You spend a lot of time talking about one of your most critical business differentiators - your employees - but have you taken the time to really understand their most urgent needs? Even before COVID-19, US workers were struggling with financial stress, and the pandemic and subsequent economic fallout have only heightened it. Now is the time to reach out and help your employees - and yes, explore how you can assist them with something very personal: their finances.
Debbie is one of your top account managers. She’s even won awards for her work with your customers.
But Debbie is dealing with some serious stuff at home. Her husband, Bob, was laid off from his long-time employer early during the pandemic. Debbie and Bob, like you and me, weren’t planning on a pandemic. They carry a mortgage, but they’ve been smart and have been able to stay mostly above water. Jenny, their only child, is starting her first semester at college (at least it’s remote, but that doesn’t stop tuition from bleeding Debbie and Bob of every penny possible). Debbie was already having a hard time sleeping, restless and thinking about impending expenses, and then Bob’s mom, Sandra, slipped down the stairs and shattered her hip. Sandra is going to need an extended care facility and insurance is only going to cover so much.
Whether you’re aware of it or not, there are a lot of Debbies in your organization. According to a recent Salary Finance survey, two-thirds of American workers are feeling financial stress in the post-COVID-19 world. And where is Debbie going to turn for the financial fix she needs? Most likely, she’s going to run up her credit card bills or dip into her hard-earned retirement savings.
It’s time for employers to step up to the plate. The vast majority of your employees trust you to do right by them - but doing right now means having what might feel like uncomfortable conversations with employees about personal finances. We’ve veered away from this conversation in the past: too personal, too difficult, “not my business.” But, you couldn’t be more wrong - in fact, according to a recent survey conducted by Commonwealth and MetLife Foundation, 65% of workers said employers should be doing more to address financial insecurity. And if you feel like this is not going to impact Debbie’s work …think again. She’s losing sleep. At work, she’s distracted thinking about her financial issues. And let me remind you: financial stress is something two-thirds of your business is struggling with.
Look, we can all agree we want to know how best to help employees who are dealing with financial stress. But the solutions we often turn to are too long-term (retirement planning), don’t solve the whole problem (student loan repayment), or only provide short-term relief (earned wage access).
The reality is, most of us sitting around the board table making those decisions are not dealing with the same level of financial stress that Debbie is. Your most financially distressed employees are paying much more than they should to access the same capital you do -- whether it’s to pay for necessary household bills or to cover emergency expenses.
Giving those employees an affordable way to access their own working capital - their salaries - returns dignity to them and is a more equitable, inclusive solution than the alternatives, which are incredibly high-cost and in many cases, predatory.
“Borrowing” may have negative connotations, but it’s time to move beyond the stigma. Too many people are struggling with financial uncertainty and stress. After all, some debt is good: your mortgage, a credit card you use but pay off each month -- these are financial tools that help you build your credit history and show that you’re worthy of more credit if and when you need it. The problem is, many working Americans are forced to borrow at much higher rates over shorter time periods, often resulting in them taking out loans they can’t actually afford and setting them back further.
Borrowing doesn’t have to be the equivalent of a four-letter word in your office corridors. Salary-linked loans, which enable employees to obtain affordable credit that comes directly from their earnings, are creating opportunities for employees that didn’t previously exist. Harvard Kennedy School research has found that “employer-sponsored benefits that take advantage of the powerful ‘salary link’—automatic repayment through salary deduction-- can provide more efficient, less costly and more inclusive liquidity and credit solutions for working American families”.
For your workers, accessing the power of their own paycheck through solutions like Salary Finance is easier, cheaper, and more equitable. Automatic repayment through salary deduction means less risk of missing a payment or going delinquent. Regular repayment helps build credit, so they can more easily and affordably participate in the financial system in the future. The result is a victory for you and your employees. Your employees feel less financial stress and have a new appreciation for you as an employer -- creating a happier, healthier, and more productive workforce.