Employers need happy, healthy, and skilled employees to be successful, while employees want a steady stream of income, job satisfaction, and professional growth. In a good economy, it’s easier for both of them to get what they want.
However, during a recession, giving employees what they want and need becomes more difficult. One way to counter this is to offer the right benefits to retain employees.
Why Retaining Employees is Important
During a recession, employees are more likely to experience financial stress, which makes them more likely to seek other opportunities. Losing employees during a recession can increase an employer’s losses. Not only will the employer lose good employees with valuable skills and knowledge, but it will also cost money to hire new employees:
- Hiring team: External teams cost 15% to 25% of a newly hired employee’s salary, and the average salary for an internal human resources manager is $ 113,300 per year.
- Career events: $ 125 and $ 225 per event, plus all associated travel and marketing costs. Typically, the cost is around $ 300 for a given rental.
- Background Checks: Up to $ 80 per employee, depending on the level of your business needs check.
- Training: It takes eight to 26 weeks for a new hire to earn more than what it costs. For most companies, onboarding and training cost between 1% and 2.5% of total revenue per employee.
Because hiring is affected by so many different factors, it’s hard to know the true cost. However, a study by the Society of Human Resource Management (SHRM) shows that the average cost of a new hire is $ 4,129 per employee. With such a high cost, figuring out how to retain employees and spend the money to do so makes economic sense.
The key to retaining employees, even during a recession, is to maintain good employee morale. This can be accomplished with strong communication, training for continued professional growth, employee recognition, connected leadership, actively seeking employee feedback and taking action based on that feedback, managing change and l offer useful social benefits.
Here are seven benefits to offer during a recession that can help reduce financial stress and thus retain employees.
1. Financial wellness program
A comprehensive financial wellness program includes retirement planning and investing, but goes beyond these topics to include financial education on a wide variety of topics that employees need. The objective of this training is to help employees understand how finances affect them and how to create a stable relationship with money.
A holistic financial wellness program will include: • Budgeting • Credit creation • Debt reduction • Understanding student loans • Managing student loan debt • Saving • Personal attitudes and behaviors to with regard to spending and saving • Setting financial goals • Managing financial crises
Financial wellness programs can increase employee satisfaction and help reduce employee financial stress, according to research. Data collected from Enrich indicates that as an employee’s financial understanding increases, their stress level decreases. Increasing job satisfaction and decreasing financial stress are key to retaining employees, especially during tough economic times.
Research also shows that financial wellness programs produce a return on investment in any economic environment.
2. Short-term employee loans
Almost half of all American employees live paycheck to paycheck. So when a financial emergency arises, these employees need to find cash quickly. Many turn to payday loans, but these have high interest rates and often trap people in a cycle of debt. One way to help employees in this situation, made more likely during a recession, is to offer short-term, low-interest employee loans.
In most cases, the interest rate is significantly lower than that of payday loans and the monthly payments can be deducted directly from an employee’s salary. When paired with a financial wellness education, short term employee loans can solve immediate financial emergencies without incurring high interest rate long term debt.
3. Mental health benefits
Financial stress is a known cause of mental health problems. A recent survey shows that employees believe finances affect their mental health, with 45% of American adults being depressed about their finances. Other studies show even higher numbers, which is why nine out of 10 companies now offer some sort of mental health benefit.
Potential benefits to consider include: • EAPs • Mental health insurance coverage • Substance abuse treatment benefits • Mental health assessments • Mental health education • Stress management
4. Integrated savings accounts and / or savings matching
A GoBankingRates survey found that the top three financial stressors are debt, lack of retirement savings, and lack of emergency funds.
One of the best ways to overcome these stressors is to help employees save money with built-in savings accounts, also known as shadow savings accounts. These accounts are linked to the employee’s retirement account through payroll deductions, allowing the employee to simultaneously save for their short-term and long-term needs.
Enrich found that employees without emergency funds are more stressed than those who do. When paired with a financial wellness program, stress levels drop even more.
5. Wellness apps
In addition to offering health insurance, companies with financially stressed employees should also consider offering wellness apps, such as Castlight, Virgin Pulse, and WebMD. Wellness apps create a culture of health, helping employees improve their physical and emotional habits.
Wellness apps also increase engagement and satisfaction with healthcare delivery. A MetLife study shows that employees are three times more likely to feel loyal to a company if they approve of the benefits it offers. Loyal employees are much more likely to stay with a company, even during a recession.
6. Student loan repayment assistance
Employer-sponsored student loan repayment assistance programs help employees pay off their student loan debt. This can be done through refinancing assistance, matching contributions or lump sum contributions.
A SCORE survey found that 75 percent of those with student loans wanted their employers to offer some kind of student loan repayment benefit or refinance option. In fact, this is the most sought-after benefit among Millennials, who say they would stay with a company offering such benefits for five years or more. Student loan repayment assistance benefits also help to increase diversity, studies show.
7. Resilience training
Stress management techniques that increase resilience are part of an increasingly popular benefit known as resilience training. Why is it so important to have resilient employees?
These employees are: • 31 percent more engaged • have 50 percent less productivity loss • feel twice as satisfied with their quality of life
By offering these seven benefits, businesses are better equipped to retain their employees during a recession, which will reduce the negative impact of a weak economy.
Kris alban is Executive Vice President of iGrad, a San Diego-based financial technology company that provides artificial intelligence-based financial wellness solutions to employers, financial institutions, colleges and universities. His Enrich the financial well-being platform is used by over 20,000 employers and over 300 financial institutions to provide behavior-changing financial literacy training to employees, customers and members.
