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Principal Financial Group has recognized Michigan State University Federal Credit Union as one of the top 10 companies in the nation for employee benefits.

The CU with more than $1 billion in assets and 120,000 members was the first credit union to make the list.

"We were surprised," said Tom Surline, VP Human Resources at MSUFCU. "We know we had a good program, but never had any idea it was this good."

It was among 1,800 entrants competing for a top spot in PFG's 2003 Best Practices Guide for Employee Financial Security for small and medium-sized businesses or those with five to 1,000 workers. MSUFCU has 260 employees.

Since winning the honor from PFG, the largest provider of 401(k) plans in the United States, Surline said the credit union has been featured on CNN, in The Wall Street Journal and Business Week, and on local radio and newspapers. He added that representatives from various companies, including "tons from credit unions," have called asking for advice.

In addition to the press, the winning companies are featured in the 2003 Best Practice Guide that includes in-depth information and tips on how they maintain such high standards.

"We created this guide because the innovative practices of these impressive organizations can help other companies overcome the challenges -and reap the rewards-of helping employees secure their financial futures," said Principal Financial Group VP Carey Jury. "The experiences of MSU Federal Credit Union along with these other outstanding companies demonstrate that strong benefits build a strong workforce which leads to a strong bottom line."

The guide, available at no charge at, highlights how each company's health insurance and retirements benefits plans and pinpoints how they have managed spiraling health insurance costs. It offers tips and solutions based on real-life tactics and includes a checklist to help employers identify gaps in their own programs and a tool for companies to benchmark their programs against others across the nation.

"What makes this guidebook particularly useful to businesses is that the winning companies don't necessarily offer the most generous benefits packages," Jury said. "Rather, they have designed creative and innovative benefits programs that can be adopted by companies of various sizes, industries and states of financial health."

The Saratoga Institute and an independent panel of experts from both the employee benefits and human resource industries selected Principal's 10 best companies.

Criteria included the breadth and depth of financial benefits offered and the level of commitment by the company to its employee's financial security. Also highlighted were the exceptionally low turnover rates-4% compared to a nationwide average of nearly 9%.

MSUFCU, the largest university-based credit union in the world, stood out in particular because it offers 100% employer-paid medical insurance premiums for retirees, employees and dependents and 100% paid hospital coverage.

MSUFCU's Surline said when medical insurance costs increased by 17% several years ago, the credit union worked out a plan to prevent having to pass the cost onto employees.

That response included three medical plan options. The credit union pays the entire premium for the least expensive plan while employees contribute a small amount toward the premium if they choose one of the other two plans.

Admittedly, getting to that point wasn't easy, Surline said.

"But the bottom line is service to the members and part of that process is that you have to support your staff and motivate serve at that level we want."

Surline said one of the company's most effective practices is getting creative and aggressive with vendors, which, in some cases, means pitting several against each other in bidding wars to get MSUFCU's business.

For example, "We find major medical carriers that can provide the level of service we want. We tell them of our experience and let them compete against two or three others to give us the cheapest plan at that level."

As far as health insurance goes, this tactic got MSUFCU a 13% increase in health insurance costs when other companies were seeing a 20% increase. "It's still a substantial increase, but the board of directors supports the idea that we can handle a certain amount."

The obvious downside of this practice is that changing vendors is a "pain in the butt, pardon my French," Surline said, referring to the paperwork process.

But, consider the paperwork hassle to "literally hundreds of thousands of dollars in savings over the years" and the former doesn't seem worth complaining about. Surline said another successful practice he uses is "stealing ideas from other companies."

Creative And In Touch

"Your benefits people have to be really creative and in touch with other credit unions (as well as outside industries) on their best practices."

MSUFCU also stood out for its 401 (k) match of 200% up to 5% of pay and 100% coverage of long-term disability premiums.

"We strongly believe that benefits are a retention tool for us," Surline said. "Our turnover is approximately half of the average credit union's turnover."

Of 260 employees, 92% participate in MSUFCU's retirement plan, in part because of the company's efforts to educate them on good health and the best use of benefits via health fairs, newsletters and staff meeting discussions.

"MSU Federal Credit Union...has managed to maintain and in some cases increase its commitment to employees even in hard economic times," Jury said. "They will have a tremendous competitive advantage when the job market opens up again."

Surline said he would share MSUFCU's successes during a CUNA-hosted meeting in Miami.

He plans to invite speakers from other credit unions who have won similar awards to discuss their best practices.

Surline added that he has also been chosen to be among the judges for next year's winners. Among the most recent judge's panel were two previous winners and representatives from the Employee Benefits Research Institute, the Profit Sharing Council of America and the Kellogg School of Management at Northwestern University.

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