Sponsors of DC and other capital accumulation plans have long struggled to persuade their employees to take full advantage of corporate savings programs and play a more active role in their own retirement readiness. With these goals in mind, Canadian Tire Corp. recently embarked on a comprehensive and innovative communication effort, designed to change employee behaviour.
Steering toward good choices
Similar to employers with DC plans, Canadian Tire had noticed a series of concerning trends with its deferred profit sharing plan. The majority of employees were defaulting, selecting cash options where available and/or underutilizing the recordkeeper tools and RRSP options.
“As an organization, we knew we had some issues with plan participation and behaviour,” explained Jackie Goldman, vice-president of HR programs with Canadian Tire Corp. “We felt we were offering employees plenty of options but feared that they were not always making the best retirement savings choices.”
Canadian Tire confronted these challenges with two bold moves: launching target date funds to address concerns over employee defaults and switching to a communication approach that focused on both marketing and education.
Keeping it simple
Instead of providing more information, Canadian Tire decided to provide less—but to do so more often, and using different media. Canadian Tire employees received emails about the new fund launch, a personalized letter that notified them of their profit sharing award and an updated guide on their plans. For information sessions, the organization sent out electronic invitations that contained a link to a catchy Flash video, as well as the company website.
Changing the frame
The framing was also changed from being primarily positive to one that focused on lost opportunities. This change in focus helped employees to understand what they were losing by inaction, rather than what they could gain from changing their behaviours. This move was based on marketing research that has found that people are more likely to take action if they perceive a loss rather than anticipate a gain.
The communications used real-life examples so that employees could begin to understand the motivation behind different decisions. The company wanted employees to see themselves in the profiles and begin to use the Canadian Tire retirement and savings plans in a way that fostered greater retirement savings and more accountability for their own retirement readiness.
All communication materials were developed with the goal of staying loyal to the organization’s traditional Canadian roots while also encouraging employee accountability. Canadian Tire employees reaped the benefits of more concise, simplified presentations and decision kits, as well as helpful People Like Me examples. These materials had a clearer, fresher look and focused primarily on the rewards available, with examples illustrating how vastly retirement savings differ for those employees who maximize their plan options compared with those who do not.
The results speak for themselves. The active award allocation increased by 50% from the previous year, and the percentage of employees directing their allocation to a registered investment jumped from 28% to 40%. In addition, 2,322 employees took advantage of the insurance provider’s planning tools, up from just 442 in the previous year, and a boom in meeting attendance as numbers climbed to 2,800 from 550.
“We believe that what we’re seeing is the beginning of a real change in employee behaviour, and we’re very proud that we’ve made retirement savings a priority for our employees,” says Goldman. “We had hoped to make an impact and spark significant change—but I don’t think anyone expected the results to be so impressive, so soon.”
In the current uncertain economic climate, it is critical that employees understand and accept their role in managing their retirement savings. The success of Canadian Tire’s campaign highlights the importance of effective communication of retirement options—in this case, with a marketing flavour.
While retirement-readiness risk is a very real concern for employers across the country, the positive results Canadian Tire achieved provide a timely reminder that steps can be taken to spark change.