Is debt management the new performance frontier? – BenefitsPro | Vette Leader

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Helping employees manage their unsecured debt (credit card, medical, and personal loan debt) could help employers attract and retain top talent in today’s high-turnover environment. In fact, offering a benefit package that doesn’t include debt-related financial wellness benefits may not be enough to promote worker well-being, productivity, and happiness.

Survey data shows a performance gap

A recent Financial Health Network survey noted that there are high needs for debt-related services and gaps between those who need them most and those who currently have access to them. The survey asked workers with unsecured debt about their financial challenges over the past 12 months and found that although all survey respondents worked full-time, many struggled with their finances and used their work hours to manage their debt burden.

Almost half (47%) of respondents said they have not been able to pay all of their bills on time in the past 12 months. 50% of respondents who indicated that debt is a source of stress for them said that they have worked an average of at least one hour per week at work in the past month to deal with debt-related matters (e.g. contacting creditors).

While employees’ unsecured debt has a significant impact on their well-being and productivity, survey responses indicated that operational benefits packages are currently inadequate when it comes to providing employees with the help they need to work through debt manage and avoid.

The survey asked participants about 13 different debt-related benefits, including financial coaching, emergency grant funds, debt consolidation loans, student loan repayment assistance, and more, and found the following:

  • For each of the 13 debt-related benefits, fewer than 40% of respondents said their employer offers the benefit.
  • One in five respondents said they did not have access to the 13 debt-related benefits.
  • Workers with higher levels of total debt, workers with lower incomes, and women were more likely to say they did not have access to debt-related benefits, although they reported higher levels of debt stress.

Designing debt-related benefits to meet employee needs and preferences

The good news for employers trying to close the performance gap revealed in the survey is twofold. First, employees expressed clear and actionable preferences about the benefit features that would be most helpful to them. Second, survey responses suggest that offering useful debt-related benefits pays off for employers in terms of employee well-being and happiness.

Employees attach great importance to the structure of debt-related benefits on confidentiality assurances. Employees, particularly those with higher levels of unsecured debt and those on lower incomes said they were worried about what their employer would think if they did knew, for example, how high the employee’s debts were. When designing Debt-related financial wellness benefits, employers and human resources teams should emphasize confidentiality practices and ensure that employees’ debt burdens are not disclosed to their managers or employers.

In addition to the promise of confidentiality, employees value the easy access, clear explanation of benefits, and availability of one-on-one help when considering whether to participate in debt-related financial wellness services.

The right mix of debt-related benefits, with the right features and messaging, is likely to have a positive impact on employee well-being and happiness.

  • 63% of respondents indicated that access to debt-related financial wellness services would be restricted their stress.
  • 68% said it is important for an employer to offer debt-related financial wellness benefits.
  • 62% said they would be more likely to stay in a job that offers debt-related financial wellness programs that are useful to them.

take that away

Employers have an opportunity to bridge the gap between workers’ needs for debt-related assistance and the company benefits available to them. By leveraging these recent survey results (or by suggesting that employers conduct their own surveys of their employees), HR teams and benefit professionals can begin to identify where companies’ current benefit offerings are falling short. Armed with this information, they can suggest complementary products and services designed to help workers manage their unsecured debt and avoid further debt. It’s time for workplace financial wellness benefits to move beyond standard pension and health insurance offerings, and debt-related benefits are a good place to start.

Amelie Josephson is Senior Manager, Innovation, at Financial Health Network

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