just like Char was saying, when you’re in a small business and you’ve got 30, 50, 20 employees and you lose 1 or 2, it’s a huge detriment to the production. Not only do you have to find someone new and train them and then you also get hope that they get back to the production that the person left.

There are a handful of things that business owners can do. It is a type of deferred compensation. The word is not the best to use but it’s discriminatory deferred compensation. What I mean by that is you are helping an employee the certain additional compensation down the road to keep them. Some companies will consider this like golden handcuffs.

Discriminatory deferred compensation allows you to help an employee gain additional compensation down the road to retain them. Click To Tweet

There can be an agreement between employer and employee time frame. “I see your value. I’m going to bonus you. I’m going to put X amount aside each year. If you stay with me for the next 10, 15 years and whatever is in here, it’s a bonus at the end of our time together.” If you happen to leave, you have broken the agreement, then the business has a bunch of cash on hand to be able to hire, train, and replace that said employee. That’s the gist of how you said this type of deferred compensation works.

What is the process of setting something up like that? Is it difficult for a small business to do?

No. Some of them require contractual agreements. They’re very easy and basic to come with. Others are just more like the business saying, “This is what I’m going to do for you.” Usually, those are the nonagreements that are not difficult to come up with. It’s not real consistent funding from the business standpoint like, “In a good year, I’ll help you out.”

That doesn’t put a lot of confidence in the employee where when there’s an actual contractual agreement and these are 1 or 2 pages. They’re not very expensive to get up if you have lawyers on retainer or if you have in-house counsel. This is something they can easily draft and come up with. It’s an agreement between the business and the employee that they will both meet their obligations.

Let’s back up a little bit because I’m sure we lost a few people when we’re talking about deferred compensation. They’re like, “What is that?” First of all, let’s back up to the beginning of this when we’re talking about the types of plans. When we’re talking about deferring compensation, what do these plans look like? What are the different types of deferred compensation plans qualified and unqualified, stuff like that?

Most people will think of deferred comp, and they immediately think of 401(k), and they’re right. That is a form of deferred compensation. Also, if companies want to offer pensions any of the qualified monies you put away, Roth 401(k), 401(k), SIMPLE IRA, and pensions, fall under the qualified deferred compensation. What we’re mainly discussing is non-qualified deferred compensation. There are two different ways of non-qualified deferred compensation. One could be the CEO who goes to his board of directors and says, “I don’t want to be paid $1 million a share. I just want to make $500,000. I’m going to take this $500,000, and I want you as the company to defer this $500,000 for me down the road.”

Why would an executive want to be paid less?

If you’re in an incredibly high tax bracket, if you want to defer some money via taxes, if it can change a tax bracket for you, that would be an idea. If you’re looking more like a long-term like, “I only want to do this for ten years. If I make $1.5 million for 10 years, and I can defer $500,000 of it, I’m going to be good.” That would be the reason why is changing tax brackets and deferring that tax to a later period.

In that particular scenario, it’s driven by tax efficiency.

With the agreement of the personnel, we’ll call this one the personal deferred compensation where the employee goes to the company and says, “I want to defer this.” A big part of it would be a tax play. It’s hard to tell if it really would make a big difference because the tax laws are always changing. You can roll the dice knowing that taxes are the way they are.

Let’s talk a little bit more about rolling the dice. There is some risk involved with an executive asking for this. Can you walk us through what the risks are?

In this instance, there actually wouldn’t be a lot of risk involved because they could defer their compensation into fixed accounts. They can defer their compensation into certain cash value, life insurance, income annuity, and bond accounts. They can do a lot of different things with this deferral. The rolling of the dice would be if it sits on the company’s balance sheet for the years this account will build 10 to 15 years down the road, and then the executive’s like, “I’m out,” that $2 million to $4 million comes off the company’s balance sheet. That could be more of the risk on the company side is that they’re holding onto this asset that they know at some point they’re going to have to let go.

An executive has to believe in the company’s financial state in these situations.

