In response to information gathered via focus groups and our DHG Voice partner and employee Engagement Survey, we have enhanced our DHG retirement plan. Michele Workman, Total Rewards Manager, shares how these changes positively impact financial wellness for our people.
AGH: Hello everyone and welcome back to another episode of our DHG Podcast series. I’m Alice Grey Harrison, your host, and I really love this venue because we get to hear from our people about all the things that matter the most to them; careers, people and flexibility. Today I have with me Michelle Workman, our Total Rewards Manager, and I have to say that Michelle is exercising Life Beyond Numbers today. She has a child who’s sick and so we’re talking to Michelle from her home, doing a little flexibility today. Welcome, Michelle.
MW: Thank you Alice Grey.
AGH: We are so fortunate that we work for a company where we can be flexible like this isn’t it?
MW: Yes we are. I am very fortunate to work for DHG who allows me to get my work done but also stay home with my family when the time arises.
AGH: Absolutely, we’ve all been there. So today, I want to talk about some of the changes to our retirement plan. We rolled out some changes that went into effect of June the 1st and I think that it’s really, really exciting. So can you tell me what these changes mean to our participants?
MW: Sure, I would be glad to. As we focus on the overall well being of our employees, we recognize that financial health is an important component. We survey our employees annually with our One Voice survey because feedback is very, very important to us. Our most recent survey results indicated a desire for a stronger and more understandable 401k plan at DHG. So, in response to that feedback, we have made positive changes that support our desire to provide our employees with opportunities for financial health, and it supports our Life Beyond Numbers focus on the people, careers, and flexibility, which we were just speaking about.
AGH: Excellent. So what exactly are these changes?
MW: One of the changes that we’re most excited about is immediate eligibility. We previously had a one year service requirement along with only two plan entry dates per year. So I’m really pleased that our new hires have the opportunity to start not only deferring immediately into their 401k, but to also start receiving profit sharing funds right away. Another great aspect of the changes is that instead of waiting until the end of the plan year to make one profit sharing contribution for that year, we’ll be making monthly contributions. Participants will be able to seek profit sharing money in their individual accounts monthly.
AGH: Wow, that’s really fantastic. So are the profit sharing funds that go into my account always mine or is there still vesting that applies?
MW: That’s a great question. You’ll be glad to hear that we have shortened our vesting schedule. Previously, it took six years to become 100% vested and now it only takes three years. Effective June 1, we now have what’s called a three year cliff vesting, which basically means that — all or nothing. So after someone has been here for three years, they’re 100% vested.
AGH: Oh, that’s great. So I also noticed that we’re now using the word “profit sharing” and not the word “match,” and I am a communications person not a numbers person, so can you explain to me what are the differences in the two and why our firm decided to go with profit sharing rather than a match?
MW: Sure and I know that sometimes it can be very confusing. Our profit sharing plan provides for a contribution regardless of whether or not you or any participant contributes their own money. So a match typically matches a portion of what a participant puts into their account, therefore, matching plans require you to defer your own money to receive the contribution. But by using profit sharing instead of a match, the firm is able to give every eligible participant a full contribution. Most matching plans would only give a defined percentages of the participant’s contributions. Now, we encourage you to save and help build your own personal financial health but our profit sharing plan does not require you to make any contributions at all. So if something happens in your life and you’re not able to contribute the amount that you want to contribute, or let’s say that you’re not able to contribute at all, you would still be able to receive a profit sharing contribution from DHG. So saving as much as your budget will allow is always our recommendation, but we do realize that sometimes life happens and you’re not able to do that. We would never encourage you to rely solely on the firm’s contributions.
AGH: Ah, okay I think I got it. But just to make sure, because you know that I’m not a numbers person, I’m a words person, can you give me an example of how this would work, just so I am clear?
MW: Sure.Okay so let’s use 3% as the target contribution. Let’s say that Sally is in a matching plan that matches 50% of the amount she contributes. She would have to put in 6% of her own money in order to receive 3% from her company’s match. However, if she were in a profit sharing plan instead of a matching plan, like we have at DHG, she will receive a full contribution without being required to contribute her own money. So if the profit sharing plan provides the 3% contribution she would get the full 3% regardless of whether or not she contributed at all.
AGH: Okay, that totally makes sense. So, wow, this sounds like a really exciting change and I‘m excited that we’re able to share this information externally so that our recruits can see exactly what it is that we do and how we listen to our people, because this is a direct response to feedback that we’ve gotten through our engagement survey as well as through just general conversations around the firm. For those of our employees who are listening, if they have any questions, I assume they just talk to the HR generalist in their office?
MW: Yes, they can talk to their HR generalist who will be able to assist them. We also have information posted on our internal site, the Compass, and it provides a host of information including examples of when you should consider increasing your contributions and all kind of resources that we would direct people to.
AGH: That’s great. Well thank you so much for taking time out of your day. I know that you’re at home and I love the flexibility that allows you to be there for your daughter and there for me when I need to do a podcast.
MW: Well, thank you so much. I appreciate the time and I’m glad that everyone had a chance to listen to our 401k podcast and learn about profit sharing at DHG.
AGH: Absolutely, and thank you all for listening to Life at DHG, our premier podcast series. If you liked what you just heard, I hope that you’ll tell your friends and colleagues. Be sure to check out our DHG blog for more great stories about our Life Beyond Numbers. Join us next time for another edition of Life at DHG.