Thermo Fisher Scientific

Having so much merger and acquisition activity has led Thermo Fisher to … develop an “M&A tool kit” for plan integrations.

As it continues to integrate acquired companies into its 401(k) plan, Thermo Fisher Scientific, in Waltham, Massachusetts, also keeps watching its plan data closely. With 92.2% participation, 8.3% average deferrals and 75% of participants invested in target-date funds (TDFs), the plan has some strong data.

But Thermo Fisher has embarked on a targeted communications campaign aimed at improving that data—and participant outcomes. “At Thermo Fisher, they’re always asking the question, ‘Is this plan working for everyone?’” says Francisco Negron, head of client services at the plan’s recordkeeper, T. Rowe Price Retirement Plan Services in Owings Mills, Maryland. “Even in a great-looking plan, if you look deeper, you can always identify places where there’s room for improvements.”

As a fast-growing manufacturer of scientific equipment, Thermo Fisher makes products for industries such as life sciences research and patient diagnostics. Acquisitions have played a key part in the company’s growth trajectory.

“We’re very specific about what technology we want to acquire to complement our diversified portfolio [of products],” says Vice President, Total Rewards, Timothy Coughlin. In its core businesses such as life sciences and basic lab equipment, there has been little consolidation thus far, he says.

Mergers, acquisitions and a tool kit

Coughlin has been at Thermo Fisher for four years and over that time has warmed to the idea of integrating benefits after making an acquisition. “Previously, the model was to integrate employees into our 401(k) as soon as we could and have a ‘do no harm’ approach for the vast majority of benefits. But now we’re on a path of harmonizing all benefits as best as possible. It’s all about scale and growth for us. To me, it’s about how we thoughtfully integrate folks into our company.”

Thermo Fisher filled about 22,000 jobs last year, and an integrated benefits approach makes it easier for employees to transfer from one area of the company to another, Coughlin says. “As we get bigger, we’ll want more employees to move from division to division and from geography to geography.” Having different compensation and benefits approaches between divisions would create what he refers to as a “talent barrier. We don’t want to turn every transfer into a business-integration issue,” he says.

Having so much merger and acquisition (M&A) activity has led Thermo Fisher to integrate many retirement plans into its own 401(k), so it has developed an “M&A tool kit” for plan integrations. The kit includes helpful items such as a fiduciary checklist, compliance protocol and benchmarking guidelines. “When I joined the company, more than two years ago, I wanted to make sure we had a repeatable model for integrations and that we leveraged the experience we have,” says Vice President, Global Benefits, Pascale Thomas. “If you look over the past 15 years, we’ve done 45 integrations into our 401(k) plan.”

In some cases, Thermo Fisher transitions an acquired company’s employees into its 401(k) plan almost immediately, while employees at other acquired companies transition to the plan in 12 to 18 months. “We really try to weigh the disruption to employees against the opportunity to help them feel like they’re part of Thermo Fisher immediately,” Thomas says. “Our retirement plan is the ‘marquee’ benefit, and it tends to be more generous than the plans of the companies we’re acquiring.” It has a 100% of 6% match, for example.

Thermo Fisher put the M&A tool kit together between 2018 and 2019, Thomas says. “We worked very closely with T. Rowe Price to develop it, so that we’re focusing on a key set of considerations in doing an integration,” she says. “It’s an online checklist, focused on the process to get employees at acquired companies integrated into the Thermo Fisher plan in a seamless fashion.”

The company wants to fulfill its fiduciary duties while also minimizing disruption to employees, Thomas says. “We have an immediate fiduciary responsibility for a plan, whether we’re integrating it immediately into our plan or not.” So, in the interim, the tool kit clarifies issues such as committee meeting protocols, key responsibilities to stay on top of, such as nondiscrimination testing, and plan benchmarking. In some cases, staff at an acquired company continue doing day-to-day plan oversight until the integration into Thermo Fisher’s plan.

Thomas says Thermo Fisher itself benefits from the consistent approach to the plan-integration process. “It’s putting all of the key issues into one place,” she says. “Now, we have a resource we can go to, to ensure we keep ourselves accountable for an integration.”

A strategy ‘grounded in data’

Thermo Fisher has an overall strategy to foster employee well-being, and it includes a financial pillar “that we were very keen to pursue,” Thomas says. So the company decided to work with T. Rowe Price on taking a deep dive into the 401(k) plan analytics, to evaluate employee engagement with the plan. “We knew any additional interventions we did with those employees had to be grounded in data, because everything we do at Thermo Fisher is grounded in data.”

Because the Thermo Fisher plan has strong overall metrics, the recordkeeper was able to use these to identify pockets of employees who need additional help, Negron says. Its study pinpointed several groups who could benefit from targeted education:

• A percentage of employees who had been automatically enrolled at 3%, but remained at that deferral rate and needed to better understand the benefits of automatic escalation;
• A pocket of individuals doing their own, suboptimal investment allocations—e.g., investing in five or more menu options or allocating heavily to company stock—who needed more awareness of the importance of diversification and periodic portfolio rebalancing; and
• Certain hourly employees in the 0% to 3% deferral range, who needed motivation to contribute at 6% so they could maximize the 100% of 6% match.

Last year, Thermo Fisher started rolling out a communications strategy, targeted at these groups of employees. Many of the workers had something in common, Negron says. “Usually, these are the participants who are the least digitally engaged, so it’s more challenging to communicate with them,” he says. “We realized we’d have to do targeted on-site meetings.”

The on-site group meetings were on hold due to the pandemic, but discussions have begun about when they might resume, Negron says. Meanwhile, T. Rowe Price uses other channels such as email to send targeted messages to these employee groups. Asked for the most motivational way to approach hesitant employees with this type of messaging, Negron says, “Provide them with a targeted, personalized message at the time they’re ready to receive that message.” —Judy Ward