If the employee was forthright in their planning, they could say, “Each and every year moving forward, I elect this.” They could defer X amount, but if they rather take their lump sum upfront, they could do that as well. Most of the time, when they’re doing deferred comp, that’s how the employee-to-employer deferred comp will work as they tell them, “I want you to take my additional salary and put that elsewhere, please.” The flip side, which would then be the discriminatory business, deferred compensation planning for key employees, key executives, and people who make a dramatic difference in the company. If they’re unable to fill that slot quickly, it’s going to be detrimental to their performance.

You can use deferred comp in different ways. We’re talking about how you can defer it to a time when there may be retirements. Maybe it’s a time when they’re sending their kids to school or something like that. They can defer it for a purpose. Maybe they want to take a sabbatical, they can design it that way. How can companies use these plans to retain people?

The employee-to-employer is something that would not help in true retention. This is just the employee going employer. For retention purposes, this is where you’ve got your executive bonus plans. You have your SERP plans, keyman plans, split, and dollar plans. Basically, you have a litany. I would say there are 6 to 7 different additional types of deferred comp plans that help in the retention of employees. These deferred compensation plans are the employer going to the employee telling them, “I found value in what you bring to the table. I want to defer an additional compensation to you so you’re increasing your commission check,” or whatever they do, like increase your salary, however they want to work it out.

I want to take that and I want to defer this compensation to you to a later date. That later date could be when you retire an X amount of years. The business owner can say, “I want to keep you for 10, 15, 20 years.” It’s an annual, “Thank you. Here’s a bonus in the future.” If the employee does not come through on his contractual obligations and leaves before said time, then the company can take that asset and utilize it to help train and get new employees up to old employee status.

I like this idea because Sam did warn us back when we had our company fully going. We were a multimillion-dollar company, believe it or not. He warned us because we did pay some of our managers and a director more than even what Sam recommended. From an ethical perspective, they go out and buy above and beyond their means like a big mortgage, a new car, and getting themselves in a pigeonhole. I’m curious.

Back when we had shut down our company due to legislation changes in healthcare and various reimbursement changes, sadly, some of my employees were in over their heads because we were paying them so generously. Ultimately, they could never find something that would pay what we paid. Luckily, most of them landed well on their feet. Let’s say someone’s buying a house and they have a deferred compensation bonus that might happen down the road. Would that keep an employee from spending above and beyond their means a little higher than they would make in that type of position?

This is where we talked the last time. Sam and I were on this. We were discussing work site financial planning and financial advising with employees, which is a great way to get someone who does budgeting and talk people through those things. In these types of nonqualified deferred compensation packages, there are timeframes on this. They can go to their employer. Sometimes, the employee owns the account and owns the policy. Sometimes the business owns the account and owns the policy.

In the realm of where the business owns the account and policy, in your example, that employee would have to go to the employer, “I’m trying to buy this home. You tell me I have this much in my account. Can I use it?” you could create some collateral in that sense. It is a little more paperwork than the business owner wants to do. If the business owner is trying to help their employee retain them, “We can give you a cash advance on this deferred comp to help you take care of this home.” With that, you may need to sit down with somebody and discuss all this stuff of what you can and cannot afford, so you’re not over your head. That could be one of those little footnotes in this collateral agreement that the business would then lend the money back to the employee before said timeframe had been achieved.

If it’s in the employee’s name, then the employee can do whatever they want. It’s just going to affect them down the road. If they have $80,000 in this account and they want to pull $40,000 out of it for said home, they’re taking a $40,000 hit early onto their potential retirement income help. For people who are highly compensated, maxing out your 401(k) and having your company max it out is not going to be enough. If you’re in the low six figures, if you’re making $120,000 and above, 401(k) plus 100% 401(k) match means you’re putting in $30,000-plus a year, it won’t be enough. You have to understand that that’s fully taxed at the end of the road.

PSF 80 | Key Employees

Key Employees: Maxing out your 401(k) through your company is not enough if you’re in the low six figures.


What most people don’t realize is not only is your 401(k) taxed, but if what you’re pulling out of your 401(k) is greater than your Social Security, now your Social Security is also taxed. You could look at a 30% to 40% hit on those buckets of money before it even hits your checking account. Doing these additional types of planning outside of what we’ve qualified and focusing on non-qualified benefits, it’s incredible for retention and helps prepare them for retirement/legacy planning.

