Forget conventional bells and whistles: benefits pay off only if they answer your employees' real needs. John Strazzanti, founder and president of Com-Corp Industries, in Cleveland, is helping his employees tackle one big problem -- lack of savings for their children's education. In doing so, he's winning the kind of loyalty he could never have anticipated.

The idea first struck Strazzanti on a fishing trip with his vice-president of finance, David Wright, and Wright's son, then a junior in high school. David junior wanted to go to the University of Southern California, Strazzanti learned, but the family had little money saved. Conversations with other employees revealed similar situations.

Strazzanti roughed out a plan to provide low-interest educational loans to employees' dependents and presented it at a companywide meeting of the $14-million auto-parts manufacturer. Pragmatic employees liked the idea but wanted to limit Com-Corp's risk. Here are the safeguards they came up with:

A dependent may borrow money for education at any accredited college or trade school, agreeing to repay the loan at 3% annual interest over 10 years (compared with 6.22% interest for a federally guaranteed bank loan for college). While in school, the loan recipient pays only annual interest. The parent or guardian cosigns.

The company never has more than $40,000 outstanding. Once that pool is depleted, new funds become available only as other loans are repaid. There's now $28,000 outstanding, and money is coming back in as fast as it's going out.

Employees are eligible for the program only after three years at Com-Corp. A formula determines the maximum each person may borrow: 10% of years of service times salary. A four-year employee making $30,000 can take out $12,000 total, for instance. (There is no annual limit.) Strazzanti acknowledges that lower-paid workers need more help. But "the longer they've worked here, the more confident we are they won't disappear, and the more they make, the faster we can collect."

If someone burns the company, it can take legal action. If that would cost too much, Com-Corp can recover the money from the company profit-sharing fund. That means all employees pay part of the debt -- an unpleasant prospect, but one employees themselves proposed.

The program cost virtually nothing to set up. There is the opportunity cost of $40,000 that could be more profitably invested. And the IRS, considering the employees' interest-rate break a gift, requires Com-Corp to pay taxes on the difference between the 3% interest rate it charges and the minimum rate required on long-term loans (about 8%). The company believes its efforts are amply repaid; annual turnrover is 2.5%. Finance chief Wright, for one, cites the program as a factor in his allegiance to Com-Corp. Last year his son, the program's first beneficiary, graduated from USC, and Wright's daughter starts college soon.

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