How to Respond to the Day-to-Day Financial Stressors of Your Workforce
BY Ellen Stark March 25, 2024A unexpected car repair. A large medical bill. A broken furnace. For millions of American workers, these kinds of sudden expenses can be hard to handle—if not impossible. As major expenses like housing, education, and medical care increase, 59% of workers report that their compensation isn’t keeping up with the rising cost of living, according to PwC’s 2023 Employee Financial Wellness Survey; nearly half find it tough to cover household bills every month.“The cost of living has increased at a greater rate than wages for decades,” said Rachel Schneider, founder of CEO of Canary, a company that enables employers to offer emergency-relief grants. “So there’s a real need for financial solutions that help people to manage that.” In a From Day One Webinar, “How to Respond to the Day-to-Day Financial Stressors of Your Workforce,” Schneider spoke about the financial pressures workers face, how money stress can seep into the workplace, and what employers can do to help.Prior to founding Canary, Schneider spent years researching the finances of ordinary Americans and co-authored The Financial Diaries: How American Families Cope in a World of Uncertainty. “That really informed the work that I do today at Canary,” she said, “because for so many people, what we saw was this story of volatility.” Many of the families she spoke to made enough to get by—until there was a disruption. And then what?With little or no emergency savings, workers may resort to high-rate borrowing or retirement-account withdrawals, or simply go without a car or forgo needed medical care. And they don’t leave their troubles at home. “Employers are losing $4.7 billion in productivity every week because of the financial stress that workers are bringing to work,” Schneider said. If the lack of a car means the employee quits, that’s another cost. “We know that, at a minimum, it’s $7,000 to replace a person, even a fairly low-paid person,” Schneider said. “If I could have spent $2,000 to help this person fix their car instead, it’s a huge win for everybody.”By providing access to health insurance and retirement-savings plans, employers have already taken on an important role in their workers’ financial lives. Recognizing the financial pressures their employees can face, many supplement these benefits with programs to address financial wellness, including education and coaching. And thanks to a recent federal law allowing employers to automatically enroll workers in an emergency savings account tied to their retirement plan, more companies may add that benefit. Schneider encouraged employers to embrace a wide range of solutions: “There’s an incredible need for employers to keep the lens on what is the financial role they play with their workforce as broad as possible.”One way to do that is by providing employees facing an emergency with cash, something that can happen informally in an office via a GoFundMe campaign or more formally through a pay advance. A few companies have gone so far as to offer formal relief programs, such as Levi’s Red Tab Foundation. “Employers are responsive to this need because it's a basic human desire to help each other,” Schneider said.Journalist Ellen Stark interviewed Rachel Schneider of Canary during the recent webinar on responding to financial stressors (photo by From Day One)It was a recognition of that desire to help that led her to found Canary and make employee emergency grants more widely available. “A lot of people are really living at breakeven, without much cushion to save or to pay back a loan with interest,” Schneider said. “So I was looking for ways that we could efficiently get people additional money in that moment of crisis.” Emergency grant programs can be a major undertaking, involving establishing a nonprofit to disperse grants and a staff to administer them. “How do we make it possible for all employers to do it?”, Schneider recalled thinking.Canary makes it possible by handling all aspects of the program. Once employers fund a nonprofit relief fund, employees experiencing a financial hardship can apply for small grants online (employers set the maximum size) and submit required documentation. Canary reviews the application and disperses the money, often within days, allowing the worker’s need to remain confidential within the office. The grants—most commonly related to a car or healthcare—are not considered taxable income for the worker.Of course, a one-time grant may not solve an employee’s financial fragility, so Schneider encourages companies to consider grants as part of a larger financial wellness program, including education and advice. “I think that an emergency fund like ours is really most effective at a company that is thinking holistically about how it can help employees,” she said.Beyond helping individual workers get past a short-term crisis, this kind of program can have a deeper impact on the workplace, Schneider noted. “People on our platform who’ve received money say things like, my employer has proven that they walk the talk of our core values,” she said. That good will can spread further. Younger workers in particular want to feel a sense of purpose and care about the corporate brands they align themselves with. “The reality is that most of your workforce will not experience a crisis this year that causes them to apply,” Schneider said. “But everyone will know it exists and feel good about it. And that's really powerful.”Editor’s note: From Day One thanks our partner, Canary, who sponsored this thought leadership spotlight.Ellen Stark is an executive editor with Foundry 360 at Dotdash Meredith, where she creates relevant and engaging content for major financial services companies. Previously, she spent more than 20 years as a writer and editor at Money magazine and Money.com.(Featured illustration by Erhui1979/iStock by Getty Images)
