In my conversations with business and human resources leaders on the topic of student loan paydowns as an employee benefit, I sometimes get asked the question “Why don’t I just give my employees more cash and let them figure out where to spend it?”
The whole purpose of offering an employee benefit or perk is to reduce the time, stress and cost of an employee having to deal with it on their own. For example, enrolling in life insurance through an employer guarantees a certain amount of coverage, eliminates having to do blood work, and the risk of getting your application rejected. The same convenience applies to health insurance, or choosing investments for your retirement. Going through an employer saves the time and stress of having to figure it out yourself.
When evaluating employee benefits, business and human resources leaders should ask themselves, what are the biggest stress points in my employees’ lives right now and how can I help save them time, stress and/or money? Solving for that increases loyalty and workplace productivity, because chances are your employees will be dealing with at least some of these challenges while on the job.
In the near future, more and more employees will need to take care of aging parents or disabled relatives. While giving these employees more time off to take care of family is great, business and human resources leaders should also provide them with resources to better understand how to support a parent or disabled relative. For example, many states have filial responsibility statutes, which means, if an employee pays for their parents medical expenses, a hospital or medical facility can hold that employee responsible for any future unpaid medical or doctor bills. For navigating these kinds of situations, simply giving your employees time off is not enough.
Another big stress point for many employees is education, both past, continuing and future education. Companies do a great job supporting continuing education, through tuition reimbursement programs, designed to reduce the cost to employees. However, companies are doing less to support the future cost of tuition for employees’ dependents. For example, my friend just had a child and now the most important thing for he and his wife is building up their child’s college fund. A benefit that would help him understand his options for setting up a 529 College Savings Plan or Coverdell Education Savings Account would be a great benefit for his employer to offer. A matching contribution from his employer might keep him for life.
Companies are doing even less to support past education, or the $1.4 trillion of student debt that 70% of employees entering the workforce are facing. Employees are paying back student loans well into their 40s and even 50s. This doesn’t even include parents who cosigned student loans to help their kids pay for college. Navigating and understanding different federal loan repayment programs and refinancing options is something many employees could use help with. Setting up automatic loan payments through payroll deductions and offering matching employer contributions saves employees time and helps them get out of debt faster.
While cash may seem simpler and easier to manage, giving employees more cash won’t make their problems go away, or remove the stress of dealing with them. When deciding to add a new benefit, employers should determine if it directly addresses their employees pain points. Doing so can have a much bigger impact on employee retention and workplace productivity at a much lower cost.
Emeka is the founder & CEO of PeopleJoy, which provides employee retention solutions to CEOs and business leaders that struggle with high costs of turnover and retaining millennial talent.
Previously he founded and launched a mobile app publishing company that was acquired in 2015. Prior to that he worked as Director of Product at a fintech startup and as a Wall Street analyst. Emeka received his B.S. in Electrical Engineering from Rutgers University and his MBA from Harvard Business School.
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