It’s a good call out for why employees should ensure that they have a good financial planner. Perhaps employers can help direct employees to such resources to ensure that their future is intact there. Everybody thinks, “Can I stuff it under the mattress? I have it under the mattress in this account. It’s all the same,” but it’s not. It’s different.

The majority of the work I do is in the tax realm. I’m not even a tax accountant, but it’s understanding how every single asset is taxed, and ultimately how that is taxed affects what you actually can use.

Back to what Char was saying earlier, those companies that are out there that are very generous to their employees and want to have high salaries and so forth do exist. I’ve worked with a few of them. They do exist out there. The thing is that we have to realize if we’re paying our people high, in the marketplace, they do have that higher tax burden. We may want to be generous as an organization, but it doesn’t translate well to retention when we’re just paying that out in salary because, believe it or not, people feel they rise to that level and they can command that higher level of salary at their next employer. They can continue with that in a lot of cases.

The important part is that if we create deferral programs, we can create retention programs for our people to not only protect their future but protect the company’s future as well. Some of these vehicles are very important. Eddie, I remember you talked about a bunch of different programs. You said in addition to the company bonus, there are the SERPs and so forth. Can you tell us about the different types and what they do differently?

There’s a handful of them. There are a few that are incredibly complicated. If you ever hear of an endorsement split dollar or anything that involves a split dollar, it’s going to be a potential headache for the business to do. With that being said, you have things like a keyman. A keyman would be establishing an employee who is key to set operations. If this employee were to pass away or to leave, what type of detriment that would have to the employee? This is not an executive by any means. This could be the head warehouse manager. This guy is critical. If he leaves, then the warehouse is going to fall apart. If you’re involved in shipping, that’s going to be a problem.

With this, you say, “If this guy happens to pass away, what it is going to cost me to replace him? Maybe $200,000, $300,000, or $400,000. If he leaves, what’s it going to cost for me to replace him? $200,000, $300,000, or $400,000?” You can have them sign into this keyman insurance, and it’s specific insurance on the life insurance side. It’s a cash-value policy most of the time. With that, the company says, “I’m going to take care of this because you’re critical to my company, but if you stay, then I can bonus you whatever cash values are left over.” That’s key.

Let’s stop there for just a second. You were talking about determining the amount of risk. How does a company go about doing that? A person passes away. Maybe they were the image of the company or they were a cultural leader. Can you dive into how we determine the amount that is at risk?

That’s where compensation specialists can come in and help us out with this because you start understanding that sales guys are relatively easy. They produce X amount of sales and this is what it’s going to take to replace that in a year. When you start looking at people who are in upper management it’s, “If this person leaves, how long it is going to take me to find someone? 2, 3, or 4 months? I’m saving in salary, but I’m losing in production.” I’m sure you can pretty much tell pretty quickly how much production you’ll end up losing if it were to happen. Obviously, you’re going to figure that out quickly.

Looking at the numbers of the employees when you’re doing their performance-based reviews, it’s a great way to try to tell how much you can lose. In all reality, it’s someone like yourself who can help guide people and show them the value that they bring. Doing that can help show the company, “This is what’s going to happen if this guy goes.”

PSF 80 | Key Employees

Key Employees: Doing performance-based reviews is a great way to tell employees what value they can bring and how they can help the entire company.


We were talking earlier about business interruption as one piece of it. The actual time that it takes recruiting and then recruiting costs, or if you have an outside recruiting firm, that’s going to be expensive. There’s the training bringing that person up to speed once they come back on board. Is that a couple of weeks or months? Sometimes it’s even longer than six months. There are a lot of pieces in there that should be factored in. Let’s go back to what you are talking about setting up the keyman insurance.

