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Human Resources

Financial Success, One Employee at a Time

Helping employees develop better money management skills
University Business, Jul 2011

"Leave your personal problems at the door." There are probably some managers who still support the antiquated belief that employees can shut off personal problems like a light switch once they set foot in the workplace. But how can a worker ignore the fact that he or she has lost a home, maxed out credit cards, drained the savings account, or stopped being able to pay the electric bill?

Over the past several years, higher ed institutions have enhanced their employee assistance programs (EAPs) with basic finance courses and resources, everything from how to develop a family budget or pay off credit cards to offering emergency grants. Whether or not an employee's financial issues are a school's business doesn't seem to matter to those implementing these programs. They've developed ways to help employees minimize financial stress so they can be more engaged, focused, and productive at work.

There is some evidence that points to the need for schools to do more. According to MetLife's 9th Annual Study of Employee Benefits Trends, conducted in 2010, approximately one in four employees in higher education feels confident in the ability to make the right financial decisions for themselves and their families. Only 27 percent feel in control of their finances and almost half live paycheck to paycheck. More than 60 percent indicated being behind in retirement savings and nearly nine out of 10 are not confidant they know how much income their savings will generate once they retire.

These results don't come as a big surprise to HR professionals. Many have taken action to help guide employees on a path of financial success, with the assistance of companies like Fidelity, Vanguard, and TIAA-CREF, which offer services from employee financial counseling and online tools to educational seminars.

Financial wellness is part of HR's overall wellness program at Columbus State Community College.

At Columbus State Community College (Ohio), which supports about 1,300 employees, HR considers financial wellness part of its overall wellness program, says Tim Wagner, vice president of HR. The team delivers seminars on how to buy a house and manage stocks, bonds, mutual funds, household debt and credit cards, and has a dedicated staff member for retirement guidance. This individual offers a variety of employee-saving tips that use holidays or personal occasions as triggers to take action. For example, every New Year's Day, she may suggest reviewing your investment portfolio or investing your pay raise.

Some schools are trying to offer more aggressive investment returns. The University of New Haven (Conn.), for example, turned to Fidelity to offer employees a different investment platform, says Caroline Koziatek, vice president of HR at UNH, which employs 657 people.

Since some employees are not financially literate, HR analyzes financial data from its broker to identify specific topics for employee seminars. "If we see 20 70-year-olds investing in risky assets, we would do some education on when is the right time to go in a bond market or, if too many young employees aren't signing up with Fidelity, then we would hold a seminar like, 'Too Young to Plan for Retirement?,' " Koziatek explains. "Our [seminars] are a little more tailored to the trends and behaviors of our collective group. We don't just do vanilla."

Less Is More

Many retirement plans offer a variety of vendor and investment options. But too many choices tend to be overwhelming for employers and their workforce.

Two years ago, Kennesaw State University (Ga.) dropped the number of its vendors from 15 to three for 403[b] and 457[b] retirement plans to meet new IRS compliance standards, shares Karin Elliott, benefits manager. "There was no way we could keep track of 15 different vendors," she says. HR also sent payroll contributions to each vendor. With just three, it's easier to choose and build stronger relationships. She says employees now have a better selection of mutual funds.

In the future, she hopes to provide employees with access to different onsite financial advisors who rotate weekly and offer a variety of financial perspectives but do not sell investment products.

Purdue University (Ind.) officials consolidated record keeping and education vendors down to one. Its financial services company, Fidelity, recently opened an on-campus office with four representatives who offer financial counseling and seminars for the institution's 12,000 employees across four campuses. "[Fidelity] has no investments in the core lineup," notes Luis Lewin, VP of HR at Purdue. "We wanted no conflict of interest as [reps] give advice and education."

At the same time, Purdue cut back its retirement contribution from 15 percent to 10 percent after results from an in-house benefits and compensation survey revealed the school was overly generous compared to peer schools. The five percent was rebalanced into employee pay.

Fidelity is rolling out a series of educational sessions aimed at specific employee groups focused on age, gender, or asset levels. Nearly 100 employees recently attended a two-hour seminar that targeted workers over the age of 55. "We're on to something," Lewin says. Such seminars engage employees and make them feel more connected to the financial experts. Within five years, he hopes to see at least 50 percent more employees actively engaged in their retirement planning. "People are not overly concerned with their [retirement funds]," he says, adding that HR is also targeting younger employees. "They need to save wisely because things have really changed economically."

More Work to Do

Officials at some schools still feel more can be done. "Our antenna is up," says Rebecca Ferguson, chief HR officer at Bowling Green State University (Ohio). "We're constantly at the big picture level, looking at forewarning signs." For example, while the school and its employee assistance program vendor don't track which employees enroll in financial courses, the vendor monitors utilization rates and offers suggestions as to which seminar topics need to be repeated or introduced.

Recently, HR surveyed supervisors and employees on areas they'd like to see covered in a new leadership training program. Finance appeared to be a hot topic; more than half of the supervisors believed employees needed the ability to develop institutional budgets; employees expressed their need to understand them. The key advantage of helping employees develop budgeting skills, in Ferguson's opinion, is that they can also use them at home. "The skills are transferrable," she says. "If I've got a custodian who's really good at running a household budget, he or she might be really good at helping to figure out how to save money for the department."

Mandating personal financial classes isn't exactly popular.

Bowling Green employees can now access web-based budget tools initially designed for students. If Ferguson had her way, employees would have two required classes: tips for developing and managing a budget, and a refresher course. While mandating personal financial classes isn't exactly popular, some employers have found creative ways to introduce basic financial concepts. The Virginia State Employee Loan Program sponsored by the Virginia Department of Human Resource Management--which manages HR for nearly 47,000 employees working in government jobs or at state-funded schools--requires workers to pass a multiple-choice finance quiz before receiving a loan, says Sara Wilson, the department's director.

"It's all online and employees must be able to answer 10 questions and get 80 percent of the questions right," she says. Almost $4.5 million in funds were handed out between July 13, 2009 and February 20, 2010. Past questions have asked what a financial goal should be and what a budget should include.

Wilson says employees also have access to a wealth of financial and legal benefits, including free seminars covering topics like bankruptcy prevention, financial fitness, and tax issues. There's even an emergency grant program, enabling employees to receive up to $750 per incident.

Moving forward, she plans on using data from the grant and loan programs to identify what types of employees may be more vulnerable to financial problems. Her wish is that employees will soon start deferring more money into a savings or investment account and have less credit card debt or a mortgage that isn't under water. "I'd like to see a more positive picture so [we] can coach them on investments instead of loans," she says.

Carol Patton is a Las Vegas-based freelance writer who specializes in covering HR issues.