The same peer group that communicated changes to Grass Valley Group Inc.'s 401(k) plan was instrumental in making the changes.
Grass Valley Group executives asked for volunteers to form a focus group that would spend an hour or two every week for up to eight months to examine the $35 million plan.
Fifteen employees took on the task of finding out what their colleagues wanted in their 401(k) program and why.
"The focus group did a great job. They took the chore seriously and went out into the company for the few next months, asking their fellow workers what they wanted, what they liked and disliked. They took notes and came into the focus group meetings armed with information and anecdotes, ready to design a plan which really met our employees' needs," said James J. Shields, director of compensation and benefits.
"Their findings boiled down to three basic things employees wanted: easier access to accounts; more timely benefits statements; and better investment returns.
"Ultimately, a bundled approach was determined to answer most of our needs."
Previously, the 401(k) plan was unbundled, using a local bank for trust services and a separate record keeper. The plan was valued monthly, with benefit statements mailed eight weeks after the end of a quarter, and the receipt of a 401(k) loan check taking as long as six weeks from the end of the month the loan was requested.
The focus group also interviewed vendors and made a final recommendation to Grass Valley's official 401(k) selection committee, which accepted that recommendation.
Grass Valley selected CIGNA Corp., Hartford, Conn., to provide a mostly bundled, daily valued service program that began Jan. 1.
CIGNA provides full record keeping, voice response, communications, plan accounting, consulting, administrative and investment education services, including a PC-based software program that integrates 401(k), Social Security and defined benefit plan information into one planning model.
CIGNA manages three of the six new mutual fund options: guaranteed investment contracts; Standard & Poor's 500 stock index fund; and a growth equity fund. Two funds from Fidelity Institutional Retirement Services, Boston, are offered - the Income and Growth Fund (balanced) and the Contra Fund.
Grass Valley also offers an international equity fund managed by Warburg, Pincus Counselors Inc., New York.
Shearson Lehman Brothers, New York, had been the investment manager, providing equity, bond and money market funds.
Under the new plan, participants now have unlimited transfer capabilities. Statements are available three weeks after the end of the quarter. Loan checks usually are available within one week of a request.
The company saved about $100,000 in plan administration costs by moving to the new plan design. Trust fees, for example, dropped to $29,000 from $62,000.
Meanwhile, employees diversified their asset allocations with the new investment options, dropping to 45% in the GIC fund, from 60% that had been invested in the money market account, the nearest equivalent.
The moderate growth and growth and income funds together have attracted about 35% of total plan assets. The old plan's stock and bond funds each held about 20% of assets, while the more aggressive Contra fund holds 11% of assets and the international fund, about 6%. The equity index fund has about 3% of plan assets.
With increased outsourcing, especially of questions now answered by the new voice-response system, the human resources department staff dropped to 12 from 28 and the employee benefit department to two from six.
Grass Valley made a point of keeping all employees informed throughout the yearlong redesign.
Progress reports appeared in the biweekly company newsletter. And, electronic mail messages went out to managers, who went on to explain the changes to department staff. Employees called the human resources department to express their opinions.