The era of worker contentment over the mere presence of a 401(k) has passed. In a recent survey by Betterment, a financial-advisory platform, nearly all workers polled had a skeptical attitude toward the benefit, saying, “You’ve given us a 401(k), now what?”
“Today, almost every employer offers a 401(k), and it is not seen as a differentiated benefit to attract and retain employees,” said Kumud Sharma, chief people officer at Betterment. “The pressure is on employers to define what is worth more than a 401(k).”
Sharma spoke about financial wellness in a Thought Leadership Spotlight during From Day One’s September virtual conference on “Stress, Anxiety and the Modern Company’s Role in Promoting Well-being.” She asserted that the financial needs of American workers are in a state of flux. “While benefits used to mean health insurance and retirement savings plans,” she said, “employees have grown to expect and need much more support from their employers.”
In this period of talent-market volatility and worker empowerment, it’s especially imperative that companies get their compensation and benefits packages right. But doing so takes more than money. It requires mindfulness in the kinds of programs companies are offering.
So what will satisfy valued employees and candidates in this area? Here’s a rundown of Sharma’s recommendations, heavily grounded in Betterment survey data and other research, with particular focus on priorities found within a diverse workforce:
Help With Student Debt
Young professionals are not the only ones whose lives are impacted by hovering student debt. According to Sharma, even senior employees might still be paying down school loans and other education-related debts, due to high interest rates and other factors.
Women, LGBTQ+, and Black workers are disproportionately affected by student debt compared to other groups, Sharma said. “So by offering a broad range of student-loan management options,” she continued, “you signal that your company values are meeting its employees’ needs today.” Sharma said women are twice as likely to stay with an employer if they offered student-loan repayment options.
Offer Wealth-Building Options
While 55% of men have three months’ worth of living expenses saved, according to data Sharma presented, just 39% of women can make this claim. Furthermore, 35% of men believe they are on track to retire with “enough money,” but only 19% of women feel that they’re heading toward such long-term financial sustainability. The Hispanic community is struggling in this regard as well. More than two-thirds of such households are not saving money through workplace vehicles like 401(k) plans.
“If you plan to build a loyal, well-distributed, diverse employee base, make sure you help them build for the future through wealth-building options that serve their specific needs,” Sharma said. “What better way to show your employees that you want them and stay for the long haul than by providing them tools for the long haul?”
In another Betterment survey the company recently conducted, Sharma said the most-enticing benefits for workers were a high-quality 401(k) plan with company matching, a flexible spending account, a health savings account, and an employer-sponsored emergency fund. These could certainly serve as starting points for a company looking to upgrade their compensation and benefits packages to appeal to a contemporary diverse workforce.
Enhance Personalized Financial Literacy
Educating workers–of all backgrounds and genders–on the ways they can improve their financial standing will help them feel more comfortable and confident about their financial well-being. Doing so can be as simple as enhancing visibility of the employer’s benefits and compensation packages. Company leaders can also go above and beyond by offering financial advice to employees, Sharma said, and encouraging them to plan for the future.
This may also help get employees more engaged with their job and the company they work for, which helps the employer’s bottom line. “Keeping employees engaged can lead to less turnover and happy employees,” Sharma said, adding that, according to a Gallup poll, 74% of disengaged workers are actively looking for new employment.
Find Out What Employees Want
Finally, Sharma suggested that companies survey their workers on a regular basis to learn more about their needs. “Ensure that you ask what benefits are important to them and where they may need additional support,” she said. “Your benefits packages cannot and do not need to meet every need of every employee. However, there are simple, cost-effective ways to provide them with a financial-wellness solution that can offer retirement benefits, emergency funds, access to financial advisors, student-loan management, and other planning tools.”
Michael Stahl is a New York City-based freelance journalist, writer, and editor. You can read more of his work at MichaelStahlWrites.com, follow him on Twitter @MichaelRStahl, and order his first book, the autobiography of Major League Baseball pitcher Bartolo Colón, at Abrams Books.