At that point, you recognize who this employee is and their value, and you approach them with this idea, “I find you critical. It is a great way to keep you. Understand that this will become yours in 5, 10, or 15 years,” whatever it is. It’s a great way to retain a key person. The keyman identification is owned by the business. If this employee does not follow through on their obligation and stays for the said time, is like, “I got a better opportunity. This bonus, extra money on the side is just not worth it to me. I’m out.” Since the company is the owner of said policy, they then can use those funds that they’ve been saving all those years to then utilize to hire, train, and bring on a new employee all the while that does not affect their balance sheet.

The balance sheet says this is for keyman Michael. Keyman Michael’s no longer around, so now I’m going to use keyman Michael’s money to bring on someone new.” The company was never really planning on having that available until Michael left. If he left early, then that pot of money is there for them to find someone. It takes a little bit of pressure off because now you’re like, “I may lose a little bit of production because Michael was a great manager, but at least I’ve got the means to get that thing started quickly and bring someone on fast. It is a great way to even show someone a sign-on bonus or whatever.

That sounds like a responsible way to plan. If you think about when we’re saving up for a new car, it would be great if we set aside money even if our car’s running great. We don’t need a car right now, but we know in five years we’re going to need one. We should probably start saving so we don’t have to kick that big loan. This is, in a sense, something like that. It’s a contingency plan. Why don’t companies do this more often?

They just don’t know about it. That’s what it is. That’s why we’re here to do as much education as possible. Unless you have someone in your network who does the type of work that I do, then you’ll find out about it. If not, it’s something that’s not talked about a lot. Once people start hearing of this stuff, they’re like, “I can do something for my employees to keep them?”

Beyond the traditional things. That’s great. Go ahead, Char.

We can call it a key person. I’m being a little sensitive. This is for inclusivity. I do like this idea and financial literacy. There are people like me who are more of a creative type of personality and don’t think about numbers, money, and things like my esteemed colleague here. I do think that it would be very helpful to retain our employees by helping them on a personal level as well as realizing that, “We care about you. We care about your future. We really want to retain you. We know that we’re competitive. We have competition out there to keep you as one of our key people. We know that you’re always what you may be looking for.”

Also, key individuals must help to retain other employees as well, identify other key members of the team, and help to coach and mentor other employees to get up to be a key person in the organization as well. A combination of deferred compensation ideas, financial literacy, as well as many of the other talent management strategies, needs to work in combination to retain that employee and individual because it’s not just about money as we know. I know Sam talks about this all the time. It’s also the culture and leaders that people leave. They can make $1 million and still leave.

As a sidebar, I’ve been working on the human side for quite some time, so I try to balance these two pieces. There’s always that allure of the finance piece because it’s so finite. Understandably, a lot of companies get stuck there thinking, “We throw more money at it. Since it’s finite, we can do that.” This other stuff is so soft and squishy, but it’s true. You need to have a full package that’s working together for it to be truly effective.

I’ve had business partners that thought throwing money at them was enough for the squishy stuff, the soft stuff like Char does. “Let’s just put that last on the agenda. Let Char handle those people’s fuzzy stuff,” and not realizing that communication, relationships, and a deep understanding of your employees’ needs are critical. As well as aging parents and the sandwich generation of those of us who have to take care of our kids’ college and various other challenges that our employees face have to be considered.

I have witnessed more than one situation where an executive has left millions of dollars because it was a bad relationship or they didn’t feel like they were safe at an organization psychologically. It’s amazing. People will leave for that soft and squishy stuff because it is super important.

Mental health is a ton. I too have seen. If your mental health is being impacted by an organization and you’re driving home, I call it the White Knuckle syndrome. Driving home, on the steering wheel, you’re so stressed out, and you’re upset. You can’t spend quality time with your family because you’re so stressed, it doesn’t matter.

That goes back to what we originally were talking about with workplace respect and company culture. Those are two of the big things. These employees don’t feel respected and the company culture just looks at them as a number and doesn’t embrace that they’re an individual. They’re human beings.

If employees don’t feel respected and the company culture doesn’t embrace them as human beings, they will eventually leave. Click To Tweet

It was frustrating because I was in charge of the Learning and Development Department, which grew way bigger. Not to go down that rabbit hole, but it was interesting to me that I would try to talk to the CFOs and the financial individuals and try to explain why it is the budget for these people-related programs, every year, gets chopped by $200,000 and $500,000.

