Want to Optimize Employee Engagement? Communication, not Auto Features, is the Key. We posted alast week from a recent The Plan Sponsor University (TPSU) program hosted at Villanova University, where we spoke to Karen Laughman, Director of Plan Administration for a law firm with 50 employees. She mentioned an interesting challenge her firm is facing. She noted that the same participants signed up to meet one-on-one with the plan’s independent financial adviser every year to go over their investments in the plan or discuss general financial wellness. However, the employees the adviser requested to meet with, or who should be meeting with him (i.e., new enrollees or long-time employees who aren’t participating in the plan) avoided those meetings like the plague.
As a result of what she learned in the TPSU program, Karen has decided to revisit her firm’s plan design. She is considering adding new features — specifically, automatic enrollment and automatic contribution escalation — as a way to help potentially boost participation and engagement in her firm’s retirement plan. As she put it, “it’s better to ask people to opt out than beg them to participate.” The firm’s independent adviser had recommended the firm consider automatic features awhile ago, but they weren’t quite ready to take the plunge. Now, Karen is shifting her thinking, and implementing automatic features seems to make more sense for the plan and the firm’s employees.
So, great. Why have I just recapped an entire three-minute video you can go to our website and view yourself? To make this point: automatic features are great for bolstering plan participation and engagement, and for encouraging savings despite good old-fashioned employee inertia. And increasing numbers of employers are relying on them to help improve American workers’ retirement readiness. Depending on which survey you read, somewhere between(Transamerica) and (Alight Solutions) of plan sponsors offer automatic enrollment in their retirement plans.
What’s more, employees welcome the “nudge” to enroll in the plan begin saving for retirement, and increase their contributions over time. According to the Transamerica survey cited above, 71% of workers would like to be auto-enrolled in their retirement plan, and 67% would like their employer to offer automatic contribution increases. Clearly, automatic features are in demand with both sponsors and employees.
All that said, here’s the kicker: while there’s no doubt about the benefits of automatic features, they are not a panacea. According to thisfrom InvestmentNews, automatic features don’t give plan sponsors or participants license to “set it and forget it.” As one advisor put it, being financially prepared for retirement is “too big a deal” to simply put it on autopilot.
So what does that mean? Well, even in plans with automatic features, a strong participant communication program is key. Yes, we beat the participant communication drum a lot, but that’s because it’s really important! In any case, creativity goes a long way when it comes to enticing employees to engage with the plan and getting them up their savings game.
We’ve written aboutbefore, and InvestmentNews points out, the mode of delivery does make a difference. Clear messaging and image-rich documents are much more likely to grab attention and spur engagement, as opposed to documents dense with black-and-white text and language that’s about as easy to understand as IKEA instructions. and interactive communications are much more likely to capture employees’ attention as well.
Furthermore, be sure to lead with benefits in all of your communications, from posters to newsletters. Messaging like “learn how saving at work can help you have a better retirement” are a lot more powerful than “come to an enrollment meeting.”
InvestmentNews also advocates setting a time and date for employees to meet with your plan’s adviser, if you have one, because it encourages follow-through. Of course, you have to get them to commit to the appointment in the first place, which may be a challenge, as it was for employees at Karen’s firm. But in theory, an appointment made and written down is much more likely to be kept.
Now, InvestmentNews says no bribes, prizes, or other incentives because while they may draw employees to attend a meeting, there’s no guarantee they’ll pay attention to the content. However, we have several videos and articles in the 401kTV archives, like, where we interviewed plan sponsors who told us that incentives work very well when it comes to persuading employees to attend benefits meetings and participate in the plan. A simple gift card raffle, or even offering pizza, has worked quite effectively for sponsors who’ve participated in TPSU programs in the past. So we stand by the use of incentives and advocate using them liberally and often to increase employee engagement with your plan. And p.s., incentives work particularly well when it comes to engaging younger employees.
Of course, all of these tactics would be moot without some form of accountability. So in addition to thinking outside the box when it comes to building a communication program that drives engagement and creates excitement about the retirement plan, also consider ways to measure the results of your efforts. Some ideas: A/B test emails, track meeting attendance, and consider pilot testing new approaches against a control group to measure their effectiveness.
How do you create and carry out an uber-creative participant communication program? First, look in-house. Do you have someone with mad marketing chops on staff? If the answer is no, consider hiring someone, or outsourcing the work to an external firm or freelance consultant, preferably with a background in retirement industry marketing and previous experience with creating participant communications. You can also check with your recordkeeper, third-party administrator or plan adviser — they may have turnkey communication programs that are ready to implement or creative ideas on how to get ‘er done.
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