Emergency Savings: How Employers Can Help Workers Be Financially Secure
BY Ellen Stark October 05, 2023Money is routinely cited as the top cause of stress in America, and stressed employees aren’t leaving financial worries behind when they come to work. Financial stress is associated with increased absenteeism, lost productivity, and a greater likelihood of departing for a new job. Employers frequently offer financial wellness programs to address their employees’ needs. But with nearly four out of 10 Americans unable to afford a $400 unexpected bill without borrowing money or selling something, education alone may not be enough to alleviate the problem of stressed and distracted workers. At From Day One’s September virtual conference on creating a health work environment, best-selling author and financial educator Suze Orman, who co-founded the workplace emergency savings program SecureSave in 2020, explained why. “When you don't have enough money to pay your bills, you don’t care about learning about money at that point in time. That is not what is going to help you,” she said in a conversation titled “What Is the Goal of Money?” The primary goal of money, Orman said, isn’t the stuff you can buy. It’s financial security. “When you're insecure, it's very hard for you to be happy or productive.” Given the messages Americans hear about how hard it is to manage money and how much help they need, it’s not surprising so many are insecure about their finances and do nothing out of fear of making mistakes, Orman noted. Financial education, including workplace financial programs, have a role in teaching Americans to manage money. Financial advisor and SecureSave co-founder Suze Orman, left, and finance journalist Ellen Stark (Image by From Day One)But first, she added, employers should help workers with the pressing need for a pool of savings set aside for emergencies. “When you have financial stress and you go to work, rather than sitting there doing what you’re supposed to do and be powerful in your job, you’re sitting there worrying about, Oh, my god, how am I going to pay my bills this week?” said Orman. “The only way for you to feel secure is to have savings.”With a workplace emergency savings account (ESA), employees can have small amounts of money deducted from each paycheck to fund an account for unplanned expenses, ideally reducing the chance they’ll resort to credit card borrowing or tapping their retirement savings early. These plans can be tied to a 401(k) workplace retirement account or operate outside of it, as SecureSave’s plan does. The SECURE 2.0 Act, passed in 2022, made it easier for employers to automatically enroll workers in emergency savings accounts tied to their workplace retirement plans — an important milestone for these plans. While most companies don’t yet offer ESAs, Orman noted, an increasing number are adding the option to their benefits menu, and when they do, employees are embracing them. When an employee sees how an ESA works — the ease of use, that they can get their money whenever they want, the portability if they leave the company, that the account is FDIC insured — every single person wants one, Orman asserted. “We even had one company that within one week had 100% adoption.”In another positive sign, employees enrolled in SecureSave appear to be using the accounts as intended. “The greatest feedback that we get is that 90% of the people who put money in, they check it all the time, but they don't take it out,” Orman said. Over time, having liquid savings in an emergency account may make workers more inclined to contribute to a retirement account. “I have no doubt that a lot of these people who have never contributed to their 401(k) plans before because why they’re afraid that they couldn’t get the money out if they needed it, they will now also start to put money maybe for the first time in the employer-sponsored retirement accounts,” Orman said. “They will work hand and hand together.”After decades of educating Americans about managing their money, Orman considers enabling emergency savings the most important work she has ever done. “If we can change the savings rate of every single person in America today, and that can be done with the help of all the employers that are out there, we can change the personal happiness and security of the whole world,” Orman said. “Once you start to save and you see you have money for the first time, you start to get as much pleasure out of saving as you did spending. And when that happens, everything in life starts to change for you.”Editor’s note: From Day One thanks our partner, SecureSave, who sponsored this thought leadership spotlight.Ellen Stark is an executive editor with Foundry 360 at Dotdash Meredith, where she creates relevant and engaging content for major financial services companies. Previously, she spent more than 20 years as a writer and editor at Money magazine and Money.com.
