As the COVID-19 pandemic takes hold globally, it’s upending “business as usual” in unprecedented ways–and at an unprecedented speed. This is a pivotal moment for HR leaders to respond to the crisis in ways that will have long-term, positive impacts for their workforce and company.
At Commonwealth, we’ve been studying financial security for nearly two decades and have focused on the importance of employee financial security partly because it reduces financial stress and increases productivity. As the pervasive worry of COVID-19 and its health and economic impacts grips the world, efforts to build employee financial security are also a strategy to build employee engagement–a positive connection to a work community, co-workers and bosses alike.
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Right now is the time to double down on what we know are the best practices in benefit design and employee engagement. Effective employee financial security strategies can be easy, practical and cost little–which means they are doable even if your company is currently in crisis mode, whether trying to keep up with supply and demand or trying to weather difficult economic conditions.
The COVID-19 pandemic and the immediate financial issues that have impacted people have shone a spotlight on the work we have done for decades. In normal times, people spend 13 hours of their workweek worrying about finances–a number that it would be reasonable to believe has increased during COVID-19. By offering benefits that address one of your employees’ greatest stressors, you are demonstrating that you value and understand their needs. In our 2019 national survey of lower-wage workers, 76 percent said they were confident that employer-offered financial security benefits would promote company loyalty.
Commonwealth has been conducting research on how COVID-19 is impacting low- and moderate-income employees since March. We have uncovered issues that employers can address with practical strategies that HR leaders can implement quickly.
The impact of the coronavirus crisis is different for companies based on the services or products they provide–not on any business decision they made. This is also true for employees. The first step in developing financial security strategies for your employees is understanding the pandemic’s impact on your workforce–and that may or not match the impact the virus has had on your company.
For lower-wage employees, for example, their financial health depends partly on their employment situation with their main employer, but also on any other employment they may have, like gig work on the side, their pre-existing financial health, and their family and community circumstances.
Some of your employees may not have (yet) been impacted, and this is especially true if your company is one that is in an industry that is currently thriving, like trucking, supermarkets or medical supplies, or is able to continue mostly business as usual. The employees least impacted are usually younger and single. And for these workers, employers have an opportunity to help them build financial security that could help them overcome financial disruptions that may be ahead:
- Suggest 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 remote, they may have some cost savings during this time, like commuting and buying lunch, that can easily be turned into savings.
- Health is on everyone’s mind right now. We are all more aware of how quickly our health status can change, and how medical bills could add up, as this pandemic progresses. If you offer an HSA, now is a great time to encourage employees to contribute. Commonwealth research found that employees said that they would start contributing more to an HSA if they anticipated a need for health care, so messaging now may be well-received. In our research, we also found that 45 percent of survey respondents with an HSA would access healthcare more regularly if their employers contributed. A small seed contribution could generate a lot of goodwill among employees, particularly during this time, as they will feel that you are looking out for their best interest.
- We have heard from employees in this group that they want to support co-workers and community members who are struggling. If you have an employee hardship fund, you could encourage people to contribute to it. Or, if you have a program that allows people to contribute PTO to staff in need, or a matching charitable gifts program, you could remind people of that, or perhaps even offer a better match for COVID-19 donations.
Other employees, regardless of the company’s situation, have started feeling the effects of a contracting economy, possibly because their partner’s income has decreased, because their costs have increased as they stock up on supplies, or because they are struggling with childcare. For this group, a number of initiatives can prove effective.
- Employer-sponsored loans, in partnership with your financial institution, are easy to set up and can offer low cost alternatives to costly credit cards. Many financial institutions are now offering loans with three-month deferments so people don’t have to pay them back until after the crisis, so check to see if the financial institution you bank with can do this for your employees
- If you have an employee hardship fund, consider looking at your guidelines to see if they can be eased in this time of crisis. In our research on hardship funds, the ease of the application process and the quick delivery of cash was essential to employee satisfaction. Positive fund experiences, regardless of job satisfaction, had a highly positive impact on participants’ relationship with their employer.
- If your company is financially sound and you are paying out for leave under FFCRA and are reaping the benefit of the 6.25 percent savings on payroll tax, you could use some of that savings to make one-time contributions to employees’ HSA or retirement accounts. This can build a sense of community, with employees feeling that that you are sharing the benefits of the federal act with them.
When addressing the financial situation of your employees, it’s also more important than ever to follow best practices for messaging initiatives to your workforce. People crave agency and autonomy over their decisions–feelings that are likely more salient now as they operate in crisis mode.
Promote agency and empower people by providing 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 things easy. People are overwhelmed, so simplicity is essential–don’t add something else to their plates. They’re also searching for bright spots, so a little (appropriate) fun like prizes, rewards and gamification is in order if possible. Fun has the positive biological effects of reducing stress and increasing cognitive space–and it also makes employees want to enthusiastically engage with the initiative.
As we move through this unprecedented time, HR leaders can have an impact. In a time when people are feeling stressed and worried about their financial futures, employers can provide their workforce with access to the tools they need to take actions that will build their financial security.
One day, when this is all over, your company will be back to business as usual–or perhaps, a new “usual.” A financially secure workforce that is more engaged and loyal could be one of the greatest assets that emerges from this crisis.
Melissa Gopnik is a senior vice president at Commonwealth where she leads the Innovation Lab at this national mission-driven non-profit focused on enabling financial security and opportunity for the financially vulnerable. Throughout her 30 year career, Ms. Gopnik has combined her talents in strategic planning, human resources management, research, and public speaking with a strong commitment to social change.