Over the last couple of years, the topic of financial responsibility has been generating a lot of discussion in the HR field. Most employers are aware that their workforce is either facing financial hardship now or will in the future when retirement time rolls around. Businesses that care about the wellbeing of their employees are faced with a couple of options. They could raise salaries substantially across the board to give workers a higher income. However, a big boost in pay rates would be enormously expensive – and very unpopular with shareholders. Plus, with the American mindset about spending, within 12 months most employees would probably be right back in the same financial pickle as before. Let’s be honest. The more we make, the more we tend to spend.
The other alternative is to offer workers the tools and counseling they need to start managing their existing income in a more responsible way. That’s the approach some companies are taking when it comes to retirement planning. Automatic enrollment isn’t yet universal in 401(k) plans, but it’s getting there. In this type of program, eligible employees must opt out of their employer’s retirement plan if they don’t wish to contribute. This approach, coupled with automatic contribution escalation and rebalancing, has been shown to greatly increase the percentage of workers who start saving for retirement. Some companies also bring in third party investment specialists to educate employees about how to create a balanced, diverse retirement strategy.
For some workers, the future is only part of the problem. They are struggling with huge amounts of debt and a tight budget right now. According to one 2009 survey, 45% of workers are living from one paycheck to the next with little or no financial cushion. A full 35% are having trouble paying their bills. Rather than offering payroll advances or a raise to cash-strapped, stressed out workers, some companies are facilitating training courses in money management, debt reduction, and credit score repair.
Who pays for all this? It depends. Employers may pick up the tab or split the cost of training with employees who want to participate. One hospital system reviewed by Workforce Management only makes workers pay for the course if they drop out instead of completing it.
Could Financial Training Be a Useful Part of Onboarding?
The start of a new job may actually be an ideal time to start employees on their path to making better decisions about money. It could give their total compensation package (and their satisfaction level) a huge boost in value since they’ll be making the most out of their salary. Dealing with money issues at work is something over 15% of employees admit to doing. So, employers benefit when workers aren’t spending their time on the clock trying to cope with one financial crisis after another.
HR shouldn’t give out financial advice, but there’s no rule saying employers can’t make this type of consultation available through a third party training organization. New hires who want to make the most out of their salary might choose to sign up for such a course during onboarding. From HR’s side, this would require creating an opt-in form that provided details about the course and a payroll deduction form if there are associated costs for the employee. With Universal Onboarding, it’s simple to build new forms and add special features to the onboarding process to offer the latest workplace perks.