It was a financial battle for those of us in charge of the cultural aspect of those programs or surveys. We talk about the TMA, the Talent Management Assessment. Why is it that spending just a few hundred dollars on one employee every year gets chopped down to $50 or whatever the dollar amount is? Generally, a challenge for us people leaders to influence the change of mindset and perspective in the paradigm. I love your ideas, Eddie. What you’re saying is spot on. I should have done that, by the way. Instead, I’m throwing my director $100,000 a year. Consider deferring that compensation.

Let’s jump back into that because you were just about to tell us about another particular product or vehicle after the keyman.

The keyman is business-owned. That’s the main thing. The business owns it. They have a lot of say in it of how much they’re going to put away, what the value of you are, and so on. There is what we call an executive bonus. The executive bonus is not so much like keyman’s. An executive bonus would be like, “This is going to be your annual bonus, but I’m going to defer it for you. Even though you’re getting a $10,000 bonus a year, I’m now going to give you another $10,000.” That $10,000, even though it’s going to add to that employee’s taxable income where they’re going to show $10,000 more, the business owner can say, “I’m going to bonus you, but I’m also going to cover your taxes.” We call that a double bonus. Accountants all know of this stuff.

You could double the bonus and take care of the taxes. The company puts it and said account policy or whatever the employee chooses. The employee owns that. This is back to what Char mentioned earlier about what if the employee wanted to purchase a house. In this instance, this is where the employee would own their account, but the employer would be funding the account.

I was a person that acts as a chief HR officer for a hospital but they kept calling me an HR manager. I was truly a Chief HR officer because I was sitting up at the executive table and I was acting as a CHRO for several years. My VP would throw $12,000 bonuses at me, but I was not placed in the correct role. It’s so frustrating.

In an instant like that, instead of giving you a $12,000 check, they would tell you, “We’re going to defer this for our compensation later on.”

I would’ve liked it if they had me in the correct role as well.

That’s fair.

Instead of never getting into the correct position at the correct compensation level, just popping me a couple of $12,000 bonuses, I should have left. I stayed there for thirteen years. I won’t say where, but in the end, I look back and think, “I lost a lot of money because I was never correctly positioned and correctly compensated for the work that I was doing.” They just gave me a pretty big bonus at the time. This is years ago. That’s vital. That’s why I love the comp team because what they talk about is career structure, career architecture, and alignment. Did you want to continue on this particular topic? Do you have other concepts?

In regards to the executive bonus, it is still a deferred compensation plan. They’re just adding a bonus to the already said bonus to move that money to a later time. The employee has full control and ownership of this said account. An agreement would be made as well. It’s not on the company’s balance sheet like the keyman would be. This is owned by the employee. Usually, they try to do 5 or 10 years down the road.

For my clarification, not as much of a financial person as you are, what if the company has to do a layoff for that individual? Would they receive all the funds if the company laid that person off? What if that person was fired?

In an executive bonus plan, in this instance, the executive is the owner of the account. When they lay off, fire, or let go, that executive takes that money or what’s in there, depending on ROI, Return on Investment. With the growth of the account over the years, that value could be a little different. Nonetheless, that executive can take that account with them.

I’m always talking about healthcare. That’s most of my career. They say the executives turn over every five years on average in healthcare.

It’s a taxing job. The executive bonus is a way to keep those executives longer than five years. If you’re telling them, “I’m bonusing you an additional $40,000,” or whatever that number is, they’re going to be like, “I’m not going to leave this additional bonus.” Even though I haven’t seen it yet, I know I have. It is an additional retention plan because not many other companies are going to offer these additional deferred comps to these executives. They’ll offer stock shares. That’s a pretty basic, no disrespect to it. Stock options are great, but it’s nothing unusual. In an executive bonus plan, it is an unusual plan. That unusualness makes the employee feel a little more important. As we talked about earlier, it’s not just about money. It’s also about how they’re perceived and their value.

PSF 80 | Key Employees

Key Employees: An executive bonus plan is unusual because it makes the employee feel a little more important.


