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© Copyright 2000 Rogers Media. The following article first appeared in the March 2000 edition of
BENEFITS CANADA magazine.
Anatomy of a savings plan redesign
Unhappy with the satisfaction rate on its savings and stock investment program, Ford Motor Company
of Canada scheduled a tune-up.
BY SONYA FELIX
In late 1995, Ford Motor Company of Canada, Limited decided to take a hard look at its savings and stock
investment program (SSIP), open to the company's 3,000 salaried employees across the country. Originally
set up in the early 1960s, the plan hadn't seen any major changes since the early 1980s and the automaker
wanted to find out how its SSIP members felt about the program. So, it asked them.
An informal survey showed some serious grumblings of discontent. A small focus group looked at whether a
few small incremental changes would be enough to update the plan to meet members' needs. "But we decided
that small changes weren't enough," says Paul Cameron, financial operations and pensions manager at Ford's
head office in Oakville, Ont. "We elected to investigate restructuring it instead."
The company needed to update the plan to meet today's standards. With only four investment options plus
company stock, and little flexibility in moving monies between investment options, the plan needed a major
overhaul. Vested monies could be withdrawn on a rolling three-year basis and the plan was valued on a
monthly basis, which meant members didn't know the value of stock until the end of the month. Another
drawback was the lack of a foreign content option in the registered retirement savings plan (RRSP) portion
of the plan--this at a time when international funds were flying high compared to sluggish Canadian funds.
Members could invest in Ford company stock, but only in the non-registered portion of the savings plan, not
the RRSP.
"Our workforce had changed since the plan was initiated," says Cameron. "Today, they're more educated about
financial planning." The U.S. parent company had already revamped its SSIP and outsourced administration
and Canadian employees knew what was happening south of the border.
ONE MAN SHOW
Slow administration was another problem for SSIP members. One employee, Al Vaughan, administered the plan
from the Oakville office. "He was so knowledgeable, he was known as Mr. SSIP," says Cameron. Still, one man
can only do so much. When he was on holiday or off sick, there was no service. When someone wanted to make
a transaction, Cameron says, "it could take between five and seven weeks for a withdrawal or to transfer
funds between investment options."
Clement Gonsalves, manager of financial reporting at the Ford office in Oakville and a member of the
company's SSIP for over 20 years, agrees that the response time for transactions was a serious drawback.
When someone wanted to change their investment, they could only do it once a month, he says. "Making
investment changes only once a month was risky because you could lose money by the end of the month [if
stock prices fluctuated]. I think a lot of members were timid about making any changes at all. And, if you
did make changes, you were never sure they actually went through until you saw your next statement. The
statements weren't easy to read, either. They didn't give information like cost, so I had to keep track of
that myself."
Although the SSIP members liked Al, they were well aware their investment needs could be met faster.
"Employees aren't separate from the real world," says Stuart Graham, managing director for Fidelity Group
Pensions Canada in Toronto. "The people at Ford are very astute. They'd heard about call centres and knew
they could get mutual funds priced daily and traded instantly. And they knew that if they wanted to
withdraw money for something like a mortgage, it's possible to have the withdrawal processed right away as
a direct deposit to their bank account. No one wants the anxiety of waiting weeks for their money."
MASSAGING THE OPTIONS
Four key areas needed to be addressed to modernize the plan to fit with current practices: more investment
options, a quicker response time, a spousal RRSP and more information on statements. Since Ford's U.S.
parent had already chosen Fidelity to manage its SSIP, and the company's globalization strategy meant
suppliers should be chosen on a global basis, Ford's Canadian arm decided to work with Fidelity in Toronto.
Over the next few months, Ford put together an internal steering committee with the human resources and
finance departments to come up with a new plan that massaged the rules but didn't change the benefit ratio.
Fidelity consultants worked with Ford providing information about best practices, says Patricia Colley,
director, marketing and product for Fidelity in Toronto.
By the spring of 1997, a new SSIP was ready for launching. It included modified vesting rules, an increased
number of investment options (from four to 11), daily valuation, up to 20% foreign property within an RRSP
and a spousal RRSP--all this without increasing the benefit formula. Members would receive four statements
a year and a newsletter to provide them with more information about their investments.
