So, the head of the 401(k) plan for a large grocery chain notices that in some stores there is zero participation in the plan while in others there is close to 100%. He flies over to the stores to investigate. First, he discovers many of the company's employees can't speak English. They rectify that by translating their defined contribution plan information, but the problem remains. So he asks some of his employees how they chose whether to invest in the plan and how they made their investment choices. It turns out they asked the butcher. Each market had a rabbi, the smart guy of the community, and that guy was the butcher.
-- Shlomo Benartzi, professor at the University of California at Los Angeles, Anderson Graduate School of Management
A new manager of the 401(k) plan for a National Football League team decides to go to the field to boost participation in the plan. Each day he goes up to one of the main players while he is training and asks why he hasn't invested in the 401(k) plan. Each day the player ignores him and keeps training. Finally, the manager gets fed up and follows him into the locker room. He gets right in the player's face, demanding to know why he is not participating in the 401(k). The player looks up, sweat dripping from every pore, and says to him: "Listen, I've been training very hard. I'm too tired to enter the 401(k)."
-- Sherrie Grabot, senior vice president defined contribution group for The TCW Group, Los Angeles
A few months ago, Hewlett Packard Co. implemented automatic enrollment in its 401(k) plan. Since then, 98% of the people hired by the Silicon Valley computer firm are participants in the 401(k) plan. When told the news, the CFO grimaced: "Find the other 2% and fire them; we don't want them working for us if they won't take free money.'
-- Brent Hartman, Hewlett Packard employee benefits financial manager, Palo Alto, Calif.
