What benefits should look like in the future
The world of work looks astonishingly different than it did just three to four months ago. In an effort to prevent the spread of COVID-19, companies around the world have shifted to remote-first cultures, some going as far as allowing employees the option to work from home indefinitely. Working parents are wearing extra hats, acting not only as colleagues and managers but as school teachers, summer camp counselors and full-time caregivers.
As we adjust to our “new normal,” traditional workplace benefits have become not only meaningless but obsolete. The standard 401(k) feels fruitless when what you really need is childcare tomorrow. Even more frivolous perks like ping-pong tables and in-office snacks have become useless. What good is a gym membership when you can’t access a gym? Simply put, when the masses are working from home, cookie-cutter benefits packages no longer cut it.
There’s a great deal of uncertainty about whether and when companies will return to their physical locations and what will be required of employees when they do so. The effects of the pandemic on workplace culture will be felt for years to come.
Employers that don’t adjust their benefits to meet the needs of today will be the ones that ultimately lose out.
To this end, it’s critical that employers use the following three-part framework when considering new workplace benefits to better support employees in the aftermath of COVID-19:
Benefits that meet immediate needs, not just long-term needs
Today, most employers offer standard benefits packages with 401(k)s, financial planning and health insurance that largely prioritize long-term impact. In doing so, they inadvertently disregard a large chunk of the population (in fact, the largest segment of today’s workforce) with more pressing and immediate needs than retirement planning and life insurance. For this group, prioritizing urgent needs brings a more meaningful impact on the here and now, and this is especially important today.
If the pandemic has shown us anything, it’s that our sense of normalcy — and therefore, our needs — can change almost overnight. No one could have predicted six months ago that by midyear we’d be so reliant on food delivery services, for example. Compared to pre-quarantine days, we’ve found that Grubhub selections by employees have increased by 173%, and UberEats selections have increased by 311%. When reassessing their benefits offerings, employers must recognize that benefits that serve today’s needs are equally, if not more important, than those that serve future needs.
Benefits that cater to a diverse
A: Banks are pulling back on their risk exposure by cutting credit card limits or canceling cards, says Ted Rossman, industry analyst at CreditCards.com.
As a benchmark, consider that during the Great Recession, the October 2008
Fed Senior Loan Officer Survey found 20% of card companies cut credit lines for customers with good credit scores and 60% reduced lines for subprime cardholders.
Unused cards are prime candidates for cancellation, so if you haven’t made a purchase on a card in a while, buy something small and pay it off right away, Rossman said. Keeping cards open helps your credit score because it aids your credit utilization ratio — the credit you’re using divided by your credit limit. Your credit limit could be cut or your card canceled if you get close to your credit limit.
If you’re having trouble making payments,
workforce — not just in age, gender and race but lifestyle
Cookie-cutter benefits packages are inherently problematic because they assume all individuals have the same experiences and needs. The pandemic has brought different types of challenges for employees.
While a single 25-year-old may be struggling with isolation in his 700-square-foot apartment, a 40-year-old married mother of two may be intensely frustrated by her lack of alone time, not to mention lack of childcare through the summer months.
In addition to differences in age, gender and race, employers must honor differences in employees’ life situations when selecting which benefits to offer.
Benefits that prioritize simplicity
When I worked in financial planning earlier in my career, I was surprised by how few people — particularly millennials — actually understood the benefits their employers offered. We’d spend hours talking about things like deductibles, stock units and the like. I’d think to myself, “Why are companies spending tens of thousands of dollars per year on benefits their employees don’t understand?”
In times of crisis, complex benefits do employees a huge disservice. When faced with uncertainty (“When are offices going to reopen?” “What will work look like in six months?”) people don’t need more uncertainty. They need to know what specific services they can access and how.
One potential silver lining of COVID-19 is that it will push employers to modernize what has become nearly antiquated benefits packages.
This moment is an opportunity for employers to act as heroes by bringing employees benefits and services that make a meaningful and immediate difference in their lives. Those who don’t will be the ones that will fail to retain talent through this unprecedented workplace shift.
Jordan Peace is the CEO and cofounder of Fringe, a lifestyle benefits company.
Q: Can you clarify the impact of a negative interest rate on an owner of a savings account, bond, money market or bond fund? Will the owner have to pay interest?
A: In a nutshell, yes. “You would be paying the bank to hold onto your money,” said Kevin Hegarty of Hegarty Advisors in Garden City, New Jersey. Likewise, for a bond with a negative interest rate, you’ll get less of the principal back at maturity.
Although interest rates are negative in some foreign countries, U.S. rates for bonds, money markets and savings accounts are still in positive territory, though not by much. Returns are close to zero and are likely to stay there rather than go negative, said Jamie Hopkins, director of retirement research for Carson Wealth in Omaha, Nebraska. “Generally speaking, people are better off staying in cash positions rather than taking on negative interest.”
For more on this and similar money topics, visit Kiplinger.com.