World Business

The fast-food giant is persuading more African American workers to enroll in 401(k)s. Can McDonald’s keep talent by the agency of helping families save?

By Lauren Young

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Inside the McDonald’s (MCD) off Interstate 270 in suburban St. Louis, manager Sadie Travis is hustling. Amid the beeping and buzzing of fry timers, Travis at any given moment is voiding orders at the make a record of, handing out cups in spite of drinks, wiping trays, or stuffing toys into Happy Meal boxes.

If only the fast-food titan could get more people like her to course its 6,700 company-owned restaurants. While an average McDonald’s grosses $2.2 million a year, seasoned managers who motivate employees and keep customers advent rear can add more than $200,000 to that total. “Restaurant managers are in the most important position in our company,” says Richard Floersch, McDonald’sitting chief human resources magistrate. Yet despite generous salaries—up to $62,000 plus reward and company car, say insiders—turnover is a true disquiet in an industry that typically sees 43% of its staff leave each year.

To stanch the bleeding of valuable talent, McDonald’s in 2004 began offering a rich retirement savings pert. Employees who put 5% of their salary in the company 401(k) receive a company match of as much as 11%, turbocharging their savings unswerving off the bat. To make sure employees take advantage of the program, McDonald’s has made enrollment automatic. And to contentment the pain of automatically deferring 1% of pay, the company gave managers a one-time, 1% salary increase.

But persuading prized employees that the kind office is reason enough to stay with McDonald’s for the long term is an ongoing challenge. Skepticism about investing runs especially high in the midst of African Americans, who show up 15% of the company’s manager pool. Research shows that blacks, in the aggregate, are reluctant to save. According to a 2008 study by Ariel Investments and Charles Schwab (SCH), blacks redeem an mean proportion of $169 a month in opposition to retirement, while comparable whites (in terms of household income) contribute about $249 a month. Race and ethnicity trump gender—and even salary—in the factors that betoken whether a person will reserve by reason of retirement.

Why don’t blacks save added? The reasons are complex, but the underlying short dissertation is cultural. “African Americans are distrustful of the fiscal scheme because it has excluded them for generations,” says Andrés Tapia, headmost diversity officer at Hewitt Associates, the benefits-consulting giant. Hewitt’s research shows that African Americans consistently induce close ownership and college in our teeth of retirement goals. Owning a home and educating children become a huge precedence, explains Tapia, “suppose that you are the first person in your family to do it.”

Preparing for the future can also be controversial in the ebon community. “If your Mama lives through you—and others in your extended common are struggling to get by means of—putting aside money that you be possible to’t touch for the next 15 to 20 years feels selfish and inappropriate,” Tapia says.

Indeed, for many blacks, retirement is again a dream than a priority. The Ariel-Schwab survey found that African Americans when exposed to the age of 50 are nearly twice taken in the character of credible since comparable whites to say they want to retire by 60, but they are half being of the class who likely to cite retirement taken in the character of their most influential savings goal.

Adding to the skepticism, the great market meltdown of 2008 showed that even the most carefully crafted retirement plans can have existence ruined by forces farther than a body’s control. “This is a big setback that determination affect all people,” says Mellody Hobson, president of Ariel, the largest African American-run money overseer. “In our community, which has had less amount exposure to the market, rabble are especially nervous” about investing. Such reticence has made McDonald’session efforts to sell its perk to employees all the more difficult.

Few employers offer 401(k) plans as lavish as the one at McDonald’s. In fact, many companies have been cutting remote put on their matching contributions in recent months as the recession deepens.

Original text: http://www.businessweek.com/magazine/content/09_02/b4115038758645.htm?campaign_id=rss_null