Benefits education yields recruitment and retention benefits

In an economic climate where memories of recession, layoffs and receding benefits are still very fresh, having an employee celebrate his 13^th year with the company is quite the accomplishment. But for Greg Kain, regional operations manager with Chicago’s Integrated Project Management, a consulting company serving the health care, manufacturing and biotechnology industries, it’s the little things at his increasingly complex job that have kept him loyal to his employer for more than a dozen years.

Those include a fully-paid health care plan and unusually transparent communications with staff about how well the company is doing, financially. And they’re topped with an integrated financial education program that’s allowed him to keep on track with his retirement plans, sitting down and getting the direct help of a financial adviser to establish a personalized savings plan. Those efforts, especially the hands-on financial guidance, Kain says, have helped keep him firmly attached to his employer.

“I want to work here, because I like the company,” Kain says. “You’re never really worried about your job – just whether or not you’re doing a good job. You get to see that IPM really puts its money where its mouth is.”

Across the nation, more and more companies are finding a litany of recruitment and retention benefits can be produced by offering comprehensive, on-the-job financial education programs, part of the broader thrust of financial wellness. By getting employees more directly engaged in their own financial well-being – educating them on their benefits, helping them make the right retirement planning decisions and learning how to tackle financial stress by addressing their own debt and their worries over health care costs – employers are seeing lower turnover and increased productivity.

See also: Financial education: The whole nine yards

Financial education can be an important recruitment tool, as well, as highly skilled employees increasingly have a wider choice of employment opportunities. Offer an employee some one-on-one face time with an adviser, or sit down in person and outline the hidden value of their full compensation package, and the results can be very positive.

“We are encouraged to see a growing number of employers offering beneficial financial education programs in the workplace, but there’s room for improvement,” notes Michael Wilson, CEO of the International Foundation of Employee Benefit Plans. To that end, financial literacy workshops and personal consultation services provided by the employer are more important than ever.

“If you think about the cost to find, hire, train, onboard and transfer knowledge for a new employee, retention is a significant return for these organizations,” says Luke Vandermillen, VP of retirement and investor services with The Principal.

Each year, The Principal makes a list of the 10 best small- and medium-sized companies in the U.S. for employee financial security. Vandermillen says the companies topping that list value their employees as key organizational investments, each offering a financial security program and associated educational offerings to help workers stay put. As a result, companies on the list experience an average turnover rate of less than 5%, despite a national average of up to 20% for similar sized businesses. Give your workers the keys to understanding how to better use their benefits – maximizing on a company 401(k) match or getting the most out of a seeded HSA account – and they’ll be more productive and more likely to stay for the long haul.

“These employees are less distracted, more comfortable, and they have a plan for their financial needs,” Vandermillen notes. “Their finances may not be perfect, but they’re in good order, and they can better focus while they’re at work.”

At Chicago’s IPM, Greg Kain’s employer, company CFO Jo Jackson says that a “whole life” approach to its 115 employees’ financial wellness has cut down turnover at the IPM’s five national worksites – with better-than-average benefits and the hands-on financial guidance serving as particularly strong incentives.

“Our turnover rate is lower than it is at most consulting firms and our target is 10%, but the last three years, we’ve been closer to 17%,” Jackson admits. “Still, we have a lot of employees who’ve been with us a long time. And simply paying employees’ health benefits is a huge start for their financial peace of mind, knowing that they’re covered and that they’ll be able to get the best health care available for themselves and their families.”

IPM’s financial wellness initiatives also go far beyond the single point of contact most workers experience during open enrollment or periodic 401(k) statements. From the get-go, retirement plan participants are given personal instruction by the company’s financial adviser to help calculate exactly how much money they’ll need in their post-work years, and use that as an objective for their savings plan – allowing workers to truly maximize on the company’s better-than-average contributions to the plan.

“We talk about setting goals and their risk tolerances – what’s just noise, and what’s going to improve your return,” Jackson says. “We target those quarterly, and try to do them at least twice a year.” On top of that, other outreach efforts also include annual day-long staff meetings for all of the company’s employees, examining changes to benefits and getting an unusually clear image of IPM’s corporate finances and its annual performance.

At Starr Conspiracy, a business-to-business marketing agency in Fort Worth, Texas, taking a consultative and educational approach has been especially helpful in educating its employee base on their finances, says partner Steve Smith. Each year, the company’s CFO individually sits down with all workers to review their total compensation packages, including their medical, dental, 401(k), life insurance and disability coverage – the company pays 100% of the basic premiums for its employees’ health care. While the employees may be aware of their take-home pay, they may not realize that their other benefits total to an additional 25-30% in compensation.

“Employees have choices, especially the good ones,” Smith says. “Top talent may have multiple offers, and we have to stack up favorably if we’re going to attract and retain the employees we need to be a better business, and that takes communicating total compensation value – demonstrating that we are doing something that helps build wealth for our employees. There’s normally a lot of turn-and-burn in the creative field, so it behooves us to train and retain people, and to empower people to be great at their jobs, every day.”

In the past year, Starr Conspiracy, which employs about 30 employees, has only lost two workers to voluntary turnover, and the company has experienced 25% year-over-year growth for the past four years, becoming the largest ad agency in the Fort Worth area. Smith credits the firm’s open and direct communications strategy with helping to keep those creative types happy and focused.

Financial wellness is also high on the agenda at Capital District Physicians’ Health Plan, Inc., an 1,100 employee Albany, N.Y.-based non-profit health plan which offers services in New York and Vermont. According to Scott Klenk, the organization’s VP of human capital management, participation in the 401(k) savings plan is now at nearly 97%, thanks to a robust program mixing monthly, one-on-one personalized financial guidance, a multi-channel communications effort on retirement savings and, most importantly, auto-enrollment and auto-escalation for plan participants.

“We’re absolutely hands-on, providing a lot of education and getting people involved directly with our Transamerica advisor, conducting regular plan reviews,” Klenk says. “We want people to be able to have a dignified retirement. And that all fits into our larger objectives of both fiscal and mental wellbeing. We hired a fitness coordinator and offer all classes for free – and we saw that participation skyrocketed. We even have two walking work stations on our call center floor, so employees can do their work while they’re walking.”

As payoff, Klenk says, employee turnover rates have dropped significantly, although he adds that the organization still struggles with the retention challenges of a largely call center-based work force.