Designing and measuring a successful workplace emergency savings program

More and more organizations have begun prioritizing employee financial wellness in an effort to foster employee engagement and increase retention. With 70% of Americans feeling financially stressed, according to CNBC, and more workers looking for additional financial resources from their employers, providing benefits like an emergency savings program makes good business sense. 

A successful workplace emergency savings account (ESA) benefit offers employees a wealth of advantages, including improved financial security, reduced stress, increased financial literacy, and more — not to mention the benefits employers enjoy, from enhanced employee productivity and retention to an improved organizational reputation.

If your organization is ready to build your program, start with this guide.

Considerations for designing a successful workplace ESA

The most successful workplace ESA programs have been meticulously thought out and developed to address the concerns and priorities of both employees and the organization. It’s important that your ESA program aligns with your company values and also fits smoothly into your existing benefits offering. Here are three key areas of consideration for building out your program:

Program features

Among the various employer-sponsored emergency savings providers on the market, certain program features are relatively standard, while others are nice-to-haves. Make sure to create your features wish list and then check that against the providers you’re considering. Some popular ESA features include:

• Automatic payroll deductions - This feature allows a set amount or percentage of an employee's salary to be automatically directed into a savings account each pay period. For example, if an employee opts to save 5% of their monthly salary and they earn $3,000 each month, $150 is automatically saved without the employee needing to transfer it manually. This “set-and-forget” approach helps make saving effortless and consistent.
• Employer contributions or matching - Similar to 401(k) matching, employers can contribute a certain amount to match the employee’s savings. For instance, for every dollar saved by the employee, the employer might contribute 50 cents, up to a maximum amount. This not only encourages employees to save more but also shows the company’s commitment to their financial well-being. Some programs have options for signup bonuses, on-going paycheck matches, and milestone bonuses. Designing the right incentive program can be an important part of meeting your organization's objectives.
• Easy access to funds - To be most successful, the program should allow employees to access their savings easily in emergencies without facing significant penalties. Imagine an employee faces a sudden medical emergency; accessing these funds quickly and with minimal bureaucratic hurdles can be crucial.
• Financial education and counseling - Offering workshops, webinars, or one-on-one financial counseling helps employees make informed decisions about their finances. For instance, a webinar on budget management can guide employees on how to effectively allocate their income towards savings, expenses, and investments and provide strategies for maximizing an emergency savings benefit.

Customization

Your workforce is unique, and your employees may have different needs or preferences that you’d like to accommodate. Consider offering some customizable options to cater to people with varying financial situations, like:

• Flexible contribution options - Offer a range of contribution levels, allowing employees to choose a percentage of their salary or flat dollar amount to be automatically deposited into their emergency fund. 
• Multi-program design - Provide different incentives to different groups of employees.
• Tiered benefits based on tenure - Offer long-term employees higher company contributions to their emergency savings as a reward for their loyalty. For instance, employees with over five years at the company could receive a $10 paycheck match, compared to a $5 match for newer employees.

For a diverse workforce, having multiple options allows each employee to choose what works best for them.

Employee engagement

Before launching your new program, create a plan for how you’ll encourage employee participation. It's extremely important to think about the launch of the program and how employees are initially invited to participate, as the way you approach the invitation process can directly impact the number of signups you get on launch day. An example launch plan might be to announce the program at an all-hands meeting, send out an email invitation for a launch day event, and host an interactive Q&A session for all employees to help dispel any doubts and encourage signups. 

Keep in mind that it usually takes a number of touch-points and repeated mentions of a new benefit to drive higher adoption levels. Consider communicating about the program through various channels, including emails, workplace messaging apps like Slack or Teams, and live information sessions. After the program launch, continue to remind employees about the new benefit and host workshops that help educate them on how to best take advantage of the program.

Measuring Success

Once you’ve established your workplace ESA program, make sure to carefully monitor employee adoption and behavior around this new benefit. Consider tracking key performance indicators like:

• Participation rate - A high rate suggests the program’s effectiveness. For example, if 70% of the workforce enrolls, it indicates that employees are engaged in your new program.
• Average savings balance - A rising average balance over time can indicate growing financial security among your team.
• Emergency fund utilization rate - Monitoring how often employees use these funds can provide insights into the program’s practical utility.
• Employee satisfaction - Use surveys or feedback forms to measure how the program impacts job satisfaction and financial stress.
• Program ROI - After the implementation period has passed, assessing how the program affects retention and productivity can be enlightening. For instance, if turnover rates decrease by 10% six months after implementing the program, it suggests a positive ROI.

Comparing your metrics with industry leaders in emergency savings like Humana or Delta can provide a standard for your organization to strive for. Considering their programs are more established, look at their participation and average savings balance and set realistic short- and long-term goals against those metrics.

Regularly evaluating and adjusting the program will help keep your emergency savings offering relevant and effective for your workforce. Consider conducting annual or bi-annual reviews to gather employee feedback and make strategic adjustments based on team sentiment or changing financial climates.

Begin building your emergency savings program

A workplace emergency savings program is more than a benefit; it’s a strategic approach to enhancing employee financial well-being and overall workplace satisfaction. By carefully designing an emergency savings offering and measuring its success with relevant KPIs, you can help cultivate a more stable, motivated, and loyal workforce, delivering benefits for both your employees and the organization as a whole.