Might Voluntary Benefits Help You Increase Employee Engagement?

Most everyone has a financial well-being story. For your workforce, it may include:

• The employee who drained his 401(k) to pay off a high-interest credit card bill.
• The enthusiastic early entrant into the workforce who starts falling behind on new car payments, not realizing how many other monthly obligations she needed to fulfill.
• The new parents with unanticipated medical bills due to a lengthy stay at home for their newborn baby.

No one proactively plans for the impact of high-deductible healthcare insurance or student loan debt. Despite individuals’ best intentions, these types of unexpected situations consume time and energy while creating anxiety and disruption — much of which spills over into the workplace, where employers can least afford it.

A recent study conducted by financial services company Equitable underscored this dynamic, particularly as it relates to medical expenses. The findings revealed 80% of surveyed Americans worry that an unexpected medical expense could derail their financial goals, with more than 25% indicating even a bill less than $1,000 would cause financial hardship. If faced by unexpected expenses, they said they would rely on credit cards (28%) or take a hardship withdrawal from their retirement account (12%).

The combination of living “close to the edge” and, in many cases, paycheck-to-paycheck threatens financial well-being and employee productivity. While preaching preparedness to the workforce might seem like a solution, employers likely need to take a bolder stance. Whether it is a worker earning the minimum wage, a furloughed federal employee or a highly compensated employee, the reality is generally the same: When employees are financially stressed, their work suffers.

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Voluntary Benefits as Solution

One of the quickest paths to workforce resilience and recovery is expanding your organization’s voluntary benefits. Examples of such optional benefits include:

• Insurance coverage (e.g., dental and vision, critical illness and accident, hospital indemnity, term and/or universal life, short- and/or long-term disability, pet and veterinary, auto and home);
• Financial and wellness services (e.g., identity theft protection, legal services, financial planning, loan programs, student loan assistance, gym/wellness memberships); and,
• Lifestyle and personal perks (e.g., discount programs, commuter benefits, family planning).

Employers have a major opportunity to make a lasting difference in their employees’ lives through a broad range of offered solutions. Some voluntary benefits are at no cost to the employer, making them even more attractive as part of the total rewards package. By bolstering these benefits, you may be able to address the commotion resulting from financial stress and positively impact engagement. Consider that:

• Education is core to financial wellness. Remember the early entrant with the car payment problems? Chances are that some employees don’t quite understand the long-term implications of a lease agreement. Add pressure to return to the office, which is increasingly common in the new year, and a car becomes not only a direct connection to a paycheck but also integral to career opportunities. Providing access to personalized budgeting and debt management guidance can help employees make informed decisions based on their own situation.
• Credit scores have a hidden power. Credit scores are one of the most powerful tools your employees — and the organization — have under their control. Strong credit scores typically lead to better financial outcomes, which is why voluntary benefits that report timely payments to credit bureaus can be quite beneficial for many workers.
• Access to low-interest loans can be a game-changer. When payroll and HR systems include low-interest loan options, employers and employees may avoid unnecessary friction. Employees’ privacy is protected and, rather than seeking predatory lenders or similar unsavory alternatives, they gain access to a professional experience that may maintain their financial stability during difficult times.

A Win-Win Proposition

Voluntary benefits have the potential to address employees’ needs and increase their engagement. Giving employees the option to personalize their benefits in a manner that will give them protection they cannot reasonably afford elsewhere may improve their relationship with their employer.

With stress-related barriers reduced or removed entirely, employers increase the likelihood that they can retain talent, strengthen the employment brand and show the workforces they care about their well-being.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Well-Being
• Workforce Engagement