Creating a healthy working environment that values employees’ well-being begins with providing useful benefits. One of the most significant benefits that companies can offer is a chance to become financially literate. Beyond good compensation, health insurance, or paid leave, financial literacy programs impact businesses in a unique way. Here, we are going to discuss just what happens when these programs are not in place, and give tips on how HR personnel can implement them.
The Importance of Financial Literacy
A study by Northwestern Mutual found that finances are the main source of stress for nearly half of all Americans, with 40% particularly anxious about retirement savings. This is not surprising, given how the majority of workers in the country are in danger of a financially unstable retirement. In fact, Yahoo Finance reports that a whopping 64% of Americans will retire broke, with 19% having less than $10,000 in their retirement fund.
While factors like unemployment or low salaries are often to blame, part of the problem is the lack of financial literacy, which influences aspects like housing and retirement. Case in point, a survey by Marcus reveals that 6 out of 10 Americans don’t have an established 401(k) with their employer, leaving them financially unstable when they retire. This instability is affecting employees in negative ways at work, causing anxiety that leads to lower levels of productivity.
The Global Benefits Attitudes Survey confirms that there is a strong connection between stress and work performance, not to mention levels of absenteeism in the office. Implementing financial literacy programs can combat the stress caused by mishandling personal funds and savings. It can provide employees with the concepts and tools that can empower them to meet their needs and have enough left for their wants. Plus, The Business Journals point out that an effective financial literacy program is one of the key benefits that promote employee retention and job satisfaction.
Improving Financial Literacy
A good place to start when trying to improve financial literacy is rethinking your company culture in relation to money. Finances can be very personal, and people may be uncomfortable discussing these matters in the workplace. Sending out material about financial literacy every now and then can signal an important shift in this mindset, allowing for a more open approach to the journey to becoming financially literate and healthy.
Aside from providing infographics or reading materials about budgeting, savings, and even self-discipline, you can also incorporate technology. There are a variety of online resources — from YouTube videos to free online short courses — that anyone can access and learn from. You can also encourage employees to use budgeting and finance apps to track their spending and plan their savings.
Of course, unless you have an in-house finance expert, one of the best options for implementing all of the above is to seek external support. You can look for consultants or even hire a financial counselor to improve your financial literacy programs or conduct workshops and seminars. Joe Blattner, President of COMPackage, emphasizes how investing in these measures is a small price to pay compared to the long-term benefits that your company will reap. After all, when employees are free from the distraction of financial stress, they can focus on things that really matter in the workplace.
Today, the ideal total compensation package is as diverse as the current workforce itself. In fact, it has to be in order for companies to attract and retain the absolute best employees.
Your employees may vary greatly in age, location (urban, suburban, rural), gender, and marital status. They also most likely vary in how they work – from home or at the office? From a computer or by phone or some other type of a machine? By travelling on sales calls or going into the office every day? These are all things to take into consideration. Not to mention, employees working for the same companies have very different job descriptions and skill sets. Why give all employees the same exact benefit package, when employees are all so different?
If you are trying to provide a one-for-all solution, you are more than likely leaving some of your employees behind. By taking the demographics of your workforce into consideration, you can remove the guesswork of a one-handed solution and offer employees a worthwhile benefits package with options.
Regardless of whether or not your company is small or large or somewhere in between, tailoring benefits to the specific needs of your employees does wonders for morale. It’s also a smart move if you aren’t able to compensate monetarily as much as your competition. To bridge the salary gap, the savviest of employers know they must make up the difference by offering an attractive total compensation package and one that make sense for the employees in question.
Think about it. Would you offer an on-site daycare facility as a part of your benefits package if a large portion of your workforce is under the age of 25? If most of your employees commute by bus, would including a parking spot be relevant or even necessary? If you have telecommuters working for you maybe they don’t get to enjoy the “complimentary” coffee you keep in steady stream in the office – why not offer your virtual assistant a monthly $10 gift card to a local cafe?
Another example would be if employees are expected to use their own vehicles for company business, a prepaid gas card would help to defray fuel expenses. Do employees work from home using their own equipment and Internet service? If so, you might want to consider providing laptops with Internet access.
The cost of providing employees with potentially expensive perks such as insurance, holiday bonuses, company cars, laptops, cell phone service, tuition reimbursement, or stock options may naturally be a great concern, but it may not be as high as factoring in the cost of recruiting and retraining new hires. Offsetting salaries with a diverse selection of fringe benefits is one of the simplest ways of compensating employees smartly.