That works as a twofold because your employees must be satisfied being there. The more satisfied they are, the greater the chance that they will stay there, and there will be less chance that someone will pull them. You throw in an unusual discriminatory compensation package that, “We get 100 employees, but we’re only going to offer this to 6 or 10 people.”

Oftentimes, the compensation of an executive is public knowledge, particularly for a nonprofit. It’s public information. I have seen where that’s been a very negative stigma. That information is out there. Also, from a succession management standpoint, it is vital at this point that the people leaders are in alignment with these bonus programs. These financial decisions are not just made in a financial silo. Oftentimes, I’ve seen where senior level executives, no offense, like VPs and presidents thought, “This is a real superstar. This particular director is going to be the next chief nursing officer at this hospital,” for example.

On the flip side, people like me knew that leaders had horrible employee engagement scores, horrible patient excellence scores, or horrible production information. This could be translated by any company, yet they were good about making the senior executives feel good about themselves and managed well.

That’s where a true compensation company can help define not just a dollar value but also the overall value. You also have those personality tests. It is through those personality traits, and you can find what people’s strengths and weaknesses are. You’re right. You can’t just give it like Oprah, “You get a car.” Not everyone gets a car. What type of value do you bring to this company that’s worthy of this?

A company must know how to define its employees not just on a dollar value but also on an overall value. Click To Tweet

That’s where you can show that it’s discriminatory in the sense of, “I value you enough, employee A. You have shown your dedication to the company. This is the way I want to reward you. Not just through other of our programs, but this is how I want to reward you personally with this package. I want you to stay here for a long time because I enjoy who you are.”

People embrace that and they’re like, “I didn’t know I was that important.” It’s a whole different element of how they go about in their work environment. They’re going to want to do better, be better, and be a better manager, and they’re going to want to make their boss proud. The boss shows them, “This is who you are. You’re a real deal and I want to keep you around.”

Speaking of diversity and inclusion, DEI that we speak about a lot, this is where it points out that your entire talent management strategy has to be in alignment with this. I have worked with another organization that had to go back many years and recalibrate all of their compensation programs because they were being inequitable for females or other aspects. I can go off on all the other categories of types of employees, but it was a huge cost blow to that organization. It was massive because they had to face litigation and then also go back and reassess even the bonus programs that you’re talking about, deferred compensation. Did you have another bucket that you were trying to address?

There are a few other ones, but we can get into what they call SERP. SERP bonuses are an executive retirement plan. What the SERP is more on a longer-term frame.

What does SERP stand for?

Supplemental Executive Retirement Plan. The Supplemental Executive Retirement Plan is similar to the executive bonus, but the executive bonus is a lot more short-term. Not only is it short term, but also the employee owns that account or policy. The SERP is owned by the business, and the business is saying, “I’m going to defer this additional compensation to you, but it’s not going to be available for twenty years. It’s not going to be available in your 59 or 63,” or whatever year is agreed upon by the parties.

That’s specifically for additional income down the road for an executive. It is tax-deductible to the company. The executive will pay the tax on said bonus, and then the payments are tax-free. This is a great way for higher earners to create a tax-free income stream for retirement outside of that simple 401(k) or capital sales stock and so forth.

PSF 80 | Key Employees

Key Employees: SERP is a great way for higher earners to create a tax-free income stream for retirement outside the 401(k) or capital stock.


Life moves fast. You think you’re 25 and, all of a sudden, you’re 52. Even newer generations of executives have to put in new planning.

We’ve got a question from Yvonne. Similar to a key person setting criteria for this special retention bonus and also stating the objectives. The criteria for doing said retention bonuses is more of an agreement between the company and the employee. That’s usually the criteria for this. What is the company going to bonus? How long are they going to do it for? How can the employee use the money when they meet terms? That’s the criteria. It’s defined by each business individually also on that executive keyman, however you want to do that. Every business is different. Every business has a different balance sheet budget and their employees are all different. The key categories that the business deems important, they write out for the employee to understand.

