The Personal Finance Employee Education Foundation estimates that employees' personal financial troubles can cost employers $4.5 billion annually. This takes into consideration the cost of missed time, hours on the phone with creditors, and low performance because of stress. Think of it this way: If an employee has a stressful financial situation at home, he/she is not going to be fully engaged in the job—his/her thoughts are too preoccupied and heavy with personal troubles.
According to a survey by the New York nonprofit Families and Work Institute that compiled 400 answers from 400 employers, one-third of employers provide some services to help workers manage their finances. However, smaller companies, those with 50 to 100 employees, lag—only a quarter provided some sort of assistance program.
Smaller organizations—perhaps your school—can offer some solutions to employees in crisis. By offering aid to those struggling, not only will you gain a loyal staff and faculty base (which is important for schools that have a high employee turnover rate), but also help to reduce stress which can lead to missed days, low productivity, and toxic morale. And, what a better time than during National Employee Recognition Month!
Here are three options to consider:
- Some smaller companies are establishing a "We Care Fund," funded by the employees themselves. Employees can elect a certain percentage from their paycheck, or simply donate when they can into the fund. This pool of money is used for employee medical emergencies or other urgent needs. A staff committee reviews applications and grants funds to those who qualify. (CAUTION: Please implement such a program with great care, and only after review by your employement attorney. If not well-structured, plans such as these can inadvertently reveal personal and confidential information about employees applying for the program that can later be used against the school.)
- Another option that smaller organizations are experimenting with is money management counseling. For a relatively reasonable fee, employers can bring in a consultant for those who are interested in learning tactics for scaling back their expenses. A financial professional, such as one of your parents, may offer to give lectures on this topic at no charge.
- A more confidential solution is to offer employees an Employee Assistance Program (EAP). These programs won't cost your school much beyond a few dollars per employee per month, and are great resources for employees to seek confidential help for a range of issues including domestic problems, addiction, and financial troubles. See this month's "Ask Michael" below for more information.
EAPs are available through a variety of providers—sometimes connected to existing employee benefits programs such as LTD. Check with your insurance broker.
