Abetting Employee Financial Security

Anant G. Nadkarni

Abetting Employee Financial Security

Sustainability strategy of a company is not all about carbon footprint or ecological impact on future generations. A holistic and progressive employee engagement is also an integral part. Employee engagement so far has focussed on learning and development, physical safety, mental health and even a pinch of spirituality thrown in.

What about financial security of employees? Should the financial transaction between the employer and employee end with transfer of salary to an employee’s account? There’s a lot a company can do if it decides to help an employee manage her finances better. Firstly, the CEO and the HR need to realize that a sense of financial security goes a long way in greater loyalty to the company.

In today’s hyper-consumption driven culture, EMIs are found to be one of the biggest stress factors affecting productivity and morale of employees. Even if some companies have placed a ceiling on the extent of EMI an employee can pay from his salary, it is difficult to enforce because of the proliferation of various cards. It may be a good idea for companies to make it mandatory that employees declare their financial health status, as in, ratio of debt to saving to investments once a quarter. Whether it is impinging on the privacy of an employee is another debate.

A good beginning is being made with a few companies proactively helping employees manage their savings that earn better returns. H N Shrinivas, chief human resource officer of Indian Hotels says: “When companies have to make more from less, a medium to long-lasting opportunity for companies to support employees is to help them plan savings starting in the early years of their careers and also look for similar ways to augment value for themselves from new market-driven options”.

B. Sudhakar, chief human resource officer at Tata Projects, employing over four thousand employees, says: “While many companies focus on physical health and wellbeing of employees, very few companies facilitate a process with credible agencies to support associates to focus on financial health and security. This, I am sure will also go a long way in the retention of employees.”

While resources-stretched companies cannot take this responsibility on directly, outsourcing is an option. For example, Alpa Shah trains corporate employees on mutual funds and related products, covering over fifteen thousand employees in six large companies, and 20 percent of them got enrolled in saving-schemes and investment for the first time! Based on this success, she now runs her own enterprise to cover more employees. She says: “These products accrue 12 percent to 15 percent return while banks and insurance providers give only 7 to 9.”

While advising on debt instruments and mutual funds is easy, getting employees to invest in equity is tougher because of higher risk. Musa Kaiser who just started training 200 people in such financial-products has half of them invest for the first time. Musa suggests managements to seriously consider educational programs in personal finance for employees. For employees, as success coach Rita Davenport says: “Money isn’t everything…but it ranks right up there with oxygen.”

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