In essence, offering a diversified benefits package gives you the luxury of not only attracting talent, but also keeping the top talent in your field happy to be on board. Providing options and showing individualized attention can be priceless. And with the right software, it doesn’t have to be difficult, either. COMPackage offers customers a comprehensive list of over 60 benefit ideas as a natural part of their total compensation software subscription.
Getting the Word Out
After revamping benefits packages to meet the unique and changing needs of your employees, it is imperative to then ensure they are fully aware of their total compensation. It is often astounding for employees to find out how much their employer pays for their total compensation, but sometimes it’s also a shock to the employer, when they start adding it all up.
Many employees are completely unaware of the extent or contents of their work benefits. Are key employees being lured away and accepting other positions offering a higher base salary? They may not be so quick to make a move if they had all the facts about their benefits package.
Employees and potential recruits need to know the full costs associated with having them on staff. Knowing this gives them a better idea of their true compensation and it also allows for essential employee feedback. Encouraging employees to provide feedback regarding which types of compensation are most important to them gives you a definitive edge when it comes to yet another important aspect of any successful business – employee retention.
But how can you give them all of this information without spending a ridiculous amount of time compiling data or an exorbitant amount of money outsourcing the task to a third party?
The answer is using total compensation statement software for creating employee compensation reports and detailed benefits statements. Benefits statements will give your employees a clear and concise picture conveying exactly how much they are really being compensated for their services.
What interesting ways does your company provide benefits? We would love to hear your ideas for diversifying benefits in the comments below.
If you’re like most business owners or HR Managers, you know that communicating with employees about their salary and benefits is always a touchy subject. It’s best to plan accordingly and ensure that the timing is appropriate. But when is a good time to tell employees what their salary, health benefits, sick time, vacation time, and countless other perks are worth? Well, the answer is…it depends.
There are several different occasions and times of the year when your organization may be best suited for giving employees their . Given that a detailed summary of employee benefits is a boost to morale, the Holiday Season or New Year can be a great time to give employees the gift of a complete rewards statement. Although an annual benefits report is sometimes adequate, there are many other times throughout the year when a total compensation statement can help attract, retain, and positively impact your employees.
First impressions are always important, and the way you welcome a new employee to your company is no exception. That’s why hiring can be an excellent time to present a total compensation statement. Letting a new or potential employee know just what you’re prepared to provide, even beyond their regular salary, is a great way to get that new relationship off to a solid start. In addition, employees who are comparing other offers can fully see what your company is offering them, and if the competition doesn’t provide a total compensation statement, your company is going to be viewed as the better choice.
Promotions or Raises
Another good time to discuss benefits is during a promotion or request for a promotion. Oftentimes in such discussions, the focus is solely on the actual wages offered or sought. However, it is wise to also emphasize the other benefits an employee is receiving outside their paycheck, such as paid sick time, free parking, a laptop, cell phone, or several other perks. Even intangibles like flexible scheduling can and should be part of the discussion, since they contribute to the overall employee welfare, contentment, and productivity.
Annual or semi-annual performance reviews are also an excellent time to bring up total compensation. While discussing what the employee has done for the company, you can also showcase the full dimensions of what your company is providing. A comprehensive total compensation statement can boost morale and employee loyalty, and makes an excellent accompaniment to any words of encouragement that you may offer during a review.
Significant Life Events
There are some events in life that have a direct correlation to employee benefits. Occasions such as marriage or divorce, starting a family, illness or approaching retirement can be opportune times to present a total compensation statement. Since an employee may become eligible for additional benefits at these times, taking the initiative to let them know what they qualify for and what they receive is a great way to show that you’re truly looking out for your team.
Remember, the full measure of benefits your employees receive far exceeds their actual wages. This is good news, so share it freely!
The process of recruiting and retaining top talent is today’s toughest job. Because as an employer, you need your employees as much as they need you, you should actively communicate your employee value proposition (EVP) to potential and existing employees.
Importance of an EVP
An EVP is a strategy of everything a company has to offer to an employee. It is usually divided into salary and benefits, and it varies depending on the employee’s role, tasks, credentials, and skills. If an EVP is planned out well and laid out in detail, the employee will know the actual value of the compensation package they’re getting, and also the reasons they are getting it.
Were they headhunted from a competing company, and are now being offered a compensation package they should find irresistible? Did they perform well in the past year and now have given a significant raise not just in salary but in perks as well? Then they should know all about it through their personal total compensation statement. An EVP is essentially a sales pitch, and should be treated as such.
All companies have their own particular EVP, whether well-defined or not. Nevertheless, for the sake of attracting and maintaining top talent, it behooves you to have your company’s EVP clearly defined. How does your EVP compare to your competition? Or maybe the better question is, is your EVP, and whatever actions you take to communicate it, working well to recruit and retain employees?
