Strategies to Strengthen Employee Financial Security During the COVID-19 Pandemic
As the COVID-19 pandemic takes hold on a global scale, it is disrupting “business as usual” in unprecedented ways – and at unprecedented speed. This is a pivotal moment for HR managers to respond to the crisis in a way that will have positive long-term impacts for their workforce and their business.
At Commonwealth, we’ve been studying financial security for almost two decades and we’ve focused on the importance of employee financial security in part because it reduces financial stress and increases productivity. As pervasive concern about COVID-19 and its impacts on health and the economy takes hold of the world, efforts to strengthen employee financial security are also a strategy to strengthen employee engagement – a link positive with a work community, colleagues and bosses.
Related: Boomers, Retirement At Financial Risk Amid Coronavirus Downturn
Now is the time to double down on what we know to be best practices in benefit design and employee engagement. Effective employee financial security strategies can be easy, practical and inexpensive, which means that they are achievable even if your business is currently in crisis mode, whether trying to keep up with supply and demand or to overcome difficult economic conditions.
The COVID-19 pandemic and the immediate financial problems that affected people have highlighted the work we have done for decades. Normally, people spend 13 hours of their workweek worrying about their finances – a number that would be reasonable to believe has increased during COVID-19. By providing benefits that address one of your employees’ biggest stressors, you are showing that you value and understand their needs. In our 2019 national survey of low-wage workers, 76% said they were confident that the financial security benefits offered by the employer would promote loyalty to the company.
Commonwealth has been researching the impact of COVID-19 on low and moderate income employees since March. We’ve discovered problems employers can solve with practical strategies HR managers can implement quickly.
The impact of the coronavirus crisis is different for businesses based on the services or products they provide, not the business decisions they have made. This is also true for employees. The first step in developing financial security strategies for your employees is understanding the impact of the pandemic on your workforce, and this may or may not correspond to the impact the virus has had on your business. .
For low-wage workers, for example, their financial health depends in part on their employment situation with their main employer, but also on any other jobs they may have, such as work alongside, on their pre-existing financial health. and their families. and community circumstances.
Some of your employees may not have been affected (yet), and this is especially true if your business is in a currently booming industry, such as trucking, supermarkets, or medical supplies, or is able to continue. mainly as usual. . The least impacted employees are generally younger and single. And for these workers, employers have an opportunity to help them build financial security that could help them weather future financial disruptions:
- Suggest that they start or build an emergency savings cushion now, because in these uncertain times we don’t know what’s next. If these workers are currently away, they can realize savings during this time, such as commuting and buying lunch, which can easily be turned into savings.
- Health is on everyone’s mind right now. We are all more aware of how quickly our health can change and how medical bills could pile up as this pandemic progresses. If you are offering an HSA, now is a great time to encourage employees to contribute. A Commonwealth study found that employees said they would start contributing more to an HSA if they anticipated a need for health care, so messages can now be well received. In our research, we also found that 45 percent of survey respondents with an HSA would have access to health care more regularly if their employers contributed. A small start-up contribution could generate a lot of goodwill among employees, especially during this time, as they will feel that you are looking after their best interests.
- Employees in this group told us they wanted to support struggling colleagues and community members. If you have an employee contingency fund, you could encourage people to contribute. Or, if you have a program that allows people to help PTO staff in need, or a matching charitable giving program, you can remind people of that, or maybe even offer a better match. for COVID-19 donations.
Other employees, regardless of the company’s situation, began to feel the effects of a shrinking economy, perhaps because their partner’s incomes fell, because their costs rose over time. as they stock up on supplies, or because they have difficulty looking after their children. For this group, several initiatives can be effective.
- Employer-sponsored loans, in partnership with your financial institution, are easy to set up and can offer inexpensive alternatives to expensive credit cards. Many financial institutions now offer loans with three-month deferrals so people don’t have to pay them back until after the crisis, so check if the financial institution you’re dealing with can do this for your employees.
- If you have an employee contingency fund, consider reviewing your guidelines to see if they can be relaxed during this time of crisis. In our research on contingency funds, the ease of the application process and speedy delivery of money were critical to employee satisfaction. Positive fund experiences, regardless of job satisfaction, had a very positive impact on participants’ relationship with their employer.
- If your business is financially healthy and you pay time off under the FFCRA and enjoy the savings of 6.25% on payroll taxes, you can use a portion of those savings to make one-time contributions to HSA accounts or employee retirement plans. This can create a sense of community, with employees feeling that you share the benefits of federal law with them.
When addressing the financial situation of your employees, it’s also more important than ever to follow best practices for communicating initiatives to your staff. People crave free will and autonomy in their decisions – feelings that are probably more salient now as they operate in crisis mode.
Promote the agency and empower people by offering choices whenever possible and allowing people to make the decisions that are best for them. Generate trust by sharing information and allowing them to decide what action to take.
And keep it easy. People are overwhelmed, so simplicity is key – don’t add anything else to their plates. They also look for bright spots, so a bit of (appropriate) fun like prizes, rewards and gamification is in order if possible. The fun has the positive biological effect of reducing stress and increasing cognitive space, and it also prompts employees to enthusiastically engage in the initiative.
As we go through this unprecedented time, HR leaders can make an impact. In an age when people are feeling stressed and worried about their financial future, employers can provide their employees with the access to the tools they need to take action that will strengthen their financial security.
Someday, when this is all over, your business will resume its usual activities, or perhaps a new “regular”. A financially secure, more engaged and loyal workforce could be one of the greatest assets emerging from this crisis.
Melissa Gopnik is Senior Vice President of Commonwealth, where she heads the innovation lab of this mission-driven national nonprofit focused on financial security and opportunities for the financially vulnerable. Throughout her 30-year career, Ms. Gopnik has combined her talents in strategic planning, human resource management, research and public speaking with a strong commitment to social change.