COMMUNICATING THE NEW PLAN
Fidelity began a massive communications campaign to prepare employees for enrolling in the new SSIP which
was set to activate on July 1, 1997. In the past, members received simple black and white information
sheets about their SSIP. Fidelity decided to make a big splash to show people how different the new plan
was.
"We looked at it more as an ad campaign for a new launch that would boost appreciation and awareness," says
Graham. "We worked with Ford's historian to come up with an image that spoke to the history of the company
in Canada. The Model C car was chosen because it was already a symbol of the employee recognition program
and many long-term service employees recognized it."
For the next four months, Ford's salaried employees from coast to coast were invited to meetings to hear
about the new plan. Because of the nature of work in the car industry, the timing of the sessions had to be
flexible. "When we say salaried, it doesn't mean they all have desk jobs," says Graham. "All of the
supervisors are on assembly lines." Some people wanted evening sessions so their spouses could attend, and
production and assembly line workers said they didn't want sessions right after work because they'd be too
tired. Complete enrolment kits with details of the plan were also mailed to employees at their homes.
"They did a great job explaining the plan," says Florence Fiorino, a financial analyst for Ford in Oakville
and a SSIP member. "Everyone was given the opportunity to ask questions at the sessions and even if you
didn't go, there was information provided. If someone didn't get the answer to a question, it was because
they didn't bother to find out because all the information was there."
THE AL QUESTION
By the time the new plan went active, the one-man office run by Al Vaughan had closed and administration
was outsourced to Fidelity's call centre. During hundreds of pre-enrolment sessions, Colley says, everyone
asked what would happen to Al. "So many people were worried about him, but at the same time, they
understood that they'd be getting better access through the call centre." (Al, by the way, has a new job at
Ford in financial reporting.)
Outsourcing administration of the SSIP made sense to the company whose core competency is producing cars,
not managing savings plans. SSIP members could now talk with Fidelity representatives from 8 a.m. to 8 p.m.
Monday to Friday. "Now I'm on the phone daily," says Gonsalves. "I like calling up. I know the conversation
is recorded and I get a confirmation number. I'm very happy with it."
Fiorino agrees that the faster service makes the plan better and appreciates the Web site Fidelity added
which allows SSIP members to do transactions and check information such as account balances whenever they
want.
"In terms of our contact with Ford SSIP members, today 40% is Web-based--a couple of years ago it was
single digit," says Graham. "The Ford employees are the biggest Internet users we serve. And as we enhance
the site, usage will increase even more."
ALMOST PERFECT
Fifteen months after the new SSIP was launched, another survey was sent out to measure members'
satisfaction levels. Despite the fact that pre-enrolment rates were "pretty good," the next survey done
with PricewaterhouseCoopers showed incredible improvement--over 90% now reported satisfaction with the
plan. "Everyone was surprised at the quantum of change," says Graham. "Only with the results of the second
survey did people see how bad the old plan was."
Results of the new survey also showed that dissatisfaction had decreased from 14% to 3% and employee
participation in the plan went up from 71% to 82%. "Part of the increase in participation rate is due to
the redesign of the program, higher visibility and more liberal rules," says Cameron. "With 3,000 employees
across Canada, we had some challenges. And we had to deal with tax laws, communicating the plan to
employees and transitional issues. But we now offer more support for our members and better service."
Another impressive result of the change in the SSIP is that the company didn't have to increase its benefit
ratio to improve member satisfaction. In fact, the changes actually resulted in cost savings. "Head count
savings and external charges to third party administrators went down," says Kathleen van den Berg,
marketing manager for Fidelity in Toronto.
Employees are also saving money, adds Cameron, since many mutual funds offer rebates on investment options
to members.
Fiorino says that everyone she talks to at Ford is happy with the new SSIP. "You'd be hard pressed to find
someone who's unhappy with it. Ford took a good plan and made it even better."
Sonya Felix is a Toronto-based freelance writer and a regular contributor to BENEFITS CANADA.
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