Here at 401(k) Specialist, we’re proud of all our Top Advisor by Participant Outcomes (TAPO) honorees over the years, so it caught our attention when we saw July 2019 TAPO honoree Kathleen Kelly of Compass Financial Partners, a Marsh & McLennan Agency LLC company, featured in the new edition of The Participant, State Street Global Advisors’ flagship retirement publication.
Kelly was honored as a TAPO finalist in part for her strategic approach to developing education and communication programs with clients, the goal of which is empowering employees to make the right decision.
Those attributes shine through in an April 28 case study article titled, “Lenovo Leads with a Commitment to Participants’ Needs,” about the Lenovo 401k plan, where Kelly serves as retirement plan consultant.
State Street Global Advisors has graciously agreed to let us share some excerpts below from that piece, which can be read in its entirety here.
Empowering employees to invent and experiment
From the State Street Global Advisors article:
By any measure, Lenovo’s $2 billion 401k plan has produced remarkable results. With one of its dual headquarters in Morrisville, N.C., the U.S. division of the global technology company has achieved 98% participation, as well as an 11% average deferral rate. But Lenovo’s ambitions are higher still. Four years after its employees were auto-enrolled, the company wants them to save 20% of their income, which would include the company’s 6% match.
“Why not?” said Ryan Whitehead, senior benefits manager at Lenovo, who oversees the company’s U.S. and Canadian financial benefits programs, as well as its defined benefit programs outside the U.S. His question isn’t flippant, but instead reflective of Lenovo’s entrepreneurial attitude and test-and-learn culture. “You have to be willing to try things out.”
Disruption is something most retirement plan committees try to avoid. But in the fast-paced tech industry, it’s the only way to succeed. As Lenovo has grown from a two-room Beijing startup into a leading global giant, it has held on to its hunger for innovation. It strives to stay close to customers and respond quickly to the market by empowering employees to invent and experiment. Innovation has been the key to anticipating customers’ needs—and employees.
That experimental spirit is exactly what makes Lenovo “a great case study,” according to its retirement plan consultant, Kathleen Kelly, of Compass Financial Partners, a Marsh & McLennan Agency LLC company. Kelly has been working with Lenovo’s 401k program for over a decade, starting before Whitehead joined the company. “Courage is a good word to describe them. Often, there’s a certain degree of fear about making changes that won’t be well-received. Lenovo takes an informed perspective, makes a decision and moves on.”
Auto-escalation
Sponsors often worry about sparking a backlash if they introduce major changes. In 2016, the Lenovo committee wondered how participants would react when the entire population was swept into a 6% automatic enrollment rate—a big leap from the previous 3% rate. But the feared blowback never materialized. Only a handful of employees set their contribution lower. Even fewer opted out entirely. Nor was there any pushback when Lenovo subsequently upped the auto-increase to 2%.
Transforming the plan
Lenovo’s plan wasn’t always what it is today. Its transformation took years of effort and committed teamwork to harmonize multiple legacy plans. When Whitehead joined Lenovo, he inherited a 401k plan that offered a 5% profit-sharing contribution plus a 3% match. In 2014, Lenovo acquired IBM’s x86 server business, including the global employees behind it. Subsequently, the company’s 2014 acquisition of Motorola Mobility included a plan with a 4% match.
The resulting mosaic of retirement plans was clumsy to administer and confusing to navigate. Something had to be done.
Moreover, the retirement plan was only one in a long list of employee benefit programs that needed to be reconciled. The easy fix would have been to tweak the company’s marquee benefit program first—its 401k plan. But Lenovo recognized that saving for retirement wasn’t a standalone concern. Every part of its employees’ lives was interconnected: Retirement savings was one part of a larger financial picture, one that affected mental and physical health. Solving for a single benefit in isolation wouldn’t necessarily make employees feel any happier, healthier, or more secure. Lenovo decided to take a wider view and focus on what really mattered: its employees’ total wellbeing.
Holistic approach paid off in 2020
“The biggest takeaway is that you do truly have to use a total wellbeing approach,” said Whitehead. “Things kind of blend together now.” Fresh off its success in the U.S., Lenovo began offering a global employee assistance program just over a year ago.
Later in 2020, it rolled out a larger global total wellbeing program, leveraging ideas tested in each geographical market to benefit other locations around the world. The program and its rollout timing were prescient, as a global pandemic called for a global wellness solution—and Lenovo had one at the ready.
Read the entire article from State Street Global Advisors here
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