Does Your Committee Represent Your Workforce?
Our clients have shared that one of their top initiatives for 2021 is to improve workforce Diversity and Inclusion (D&I). We decided to examine our retirement plan fiduciary committees to see the makeup of these groups and what insights we can gleam. First, some background on the data:
As of 2021, ProCourse works with 134 corporate retirement committees, overseeing 166 corporate retirement programs. These committees are comprised of 508 individuals. The vast majority of these members represent senior management within their respective companies.
Based on our study, here is what we found:
The average number of members on a committee is three, with the median number being four. Our client committees range from as few as one member to as large as 12.
We found that the size of the committee increases with the size of the retirement plan. Once plans reach over $100,000,000 in assets, the committee size starts to level out around 5-7 members.
The committees tend to have representatives of Human Resources and Finance. As the fiduciary oversight structure matures, committees will add other business unit representatives to get a better feel for the participants in the plan.
From the perspective of female and male membership, 39% of committee members are female and 61% are male. According to the Bureau of Labor Statistics the US workforce is comprised of 47% female and 53% male workers.
With respect to race, the Bureau of Labor Statistics cites that the US workforce is comprised of 78% white and 22% non-white employees. The graph below denotes that the biggest disconnect from the workforce is the disparity in white (95%) versus non-white members (5%).
Things to Consider
Under current law, being part of a fiduciary committee (like your retirement plan committee) has one of the highest standards of care for overseeing other people’s money. There is potentially personal liability for members of the committee, so it is important that some thought goes into who is on the committee. Members should have experience and training to be part of these committees.
With that in mind, there are a number of ways to structure committees. A committee does not need to be made up with just voting members. Committees could have non-voting (and maybe non-fiduciary) members to provide insight. We have started seeing committees set up advisory sub-committees that are not part of the technical fiduciary committee to help provide additional insights about how the plan could better meet the needs of the broad employee population. We would recommend discussing this with your legal counsel to ensure that the fiduciary roles are clearly defined.
The results from our study leads us to believe that some committees do not represent the overall workforce and it is probably time to look at having members that could provide more insight about how these plans can better help all employees.
Also, be sure to establish a solid governance structure. Start with a committee charter that is approved by the board of directors of the company. The charter will help map out the overall reporting structure and how the committee operates.
We would encourage you to discuss these items at your next committee meeting and see how you can continue to improve outcomes for both your workforce and your organization.