Case Study: A Plan With Many Uses

Strategic Data Analysis


Challenge

A global aerospace company recognized the potential value in the defined contribution plan it offered as both a business-planning tool and a recruitment/retention tool. Management saw both high participation rates and high balances relative to an individual’s projected retirement age as measures of success in the 401(k) offering. Overall reports from the administrator showed that participation in the plan was good but not excellent, with 75% of the employee population contributing to the plan. Contributions viewed as a percentage of payroll were above the 50th percentile (averaging 6.5% of payroll), but the number of outliers and the contribution range among them painted a less consistent picture.

Our Consulting Strategies

Sibson Consulting took a deeper dive into the data than the plan’s provider could provide.  Our analysis yielded information that identified the largest group of consistent outliers: a shortfall was specifically occurring with female employees in a certain location. 

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Plotting the participation data by age of the outliers from the analysis showed an inverted bell curve with the lowest point in the dip from ages 30 to 39.

Sibson partnered with HR to better understand why this specific cohort might be under-participating, and created participant profiles to help HR, as well as the actual employees, understand their behavior relative to others. We also examined other economic factors tied to that location that could potentially affect the 401(k) plan participation behavior, and we found that childcare costs were higher than expected and childcare options were limited in the area.

With this information in hand, HR reached out to a cross section of the group to address the issues and asked for their partnership in finding workable solutions. Initial meetings, which included a member of the Sibson team, demonstrated the long-term value of the 401(k) plan via projections and also presented research on options for lowering employee expenses to allow higher payroll contributions to the plan.

The Value

Taking a deeper dive with specific analysis into the data uncovered information that would not be readily apparent from standard, broad-based reports. Employee relations/engagement has improved from the company outreach suggested by Sibson’s Analytics Team. The overall participation rate is now almost 90%.

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