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Maytag Solutions Found in Consolidation, Redesign, and Automation

The appliance-maker reduced its 50 vendors down to 12.

September 18, 2003
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Related Topics: Retirement/Pensions, Benefit Design and Communication, Health and Wellness, Compensation
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Maytag Corporation executive vice president and CFO Steven H. Wood toldanalysts in November 2002 that the company had pulled $135 million out of cashflow for pension contributions in 2002 and would pay an additional $160 millionin pension contributions plus higher retiree medical expenses in 2003. TheNewton, Iowa, appliance manufacturer also faced increased health-benefit costsfor its 21,000 employees worldwide. "There are union health plans that wecannot change, but we have reduced the number of plan offerings for salariedemployees," says Tracy Sears, director of benefits programs. The companyconsolidated offerings in 2002 and estimates savings of $2 million for 2003. "Beforewe consolidated, we had 81 plans across the organization supplied by 50different vendors," she says. "Now we’re dealing with 12 vendors, so wewill be able to reduce costs through economies of scale. Also, we’re no longeroffering an HMO option, so employees do not have first-dollar coverage."

    The company is also addressing pension costs. Effective July 1, 2003, newhires will be offered a cash-balance plan and will not be eligible for retireemedical coverage. Current employees will be offered a choice between theircurrent retirement plan and a cash-balance plan, and must meet new eligibilitycriteria for retiree medical coverage. Maytag will shave almost $1 million off2003 benefit costs with a new automated enrollment system from ProActTechnologies that went live in October 2002. Before automation, Maytagadministered enrollment with staff at 12 regional offices. Five regionalbenefits administrators now perform the same functions. "Using an onlinesystem also frees up time for the regional benefits staff to communicate to eachlocation the benefit costs for the site and a comparison to a company norm,"Sears says. "Top management was behind the changes to support the head-countreduction and also felt there was a need to automate."

Workforce, March 2003, p. 38 -- Subscribe Now!

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