We just touched on the objectives naturally when we were talking about keeping that employee feeling like they are one of a kind. They’re unique and they’re valuable. The main objective is demonstrating to them their value not just financially but also by being there for them mentally and physically offering additional help to them. Showing these discriminatory plans and showing how important they are that you want to choose them individually is a great step toward the objective but also explain how and why you came up with that decision. This is what you touched on earlier too, Char, about touching upon all those different things. This is why we find you so important. It’s because you have great leadership, you command a room, or you’ve been loyal. Whatever it is the reason why you chose this person, express that to them.

PSF 80 | Key Employees

Key Employees: Companies must demonstrate to employees their value not just financially but physically and mentally as well.


Thank you, Yvonne. I appreciate that. That’s vital. That also goes to the point of knowing your people at all levels of the organization and assuring each of your leaders has a good understanding of how they’re meeting those objectives. We are approaching the top of the hour. Eddie, I know you probably had a couple more concepts and ideas, but we are going to wrap up here soon. Let me ask you a question. Who is the primary client that you work with? Do you traditionally work with executives, board members, senior, or people leaders as I call it the HR/talent management team?

The number one thing is my grandfather was very influential. When I grew up as a young man, he always told me in the thickest Italian accent possible, “Younger man, you were never too good for anyone.” I really am not. If someone has a question, if I can’t get the answer, I can find the answer. I love solving for why, the literal algebraic Y, and then the W-H-Y.

You will never be too good for anyone. Click To Tweet

If we were to look at my clientele list as a whole, a lot of them are small business owners specifically under 100 employees, a real small business. I do work a lot with your 9:00 to 5:00-ers. Normally, it’s your higher compensated 9:00 to 5:00-ers. It’s just the way it’s worked. It’s not that I prefer one or the other. I love business planning. I find a lot of joy in that. Helping people figure out their why is my jam, and I love it.

How do people get ahold of you, Eddie? What’s the best way to contact you?

I have a LinkedIn. I’m not super active on LinkedIn, but I do have one. You can go to my website, My office number’s on there, email, and all that stuff.

We appreciate your time here. If you had a question for another people strategist type of expert that we have here on our panelists, would you have a question that you would like to ask? Maybe our next host? I don’t know who that is because Sam doesn’t have the slide up, but what question would you ask that person?

I would just ask who you are, why you are, where you are, and what’s your why.

What’s your why? Why are you doing this? I love that. Thank you, Eddie. It’s a pleasure meeting you. Stay cool down there.

It was so nice to meet you. Thank you for this time. I loved and enjoyed this. Maybe we can get more into the weeds of this in the future show.

We would love to have you back, Eddie, as a future speaker. Thanks so much. We appreciate having you. We’ll be in touch. Looking forward to reaching out to you on LinkedIn.

Take care. We’ll see you.

Thank you.


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About Eddie Diaz

PSF 80 | Key EmployeesI received a degree in Finance at Arizona State University and soon thereafter began my own small business practice in financial planning and management; Diaz Strategies Insurance and Financial Solutions. I regularly meet and exceed professional milestones set before me and I strive to educate people on the importance of having a solid financial plan and professional team in place. I believe that people don’t plan to fail, they fail to plan.

I offer a variety of products that can help you meet a number of insurance and financial needs, including, but not limited to college funding, retirement, managing costs for extended periods of care and lifetime income strategies. Please contact me to help you fully analyze your needs and recommend appropriate solutions. I am an Agent licensed to sell insurance through New York Life Insurance Company and may be licensed with various other independent unaffiliated insurance companies. Additionally, I am a Registered Representative of and offer securities products & services through NYLIFE Securities LLC, (Member FINRA/SIPC), A Licensed Insurance Agency. Any testimonial on this site is based on an individual’s experience and may not be representative of the experience of other customers.

These testimonials are no guarantee of future performance or success. 14850 N. Scottsdale Rd. 480-840-2165 Neither New York Life Insurance Company, nor its agents, provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professionals before making any decisions. I am not licensed in all jurisdictions. My California Insurance license number is 2074158. Neither Diaz Strategies nor New York Life Insurance Company, or its agents, provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professionals before making any decisions. Diaz Strategies is not owned or operated by New York Life Insurance Company or its affiliates.

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