Retaining hourly workers is vital in high-turnover industries. While competitive pay and flexible scheduling help, one underutilized yet impactful strategy is offering emergency savings accounts (ESAs). By including ESAs as part of a company’s financial wellness plan, employers can ease employee stress, reduce turnover, build loyalty, and boost engagement and productivity.
This article will explore why ESAs are so effective, their impact on retention, and how to implement them successfully using simple, practical steps.
The Financial Vulnerability of Hourly Workers
Hourly workers often have variable hours and little savings, making them vulnerable to unexpected costs. For example, a sudden car repair or medical bill can strain their budget, forcing them to miss work or look for other jobs.
According to the PNC Workplace Financial Wellness Report, 44% of employees admit that financial stress impacts their productivity, with hourly workers particularly susceptible due to their lower, less predictable income.
This highlights how financial strain can lead to reduced focus, increased absenteeism, and higher turnover. ESAs offer a proactive solution by providing employees with a financial cushion, which can translate into peace of mind and higher job satisfaction.
ESAs as a Strategy for Retention
Emergency savings accounts are post-tax savings accounts employees can use to manage sudden expenses. These accounts are typically funded through automatic payroll deductions, often with employer contributions or matches to incentivize participation. This strategy helps hourly workers feel more financially secure, making them less likely to seek alternative employment.
The benefits of ESAs go beyond individual well-being and extend to overall business performance:
- Reduced turnover: Implementing Emergency Savings Accounts (ESAs) can significantly boost employee loyalty. PNC’s report indicates that 92% of Gen Z and 85% of Millennials are more inclined to stay with employers offering financial wellness benefits. This strong correlation highlights the importance of supporting employees' financial health, leading to reduced turnover and a more stable, committed workforce.
- Enhanced productivity: Reducing financial stress enables employees to perform at their best. In fact, research shows that nearly 42% of employees believe their workplace focus would improve if their employer invested in financial wellness programs. This highlights the strong connection between financial wellness and productivity
- Higher job satisfaction: When employees feel supported financially, they are more likely to remain with their employer. The PNC report reveals that 68% of workers say financial stress impacts their mental health, implying that financial wellness initiatives can enhance job satisfaction and foster a more cohesive work environment.
Steps for Implementing an Effective ESA Program
For employers considering ESAs as part of their retention strategy, the following steps can guide successful implementation:
1. Introduce employer-assisted payroll deductions
Payroll deductions make saving effortless and consistent for employees. This reduces the administrative burden and ensures steady participation. Highlighting how convenient this is when introducing programs can boost initial sign-ups.
2. Offer matching contributions
Matching contributions can greatly enhance employee engagement, even at a modest level. This investment shows employees that their financial well-being is a priority for the company, fostering a supportive culture and encouraging higher participation. The incentive of extra funds motivates employees to contribute regularly.
3. Educate and communicate
Provide clear communication through workshops, detailed guides, and one-on-one sessions to explain the benefits of ESAs. Employees who fully understand how ESAs contribute to their financial security are more likely to participate. Strong educational efforts lead to consistent contributions and long-term program success.
4. Track progress and make adjustments
Regularly track KPIs like participation rates, turnover, and employee feedback to evaluate the program’s effectiveness. Use these insights to adjust the program and address any gaps. This continuous improvement ensures the ESA program stays aligned with company goals and employee expectations.
Measuring the Impact of ESAs
Evaluating the success of an ESA program is vital to maintaining its positive outcomes. Employers should monitor the following key performance indicators (KPIs):
- Absenteeism rates: Reduced absenteeism often indicates that employees feel more financially stable and less stressed.
- Turnover rates: A decrease in turnover shows that employees value the support provided by the ESA program.
- Productivity and performance scores: Improvements in job performance and efficiency can indicate that employees are less distracted by financial concerns.
- Employee feedback: Regular surveys and feedback sessions can provide insights into how employees perceive their financial well-being and the company’s support.
Case Studies on Retention from ESAs
One easy way to see turnover improvement from an Emergency Savings Account is to track this number between the saving population and the nonparticipants. Here are datapoints from two Sunny Day Fund clients.
- 700+ employee non-profit organization with an overall company turnover rate of 9.92%. The turnover rate among nonparticipants was 11.26%, compared to just 6.64% among the ESA participants.
- Multi-location quick service restaurant chain had an overall company turnover rate of 58%. The turnover rate among nonparticipants was 79%, compared to just 28% in the participant pool.
The Business Case for Investing in ESAs
The cost of setting up ESAs is small compared to the money saved through lower turnover, fewer absences, and reduced hiring costs. This is especially important for businesses that rely on hourly workers, where keeping a stable, engaged team is key.
Financial stress is a common problem that can discourage employees from doing their best. 3 in 4 employers say that workers’ financial stress hurts their business. This stress often leads to lower performance, missed workdays, and higher quit rates, impacting the company’s success.
Adding ESAs to employee benefits shows that a company cares about its workers’ well-being. This builds loyalty, boosts engagement, and creates a better work environment. ESAs can make a big difference for businesses with many hourly employees by supporting workers' financial health and helping the company grow stronger in the long run.
ESAs as a Retention Tool
Offering emergency savings accounts is an investment in long-term success for businesses that rely heavily on hourly workers. By supporting employees’ financial well-being, companies can attract and retain their workers, boost productivity, and create a positive work culture. The advantages of reduced turnover and increased engagement far outweigh the minimal cost of offering ESAs.
Sunny Day Fund offers solutions for companies looking to incorporate ESAs seamlessly. We help businesses support their employees’ financial health and build a financially resilient workforce.