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TOPEKA, Kan. -- When Payless ShoeSource Inc. was spun off from The May Department Stores Co. in May 1996, it faced a difficult employee benefit challenge.

Payless' profit-sharing plan changed from a company match plan offered by its former parent to pure profit-sharing offered by Payless.

The Topeka, Kan.-based discount shoe retailer was concerned, however, that by automatically contributing money to each eligible employee's account, it was not offering incentive for employees to save on their own.

Contributing to that problem, the majority of Payless' younger workforce are not big savers -- only 40% of the eligible employees were participating in the the May company's plan.

Not surprisingly, of the 11,000 eligible employees, the average age is 21.5. Most are high-school educated

and earn between $9,000 and $12,000 a year. Turnover among store employees runs as high as 150%.

"These are not people you think of as motivated to save and to think of their futures," said Ross A. Miller, a principal with Buck Consultants Inc. in Chicago. "Taking this all into account, we needed to create a high-impact communications piece" to get Payless' younger employees interested in saving in the company's new profit-sharing plan, he said.

To do this, Payless, with the help of Buck's Mr. Miller, developed a "PSP Enrollment Kit" that included a summary plan description booklet, a colorful newsletter explaining the plan and a five-minute video intended to motivate employees to read the accompanying print materials. All the materials were mailed to eligible employees' homes due to the widely dispersed workforce.

Payless' program, titled "What Are You Waiting For?" won the Best of Show award in the multimedia program category of the 1997 Business Insurance Employee Benefits Communication Awards competition.

"We tried to bring the plan out in terms people would understand," noted David H. Brown, Payless' supervisor of profit sharing. "We needed to appeal to a younger crowd and get them excited about the plan."

The video, for example, shows only one paid actor and several Payless employees dancing and lip-synching to "What are you waiting for," sung with a hip-hop beat. Employees gave testimonials in the video on why they are saving money in the plan.

The video was not meant to be "an information tool," Mr. Miller said. It was used to "generate excitement for the plan."

Specific information about the plan was detailed in an 11-by-17-inch, four-page, brightly colored newsletter called "PSP Highlights" and also via a summary plan description booklet.

Through colorful graphics and varied typefaces, the newsletter explains how the profit-sharing plan can help employees save for a vacation, a new car, a new house or retirement, no matter how much money they earn. Specifically, the graphics illustrate the difference between pretax and aftertax contributions; compounding interest; and the various investment funds offered in the plan.

In some instances, the graphics take a more lighthearted approach. For example, one graphic lists a few items people can buy each week with $10, such as nine cans of premium cat food or three diet sodas a day. The message goes on to say "Or you could save it in the PSP and watch it grow into a nice nest egg that you could use to buy something really important."

"We used lots of color, lots of visuals; we kept the content light and used short sentences and simple messages," Mr. Miller said. The oversized newsletter was used so employees would not be "overwhelmed by too much information," he explained.

Other "PSP Highlights" newsletters subsequently were sent to Payless employees' homes that contained articles on specific plan features and participation-related issues.

The entire communications program, including consulting fees, production and mailing costs, cost $200,000.

Payless says the program helped achieve its goal of generating enthusiasm for the profit-sharing plan.

"There was a lot of excitement in the stores," said Bob Ihrie, director of compensation and HRIS at Payless.

Recognizing the combination of Payless' employee demographics and the fact that the plan does not require employee contribution, the company was not expecting a large increase in participation rates, he said.

"We didn't get a huge uptick in enrollment," but "we were afraid of a huge downtick due to the loss of the match," Mr. Ihrie said. Overall, there was a "small percent" growth in enrollment. "That to us was huge."

To help further boost enrollment figures, Payless switched back to a matching contribution plan last August. Beginning Jan. 1, 1998, Payless will begin an automatic enrollment program, Mr. Ihrie said.

Under this plan, eligible Payless employees will have 3% of their paychecks deducted automatically each month and put into the company's profit-sharing plan unless the individual employee declines, he said.

In 1996, Payless contributed 2.5% of its pretax profits, or $3.56 million, to the profit-sharing plan.