When it rains, it pours! Right as companies are trying to keep costs as low as possible, employees’ retirement plan balances are taking a dive. Here’s a strategy that can take care of both.

50%, 75%, 100% — no matter what your company offers to match employees’ 401(k) contributions, those incentives to help folks save are probably hitting you a little harder now.

On top of that, your benefits staffers have most likely been getting an earful as employees see their plan balances shrink. Plan balances across-the-board tanked in the first quarter of 2008.

It may be time to rethink your match.

You’re probably already embracing a “pay for performance” strategy when it comes to compensation. Think about extending it to your organization’s retirement plan as well.

Naturally you don’t want to take a hatchet to your No. 1 carrot — the main reason employees participate in retirement plans is the company match. And with people so financially skittish these days, any change is likely to meet some resistance.

But consider a “pay for performance” 401(k). You’d set a standard match, maybe $.50 on every $1.00 employees sock away. Then use a variable match after that.

Your company is faring well financially? The match goes up by a certain percentage. Teetering on the brink of tough times? Employees will receive a percentage less than the base match.

That way the costs are aligned to reflect the current economic state — easier for employees to digest and easier for your company to keep your plan going strong even when the economy isn’t.

Tags: 401(k), Benefits, Pay for performance, Profit sharing