Is your company’s EVP in sync with your company’s core values? For example, if your company values loyalty, your EVP might include additional incentives for employees who meet a specific length of service.
Role of Employee Compensation Software
An EVP is not a one-time thing. You don’t develop it and then just leave it there. It has to be regularly reviewed and continuously improved to be competitive.
For example, technology is rapidly changing the way people work. Think about it: If the last time you’ve updated your company’s EVP was five year ago, then your telecommuting perks (if you have them in the first place) need to be revised in light of the new digital solutions that have made remote working easier and smoother. Instead of offering just one day for working from home, maybe your company can now afford to make it the whole five days. But that’s just one thing to look out for.
Aside from streamlining your EVP, employee compensation software can also help with highlighting the important values that can drive an employee’s compensation. As with marketing to customers, marketing to employees shouldn’t come across as generic if you want to make a lasting impact. Because, today, you can tailor your EVP on a total compensation report accordingly.
Employee compensation software solutions, like those from COMPackage, also help with transparency. You never want your employees to feel shortchanged, so you must be able to explain their compensation package instantly, regularly and repeatedly in order to promote your EVP.
A good compensation package attracts and retains top talent, so it’s crucial for companies to provide the best they can offer. It’s why employee benefits statements are so crucial — they serve as a measurement of just how much a company is willing to invest in its people.
But if your company is working within a fixed budget, how can you provide enticing benefits without overspending? How can you go beyond government-mandated benefits and deliver something extra?
The answer is in low-cost but high-impact benefits. Some of the perks employees appreciate the most are affordable enough not to dent your budget. Here are some examples:
Work-life balance is a goal for many employees, so help them achieve that by giving them a flexible schedule. There are several ways to accomplish this, such as authorizing a couple of work-from-home days every week, implementing staggered hours instead of a fixed login time, or allowing people to offset shorter hours in one workday with longer hours in another workday.
You’re not giving money to your employees when you offer them flexible schedules. You’re giving them time, which, to many, is far more valuable.
Paid vacation leave
The US doesn’t require employers to grant paid vacation leave to employees. But all work and no play makes Jan a disgruntled worker, so it’s better to allot a fixed number of paid vacation days which your employees can use whenever they want to as long as they give advanced notice.
To avoid going over budget, don’t make unused days convertible to cash. Forfeit them at the end of the year and reset the counter at the start of the new one. Or you might choose to give an extended rollover period, for example for a period of three months.
Financial planning assistance
According to a 2016 survey by Magnify Money, more than half of Americans are living paycheck to paycheck. Given how large this statistic is, chances are that many of your employees are living this way, even if they’ve been working for years.
Help them out by teaching them how to fish. Offering financial planning assistance won’t cost your company a lot, but it can make a world of difference for your employees who are struggling to budget their money wisely.
Corporate rates on insurance plans
Individual rates are higher than corporate rates, so your employees will appreciate it if they can get a discount through your company on life, accident, auto and other kinds of insurance.
Also, automatic payroll deductions make payments faster and easier. This added convenience is a benefit worthy of being included in employee benefits statements.
Where do your employees get their morning coffee? Where do they work out after they leave the office? Most likely, it’s that cafe around the corner and the gym a couple of blocks away, respectively.
Thus, approach nearby commercial establishments to see if you can get discounts for your employees. A lot of businesses will be happy to oblige if it means more customers.
These examples clearly show that although monetary compensation is of primary importance for many people, the little things do add up and make a difference. But your employees won’t get to appreciate the full effect of these perks unless you lay it out for them in employee benefits statements from companies like COMPackage.com. Only then will they see the total value of the compensation they’re receiving. If you’ve been looking for a way to boost staff morale, employee benefits statements are the way to go. After all, you can’t appreciate what you don’t know you have.
On March 7, the U.S. Department of Labor (DOL) announced proposed changes to the Fair Labor Standards Act (FLSA) regulations that will likely make approximately 1 million workers eligible for overtime pay.
Under the FLSA, employers must pay workers time-and-a-half for hours worked in excess of 40 hours in a work week. The FLSA includes some exemptions to the overtime rules, intended to exclude certain “white-collar” workers from the overtime requirements. Companies do not have to pay an employee overtime wages as long as the worker passes both the salary test and the duties test to meet the FLSA exemptions from overtime pay.
