Attracting ‘Top Talent’ With Peanut Butter
I got a chuckle when reading the Feb. 5, 2026 HR Dive article titled, “The Spread of ‘Peanut Butter’ Pay Raises: Across-the-board raises may have sticking power as companies reassess their compensation strategies in the face of inflation.”[i]
About four decades ago, many HR professionals I worked with justified the cost of our traditional, tax-preferred benefits (pension, 401(k), medical, dental, vision, LTD, life) and other benefits (vacation, personal days, sick leave, etc.) as necessary to “attract, retain and engage top talent.” They asserted our high-cost benefits were a differentiator of talent.
However, the majority of our spend was designed to provide benefits for sickness, absence, and after death, disability or retirement.
So, I decided to convince my senior HR leadership that traditional, tax preferred benefits and other benefits based on completed past service, or those that tended to cost more based on variables other than job performance or results (e.g., family status, age, enrollment, sickness), were “table stakes”—targeting the first two tiers on Maslow’s hierarchy pyramid.[ii] That is, benefits are satisfiers, not motivators, and gaps in benefits create dissatisfaction.
The image I often used was peanut butter on white bread. I noted that when you have tax-preferred benefits, they come with eligibility, vesting, and non-discrimination requirements. Those require you to allocate benefits more evenly than an allocation of company spend based solely on performance or results.
That is, you spread the peanut butter, whether smooth or chunky style, oh so carefully across the white bread … to the edges of the bread so that the entire surface is covered.
For example, I never favored the significant subsidy for family medical coverage, limited only to those who had families, and only to those with families who decided to enroll in your health plan. I also criticized attempts to adopt more progressive structures that would increase employer contributions for lower-paid workers where coverage costs already represented a third, half or even 100% of a lower-wage worker’s salary![iii]
So, no surprise that I smiled when I read that 9% of employers are adopting “the peanut butter raise” approach to provide workers with across-the-board salary increases; another 16% are ready to implement it; and another 18% are considering it.
Bottom line, traditional, tax-preferred benefits, including your 401(k), do not differentiate “Top” from “Not So Top” talent.
How does your 401(k) fit within your Total Rewards Strategy? Obviously, given that we now have more than 725,000 plans and more than 105 million participant accounts, the 401(k) is ubiquitous, table stakes. So, a 401(k) that sticks to the “retirement preparation” script is not a differentiator of talent, at hire, or in retention and certainly not when it comes to engagement. If all you are selling is “retirement preparation,” your plan may not even meet the first two rungs of Maslow’s hierarchy—because, for many, “retirement” is a distant, uncertain, perhaps improbable goal decades off into the future.
In my last plan sponsor role, we recognized the 401(k)’s potential beyond retirement preparation and morphed our “retirement savings plan” into a Lifetime Financial Instrument. You can too!
SEE ALSO:
• Solid Benefits (Led by Health, Retirement) Keep Most Employees at Current Job
I always appreciate your comments, concerns, criticisms, or questions. Connect with me on Linked-in or contact me at: jacktowarnicky@gmail.com
Disclaimer No. 1: My comments are my own based on my past experiences in plan sponsor and consulting roles and do not necessarily reflect those of any employer or association I have been employed by or affiliated with, past, present, or future.
Disclaimer No. 2: Information was provided by individuals with knowledge and experience in the industry and not as legal or tax advice. The issues presented here may have tax and legal implications, and you should discuss this matter with tax and legal counsel prior to choosing a course of action. This article is intended to be informational only. It is not and you/others should not use it as a substitute for legal, accounting, actuarial, tax or other professional advice. Any advice contained in this article was not intended or written to be used and cannot be used by anyone for the purpose of avoiding any Internal Revenue Code penalties that may be imposed on such person [or to promote, market or recommend any transaction or subject addressed herein. You (others) should seek advice based on your (their) particular circumstances from an independent tax advisor.
[i] G. Christ, Dive Brief: The spread of ‘peanut butter’ pay raises. Across-the-board raises may have sticking power as companies reassess their compensation strategies in the face of inflation, Payscale said., 2/5/26, Accessed: https://www.hrdive.com/news/spread-of-peanut-butter-pay-raises-compensation/811251/?
[ii] S. McLeod, Maslow’s Hierarchy of Needs, Simply Psychology, 2/6/26, Accessed 2/7/26 at: https://www.simplypsychology.org/maslow.html
[iii] Author’s Note: According to the Kaiser Family Foundation 2025 study of employer sponsored health coverage, the average annual premiums for employer‑sponsored health insurance in 2025 were $9,325 for single coverage and $26,993 for family coverage, where the average employer contribution was $7,884 for single coverage and $20,143 for family coverage. So, for a full time worker at the median wage in America, $60,183 (BLS, 3rd Quarter 2025), the employer cost for family coverage represents more than 33% of base salary – that’s ~50% for a worker earning $40,000 a year and ~100% for workers earning minimum wage or working part time. See: KFF, 2025 Employer Health Benefits Survey, 10/22/25, Accessed at: https://www.kff.org/health-costs/2025-employer-health-benefits-survey/
As an ERISA/Employee Benefits compliance and planning attorney, Jack Towarnicky has over forty years of experience in human resources and plan sponsor leadership roles. Jack's expertise has afforded him several invitations to present at various national conferences: World at Work, International Foundation of Employee Benefit Plans, Council on Employee Benefits, Academy of Behavioral Finance & Economics, Disability Management Employer Coalition, Society of Actuaries, Society for Human Resources Management.
Jack has also provided several testimonies to the Department of Labor, Employee Benefits Security Administration, and authored several publications.