Family-Style Planning

This 34-year-old company considers itself a family organization. The leaders feel a sense of responsibility to the employees, which is why they’ve offered profit-sharing from the beginning, says David Carnahan, vice president and general manager of operations. But in 1995, the executive team decided that profit-sharing wasn’t enough. “The employees needed to be more involved in investing in their own future,” he says.

Until that time, the company made all the decisions about where profits were invested. Employees couldn’t contribute their own money, and the funds weren’t growing fast enough, Carnahan says. The situation could have placed the company at risk of legal action if retirement funds didn’t increase properly.

To give employees more control and reduce their liability, Penna Flame added a 401(k) package to its retirement program in 1995 with a partial match of funds. “It was an opportunity to shift the burden and let employees customize investment choices based on their personal needs,” Carnahan says.

To support the new program, and to give employees the confidence and knowledge to make shrewd investment decisions, Penna Flame developed a partnership with a local bank to host on-site seminars and investment workshops. Together, they explained equity, risk assessment, and fixed-income management, and handed out literature. It still wasn’t enough.

Carnahan wasn’t permitted to provide investment advice, which is what many of the employees wanted. “Our people are blue collar. Investing is not something they are necessarily good at, but they know it’s important.”

To help solve the problem, Carnahan invited Brad Thomas, a local investment representative from Edward Jones, a securities firm headquartered in St. Louis, to meet with employees. Because of shift schedules, it didn’t make sense to hold one large employee meeting, Thomas says. Carnahan introduced Thomas to employees during several short meetings held directly on the shop floors. At the end of each meeting, employees were given a sign-up sheet for individual counseling sessions.

Over two days, nearly all of the employees met with Thomas, free of charge, to discuss their investment portfolios. “We took a snapshot of where each employee was financially and what their goals were,” Thomas says. Then he made investment recommendations based on their situations. “People want specific advice for their particular circumstances,” he says. “Education alone doesn’t tell people whether a fund is right for them.”

The employees were thrilled, Carnahan says. “It’s a win, win-win situation.” Employees get sound advice, Thomas makes business contacts, and the company shows its concern for the welfare of its people, which affects retention. “Heat treating is a selective skill set. We don’t want to lose valuable employees because we are not dealing with their retirement needs. That’s a big issue for our people.”

Workforce, May 2002, p. 68 — Subscribe Now!