Turning Open Enrollment Into an Employee Retention Strategy
BY Ellen Stark October 08, 2021Amid today’s tough competition for workers, attracting and retaining valued employees doesn’t just hinge on paying competitive salaries, offering a flexible schedule, and creating a welcoming corporate culture. A generous slate of benefits can play a crucial role as well, making the fall annual open enrollment period–when employees must chose health insurance plans and other benefits for the coming year–all the more important. “It’s an opportunity to showcase all the great compensation and benefits changes that you're making,” said Will Peng, CEO and co-founder of Northstar, a financial-wellness platform for employers. Yet this process can be overwhelming for some workers, who may see this short window as more of a hassle than an opportunity to make the most of their benefits. Dani Fischer, a senior director of global benefits at Hewlett Packard Enterprise, said that employee feedback about open enrollment has a consistent theme: “Benefits are hard, benefits are expensive, I need support, and I need somebody to just help me do this.” The fact that these decisions can be high-stakes adds to the pressure. “If you talk to the employees, they’re going to tell you that they’re anxious about it, because this is kind of make-or-break for the next 12 months,” said Derick Adams, VP of total rewards at the Henry Ford Health System in Detroit. What companies can do to help employees understand, value, and take advantage of their benefits was the theme of a From Day One webinar last week, “Turning Open Enrollment Into an Employee Retention Strategy,” which brought together five employee-benefits experts to talk about best practices and share ideas, moderated by Gary Belsky, president of the media consulting firm Elland Road Partners. Presenting a menu of benefits during open enrollment can reinforce that your company is a great place to work, but employees need to understand what they’re being offered. Peng noted that employees crave information: MetLife’s annual benefits survey found that 55% of employees wished they were more informed about their benefits so they could get more value out of them. Yet as the HR leaders on the panel explained, companies must balance ample and clear communications with not inundating workers with so much material that they block it out. “We try to bundle communication so that we're not hitting them all the time,” said Fischer. “But especially with the pandemic, it feels like so many more emails have come out that I think we've gotten lost a little bit in the noise.” To make open enrollment less overwhelming, Adams noted that his organization played down voluntary benefits that employees can sign up for at any time during the year. “That's our attempt to make it so that there's not as much anxiety around it,” he said. Sony Pictures Entertainment tries to make open enrollment materials more engaging by drawing on the company’s products, said Gabrielle Ernst, the company’s VP for compensation and benefits. “When we first rebranded everything, we called it a benefits voyage and the imagery that we used was from Hotel Transylvania,” she said. Benefits experts on open enrollment, top row from left: Gabrielle Ernst of Sony Pictures Entertainment and Will Peng of Northstar. Middle row, from left, Cindy Brandt of Allegion, moderator Gary Belsky of Elland Road Partners, and Dani Fischer of Hewlett Packard Enterprise. Bottom: Derick Adams of the Henry Ford Health System (Image by From Day One) Educating employees about their benefits options during open enrollment is typically a multi-pronged operation, combining paper mailings with online tools, virtual assistants, call centers, employee education sessions, and even advisors to help. “Some may want to come to a meeting, some prefer self-service and going to a website, some may want to have a one-on-one session,” said Cindy Brandt, director of global payroll and benefits for Allegion, the security-systems company. “We try to provide all of these different options because everybody is at a different place.” Her company also educates managers about benefits options, because employees with questions often reach out to their supervisors first. Offering employees access to outside financial coaches can help them analyze benefits choices in the context of their finances and future plans. Deciding what health insurance plan to sign up for, for example, may depend on a family's ability to handle out-of-pocket costs and comfort with taking that risk. “These are not only benefits decisions, but also financial decisions,” said Northstar's Peng. “It’s really difficult to get perfect information, and that's why being able to talk to a trusted third party is so important.” Providing information about open enrollment can also involve communicating with non-employees, such as spouses and partners. “We know 50% of the people making choices aren't the ones that are the employees, they’re the people at home that are making those decisions as well,” said Ernst. “So we’ve made it easier to access information.” Of course, for all the pressure put on open enrollment, this annual fall window isn’t necessarily the only time workers will be thinking about benefits. Life changes, like a marriage or the arrival of a child, can also spark interest in what an employer has to offer, and highlighting those benefits throughout the year has value. “People don't make life decisions only around open enrollment,” Peng noted, “and being able to proactively say, ‘Hey, we have this great set of benefits, and we want to show you how to use them’ can happen year-round.” (Photo-illustration by JimVallee/iStock by Getty Images) At Hewlett Packard Enterprises, Fischer said, the company is starting to become more proactive about alerting employees about benefits they may qualify for via a third-party personal care team. “Our employees are probably gonna be a bit skeptical at first,” said Fischer. “But the care team is built to really get them where they need to go based on what they're dealing with.” In the end, do top-tier benefits keep employees from jumping ship? According to the Society of Human Resource Management (SHRM), employee benefits “play a role in retention. Offering a competitive benefits package, in addition to competitive pay, reduces the likelihood an employee will find the grass greener elsewhere.” Allegion’s Brandt thinks a generous benefits package has even more leverage at the front end of an employee's experience with a company. “It absolutely goes into their decision on whether they want to join a company,” she said. Added Sony’s Ernst: “I see more and more applicants asking questions related to benefits and what type of services we offer.” For new college graduates, that might be whether a company offers repayment programs for student loans. Others might ask about family-planning services, such as coverage for fertility treatments or adoptions. The elevation of benefits as a factor in job searches means employers may want to be more public about their offerings. There's an opportunity in making benefits more outward facing, said Peng. “We think that the employee experience extends to the candidate experience, as well.” Ellen Stark writes about personal finance, business, entrepreneurship, and philanthropy. She is the former deputy editor at Money magazine, where she worked as a writer and editor for more than 20 years.