By Lisa Purichia
Partner, Director of Entrepreneurial Services
It’s not unusual for a manager or business owner to feel like a mom or dad to their employees. After all, they are generally younger than you, less experienced, and look to you for leadership and guidance. In turn, a good supervisor enjoys watching their workers grow professionally, build new skills, and acquire new capabilities and responsibilities.
So how much “parenting” should you provide to your employees when it comes to managing their own benefits and finances?
Many business owners feel justifiably proud of the benefits package they provide workers. Some feel that merely offering them should be the extent of their effort. But for younger employees, especially those just out of school, it might be wise to coach them to take better advantage of these benefits.
A surprising percentage of people in their 20s and even 30s do not participate in their company’s 401k program. They don’t fully grasp the idea of compounding interest or the automatic rate of return on an employer’s matching contribution — seeing any deduction on their paycheck as withering their ability to pay for their current “wants” after the living expenses, student loans, car payments, etc.
Not to mention their disposable income that can be applied to relaxing and partying. (C’mon, you remember your own 20s, right?)
When you first hire a new employee of any age, make sure to explain the benefits package and encourage them to participate. If you have current employees who have not yet signed up, sit them down for a friendly conversation.
Make them understand that any company match on a retirement plan is essentially “free money” that they’d be crazy to turn down. Tell them the sooner they start saving for their “someday,” the less they’ll have to contribute when they’re in their 40s and 50s.
It can be hard for someone who’s 23 to visualize being 53, so use personal experience and anecdotes (if you feel comfortable doing so) to illustrate potential missed opportunities for long term financial security.
Over time these employees will transition into homeowners, married couples and parents. If they make saving a habitual practice at a young age, they will have a larger degree of financial security in their personal lives. This will also translate into a more stable workforce with less stress on the home front related to financial responsibility.
You should also consider offering financial planning counseling to your employees – either through your own expertise or that of a vendor. Teach them the basics of making a household budget and living within it, the amount of savings (“Pay yourself FIRST”) they should be setting aside, contributions to a 401k or similar retirement plan. Lay out the benefits of a Health Savings Account (HSA) and encourage them to think like a consumer when securing healthcare services.
This can also extend to non-monetary benefits that your company may offer, such as wellness programs that help pay for gym memberships and such.
Of course, not every employee will heed your advice. And you don’t want to keep offering input if an individual worker has made it clear they’re not receptive. But you may find that young professionals who look to you for wisdom in business matters may be inclined to also listen to your word about personal financial affairs.
The benefit to you the business owner is that by fostering a culture in which people feel like the company is looking out for them in the long term, you will become an employer of choice. You’ll have a better record when it comes to retention and recruitment.
This is especially true of Millennials, who have consistently shown they want to work for businesses that view them as valued individuals.
By providing encouragement and stimulus, and helping employees take full advantage of the benefits package you offer, you will find yourself with a happier, motivated workforce that is much more inclined to stay with the company.
If you need any advice about guiding your employees’ benefits decisions, please call Lisa Purichia at (317) 608-6693 or email [email protected].