New economy companies need new economy suppliers. Dutch group Getronics certainly fits that description and is thriving on meeting customers’ demands for consulting, design and implementation of information and communication technology services on a worldwide basis. It’s a solutions company, independent of the IT vendors, though it works with the major technology suppliers worldwide.
And this is big business now, as Getronics demonstrates, with revenues of E4.8bn and a workforce of 34,000 globally, controlled from the headquarters in Amsterdam and regional head offices in Boston, London, Singapore and Washington.
“In a knowledge economy, finding and enhancing knowledge workers is a top competitive priority. Because of this, there is a real ‘war’ for talent out there ,” says Paul van’t Hooft, director human resurce management, based in the Netherlands. “We have to provide opportunities that are rewarding both financially and in terms of job satisfaction,” he maintains, as the average IT professional is very self confident and highly independent. “In choosing an employer, they determine whether this employer can meet his or her ambitions and aspirations.”

For a group like Getronics, very much a people business, the only way to maintain its lead is to be the “employer of choice” in order to attract and retain the best people. As he puts it: “Genuinely ‘adding value’ talent will only want to join if brilliant people are around.” That’s a tall order for any HR department andresults in an array of activities to meet employees’ goals, such as running the ‘Getronics Virtual University’.
On the financial rewards side, a global compensation scheme has been introduced. “This represents a shift from fixed incremental pay increases towards a pay-for-performance philosophy,” he says. Stock option programmes cover 8% of the workforce for management and the high fliers in the organisation and a new shareplan for all employees has been announced.
On the benefits front, flexible benefits are the order of the day. “An employee, for example, can buy or sell holidays, or can allocate incentive payments for pensions,” van’t Hooft points out. But the success of any benefits programme is determined by how well it is communicated to staff. “Our primary goal is to increase the ratio between value and appreciation by our employees.”
The group has adopted a global pension strategy using the defined contribution (DC) model. “Although we understand that based on local law it is not always possible to implement this strategy directly in each of the 40 countries where we have a presence, by implemeting a world-wide policy the direction is set for the future development of the local pension plans in the different subsidiaries,” says van’t Hooft.
Another reason for choosing DC plans was because they offer a transparent financial cost structure and less administrative complexity for subsidiaries introducing them. “And that’s not to ignore the individual flexibility for employees in a fast moving industry such as ours.”
The group decided against the defined benefit (DB) route for carefully considered reasons. “Sophisticated calculations are required under DB to determine a benefit formula consistent with our objectives and budget,” he notes. The investment aspects also require attention and monitoriong with DB and the employers annual costs are reduced or increased by investment performance, he adds. “Poor understanding of DB plans’ benefits by employees reduces the perceived benefit of the plan.” And tellingly in Getronic’s case, there can only be limited options for individual choice by members under DB.
In the Netherlands alone, the group was faced with 15 different pension plans for its 8,000 employees, partly as a result of major acquisitions over recent years. “A strategic decision was made by the end of 1998 to transform all the different pension plans by integrating them into one umbrella scheme. This was designed to facilitate employees making individual choices, while providing the group with a transparent cost over the longterm.” By having a scheme covering all Dutch sites, another aim was to have a positive impact by reducing limitations to an effective job rotation policy, says van’t Hooft.
The implementation was undertaken by “a country taskforce”, made up members of the existing pension fund, and people from HR and the finance side. But the final shape of the plan reflected the findings of an internal employee opinion survey and the implementation process itself resulted in feed back from local representatives, which included works council members at the different Getronics locations.
“During the start of the implementation process, we were confronted with some scepticism from the works council as well as trade unions, since the proposed plan was DC, therefore unknown and consequently unloved!” He adds that DC plans are often seen as less attractive for employees than a DB, having the image of being a cost reduction excercise by the employer, he says. “In the past this may have been the case, but nowadays DC plans provide comparable results to DB and do not have a policy of reducing costs for employers.”
Communication formed a large part of implementation. “Employees were informed via brochures, helpdesks, presentations at the different locations and a ‘Windows application’ that enables them to make calculations based on their individual circumstances.” This effort was rewarded with the plan being very well received by employees, and not just the older ones, but also those in the 25 to 35 age bracket. “So we think we achieved our objective of having a plan that increases the ration between value and appreciation and stimulates employees to make their own individual choices.”
The plan, which is administered externally by the Fortis insurance group, provides each member with an individual pensions account. “The balance on this account can be invested by the employee through a mix of shares and bonds based on pre-defined market indices, ranging from 100% in bonds or up to 100% investment in shares. The sum total of all the individual decisons is invested in the market indices through a lump sum payment, with the investment results coming from the performance of the related market indices,” he says. The investment mix can be changed once a year. Getronics pays for all the investment and administration costs related to the plan.

Another option is to allocate the contributions to a “so called collective portfolio of shares and bonds, predefined by the Getronics pension fund”. Here a minimum investment performance is guaranteed over a long period. “But this guranatee is only applicable if the money is invested in the collective portfolio for the duration of the employment.”
At the time of launch in spring last year, 35% of employess opted for market based investments relating to market indices, and this proportion has grown to 50% since. “Members are informed regularly via intranet about the performance of the underlying market indices.”
As part of the plan design, all employees are covered for spouse’s pensions, for the period up to age sixty two and a half, which is the normal retirement age, as as well as beyond if the employee continues to work after that. The benefit is designed to mirror the 70% of old age provision traditionally provided under pension plans and the premiums for this are paid by Getronics.
The employee’s contribution to the plan is 7% of pension salary, with the group paying 5% annually for employees below age 40 and 10% for those over. The cost of the spouse’s pension and the investment and administration charges cost the group altogether another 4% of payroll.
By May of this year, says van’t Hooft about 60% of employees had changed to the new plan. “By the end of next year, we plan to complete the whole implementation process by achieving our goal of one integrated pension plan for all employees in the Netherlands, after a process that will have taken three years altogether to implement,” he says.
“But most important is the feedback of employees, which is very encouraging. The perception in the organisation with regard to the pensions has changed from an old fashioned image into one of a modern flexible benefits that creates individual opportunities for employees. This awareness leads us to the conclusion that they appreciate the plan benefits more than they were used to in the past. As a consequence, the orgnisation can benefit by an improved positioning in a competitive marketplace.”
This article is based on an address to a Fortis group conference held earlier this year in the Netherlands

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