The rule would increase the salary threshold that an employee performing executive, administrative or professional duties must be paid in order to be exempt from payment of overtime for hours worked in excess of 40 per week. Currently, employees performing duties in a white collar exemption category that make $455 per week ($23,660 annually) or less must be paid an overtime wage, whereas the new rule would make the required wage of $679 per week ($35,308 annually).
The rule, if it becomes final, will go into effect on January 1, 2020. It was published in the Federal Register on March 12, upon which began a 60-day period for the public to submit comments. The DOL already received public input in six nationwide listening sessions, as well as 200,000 comments after a 2017 Request for Information while it was developing the proposal.
The nearly unanimous public opinion, according to the DOL, was that the overtime threshold needed to be updated from the current level established in 2004. The Obama administration proposed a rule in 2016 that would have doubled the salary threshold and set up automatic adjustments to it, but a U.S. District Court found the rule unlawful. The new proposal, however, would set up periodic reviews to determine if the salary threshold increases are needed.
Additionally, the rule would increase the compensation requirement for someone to be classified as a highly compensated employee (HCE) – and therefore exempt from overtime wages – from $100,000 to $147,414, which is equivalent to the 90th percentile earnings of full-time salaried workers, projected to Jan. 1, 2020. Along with the income, HCEs must also have primary duties that include office work or non-manual labor, and they customarily and regularly perform duties of an exempt executive, administrative or professional employee.
Employers should carefully review their current exempt employees’ compensation structure to determine which workers may be eligible for overtime wages under the new regulations. Although the changes are not effective until next year, companies should monitor those employees’ work hours now to determine the most cost-effective way to comply with the new rules. In some cases, it may be easier to simply raise the workers’ salaries to the threshold, assuming their job functions meet the FLSA duties test. In other cases, employers may want to convert the employee to an hourly rate and pay overtime for hours worked in excess of forty hours per week and implement rules to limit excessive overtime.
For more information about the new overtime regulations, contact employment attorney Elaina Smiley at firstname.lastname@example.org or 412-456-2821.
Interviews are a great way to get to know applicants on an in-depth level — much more than resumes or test scores can offer. After all, someone can be excellent on paper, but not necessarily in person. It takes a face-to face interview to perceive someone’s attitude.
But although interviews are meant to give you a closer peek at applicants, there are several questions you shouldn’t ask, either for legal or ethical purposes. Otherwise, your company may end up with a discrimination lawsuit, as well as damage control problems on social media.
To avoid such headaches, take note of the following no-go lines of inquiries:
- Race/ethnicity — Questions like the following are off-limits because national origin is strictly a federally protected class.
- “Where did you originally come from?”
- “What’s your nationality?”
- “What’s your ethnic background?”
However, the law stipulates that companies must hire only people who are eligible to work in the U.S., so you should determine an applicant’s eligibility without asking questions that invade privacy. But it’s not a matter of how, but when. You can verify an applicant after you’ve hired them by asking them to fill out an IRS Form I-9 (Employment Eligibility Verification) on their first day of work.
Here are some additional thoughts about what you should and should not ask.
- Religion — If you’re concerned about whether or not an applicant can work during the required hours, you can straight up ask if they’re able to commit. It’s much better and clearer than asking them about the holidays they observe, what church they belong to, or when they will expect to have time off for their religious practices.
- Sexual orientation/gender identity — These are considered non-issues in job hunting, so there’s no reason to ask an applicant about their gender or sexual preference. But there are less obvious questions you still need to stray away from, like “Do you plan on having kids?” or “Are you single?” Plans for getting married and having children could be used to discriminate against female employees.
- Disability — People with disabilities (PWDs) are protected under the Americans with Disabilities Act (ADA). This means PWDs who are qualified to perform a job should not be discriminated against on the basis of their disability. Just ask the applicant if they can perform all the tasks associated with a job.
- Age — The Age Discrimination in Employment Act (ADEA) protects applicants aged 40 and above from workplace discrimination on the basis of their age. Thus, don’t ask an applicant how old they are, or when they finished high school. However, in some cases, asking for age is legal because the law requires employees for certain jobs to be of a certain age, e.g. bartending and casino dealing.
Current salary — In Massachusetts, asking for an applicant’s current salary is prohibited until the job offer stage. In other states, it’s not, but it’s still considered taboo to ask about it in the early stages of the hiring process. You can ask about an applicant’s current salary once you already have a job offer that includes a compensation package.
It can be tricky to navigate the do’s and don’ts of HR interviews, but the key here is to stick to professional questions and stay away from personal ones. The more you focus on the job at hand, the less likely you’ll end up asking illegal/inappropriate questions.
Employers are often perplexed by how much they should spend on employee benefits. How much is too much for things like vacation time or bonuses?
