This week’s post was written by Brianne, who is a Project Manager in our Kansas City office. In addition to being a Project Manager, Brianne is also responsible for managing our vendor relationships and recently was introduced to a vendor that provides a product we don’t typically consult on, Benevate. Below are her thoughts on this interesting product and the HR trends that triggered the need for it.
In recent years, the focus in HR departments has shifted to attracting and retaining good talent. Baby boomers are retiring, and the anticipation of a labor shortage in the coming years is in the forefront. The new buzz words in the HR world include performance reviews, succession planning, recruiting and onboarding. This has given millennials an edge over previous generations who were fighting to get a good job. Employers have moved from selecting from a wide pool of varied talent to coming up with new ways to entice good talent to come work for them and stay. Fortunately, with more and more young adults going to college, there are more qualified individuals to fill open positions. However, this still doesn’t close the gap caused by baby boomers leaving the workforce.
I recently read an article from Forbes called “Ten Unmistakable Signs of a Bad Place to Work.” Sure, employee rights have been of interest for years, which is why unions were formed. However, we’ve moved from focusing on employee rights in the sense of being humane, to sharing ways to avoid working for a company that doesn’t line up with our idea of a “good” company. Granted, I don’t disagree. I wouldn’t want to work for one of these companies either. I’m just using this article to point out the societal changes we have witnessed in the last few decades.
This new perspective on working for a company also includes valuing a work/life balance. More and more companies are allowing for flex-time, which enables employees to come in a little after 8 a.m., or to start earlier in the day so they can leave by 3 or 4 p.m. instead of 5. This type of scheduling works great for parents with young children who want to see them off to school or be there when they get home. More companies are starting to pay for parental leave, provide mental health days, incentivize employees to invest in their retirement accounts by making greater company matches, and allow employees to work from home. Companies have realized that by taking care of their employees, they are retaining talented individuals who are more productive while at work.
As the competition to retain talent revs up, employers are looking at new ways to attract employees and, more specifically, millennials. Two of the most important issues for millennials include student loans and down payments for a house. According to BerniePortal, it’s estimated that the average college student has $35,000 in student loan debt. Students taking part in a survey even said they would prefer to use employer dollars to pay off student debt over paying for healthcare or 401(k) contributions, so there is clearly a growing interest in this type of benefit.
With this growing trend, there is a new space for technology vendors. I recently met with one of these vendors, Benevate, to learn more about its technology offering. The idea behind this technology is to help companies monitor the monies they offer new recruits or existing employees for use towards paying off student loans, saving for their children’s college education or purchasing a home. All the aforementioned benefits involve an employer providing either a lump sum contribution (forgivable loan) or periodic contributions (earn-out) to the appropriate third-party financial entity. In exchange for the financial assistance, employees agree to performance and retention obligations. For example, a company may want to offer a forgivable loan that could be used for the down payment for the purchase of a home. The loan would be forgiven over a specified period of time, as long as the employee fulfills the agreed upon requirements. If the employee leaves the company early, he or she must pay back the unforgiven loan amount.
So how does the technology work? The first step in the process is to obtain an application submitted by the employee wishing to participate in the program. There could be requirements tied to this application, such as completion of certain courses or certifications. The employee might have to supply real estate broker information if he or she is applying for a down payment for a home. Once the application is submitted and the employee agrees to the retention and performance obligations set forth by the employer, the employee would receive the funds.
A file feed could be generated and sent to payroll for tax processing purposes. Each year that passes, taxes would need to be processed on the employee record and, at the same time, a portion of the loan would be forgiven. The system would assist with monitoring those payments as each year passed and would be able to determine a prorated amount that would be due back to the company if the employee were to leave early. The system allows the employee to monitor their participation in the program in a secure site. There are real-time dashboards and reports that provide an instant return on investment analysis to the company. And the deferred amounts can be sent to finance to be recorded on the balance sheet for accounting purposes.
So, if you’re wondering why anyone would need an entire system to accomplish this, we can use the example of the healthcare industry, where a program such as this might be heavily utilized. Students may agree to work for forgiveness of their student loans, or hospitals might want to incentivize their employees to live closer to work by providing down payment assistance. Hospitals tend to have a large employee population, so an administrator could potentially be monitoring hundreds of loans.
There are many benefits to implementing these type of programs, including the improvement of employee morale, increasing the benefits package and total compensation, reducing training and hiring costs, attracting a strong local workforce, stabilizing or revitalizing the community, and even reducing traffic and air pollution.
Even though this is a relatively new concept, with only around 3 percent of employers offering some sort of repayment benefit, the increased pressure on employers to attract talented millennials may make this concept the next big trend in HR.
Have you heard of this as a benefit offered by an employer? Would you as an employer utilize a technology like this to help attract and retain talent? Weigh in by commenting below.