A recent report released by the U.S. Bureau of Labor Statistics showed that benefits make up about 30% of the average worker’s total compensation. According to this September 2018 report, employer paid benefits represent 46% of an employee’s wage. So, if I pay you one dollar in base pay, I would on average pay you $0.46 in benefits!
That’s a number most employers and employees do not know. And if you are a gracious employer, like most of COMPackage’s customers, it’s even more!
The report provides separate numbers for civilian, private, and government workers, but for the purposes of this article, we’ll just look at the private business numbers. The highest percentage of benefit costs for private employers was insurance at 7.9%, followed by required benefits, at 7.7%, and paid leave, at 7.0%
According to the report, an employee with an annual salary of $50,000 would have a total compensation of $70,721. That employee’s package on average would include:
- $5,667 for insurance
- $5,524 for legally required benefits
- $5022 for paid leave
- $2,798 for retirement and savings
- $2,726 for supplemental pay
And if you never tell your employees, or their managers, they will never know!
Ask most employees if they’d rather have cash or non-cash incentives, and they’ll choose the cash incentives almost every time. However, as an employer, you have many other factors to consider when choosing an incentive other than whether or not employees say they want it. Carefully consider the benefits and drawbacks of cash bonuses before creating your incentive program.
Benefits of Cash Incentives
- Nothing talks louder than cash – Many employers find that as soon as they offer cash incentives for a task, their employees start working harder. For fast, effective gratification, few incentives work better than cash.
- Easy to distribute – Cash incentives require little extra effort on the part of an employer to distribute. Money can either be added to a paycheck or distributed as cash.
- Practical – Many non-cash incentives appeal more to some people than others. While some employees may not need a new iPod or tickets to a sporting event, everyone can benefit from a little extra cash.
Drawbacks of Cash Incentives
- Can become viewed as base pay – When employees receive cash bonuses on a regular basis, they can come to expect them as part of their base pay. For example, many people rely on their annual Christmas bonuses or quarterly commission checks to pay their bills. If these benefits ever have to be taken away, things could get ugly fast.
- Disappears quickly – Cash incentives are often quickly forgotten because they are spent on necessities – things like bills, debt or Christmas presents. On the other hand, even small non-cash incentives like movie tickets, electronics or gift cards are remembered long after they’ve been received.
- Takes the joy out of incentives – Non-cash incentives often make a more positive impact because they are viewed as “treats,” while cash incentives are often seen as more practical.
The best incentive programs often involve a mix of cash and non-cash incentives. To show your employees how much their non-cash incentives are worth, consider total compensation statements through COMPackage.
During a job interview, open ended questions provide valuable opportunities to peek behind the veil of prepared answers and find out what a job candidate is really like. The following are interview questions designed to get applicants to reveal more about themselves.
1. “Well…why don’t you start with telling me about yourself?”
As an hiring manager, pay attention to not only how impressive well the candidate can speak of themself, but also to how the candidate demonstrates her willingness to take the initiative in answering the question. Self motivated employees can do their jobs without constant supervision or motivational tricks.
2. “How would you go about handling _______?”
This question is designed to test technical knowledge. While candidates may claim to have experience in your industry, a question like this will test whether or not they actually know what they are doing.
3. “So, tell me about some of your biggest failures or regrets.”
This question tests honesty and sense of personal responsibility. Does the candidate take responsibility for their failures or do they blame others? Do they learn from their mistakes? Can they answer the question without going into personal details?
4. “If I were to call one of your co-workers, what would they say about you?”
This is a great way to indirectly find out whether or not a candidate can put their self in the shoes of another co-worker and to find out how well they can work with others, and also empathize with others.
5. “How have you handled conflict with coworkers in the past?”
We all have had at least one conflict with a coworker in the past. If the applicant denies ever having a conflict, dig a little deeper. This question is valuable for helping you determine whether or not a candidate is a good team player.
6. “Give me an example of a stressful situation at work and how you handled it. What did you do well? What could you have done better?”
The ability to work under pressure demonstrates that an employee is committed and can handle stress. For this question, look for specific answers that illustrate strength under pressure.
7. “Tell me about the strengths and weaknesses of your last boss.”
This can reveal how your applicant works with superiors and whether he will fit well under the new management style. Does the applicant have plenty of bad things to say about her last boss? Does she respond well to professional criticism? Ask for specific examples to back up her evaluation.
I came up with 7 — would love for you to share more in the comments!
Also, if you’re recruiting new employees, you may want to include an employee benefit statement during the interview to showcase how much your company spends on salary and benefits for your employees.