Time to repurpose benefits – and avoid employees pulling cash from their 401(k)s

Companies continue to ask more of their CHROs than ever before. After the trauma and uncertainty of the COVID-19 pandemic, employees now struggle with soaring inflation and the prospect of an imminent recession. It’s no wonder why turnover rates have spiked; companies have proved incapable of meeting new employee priorities (such as the demand for workplace flexibility) or providing the financial support their workforces need.

This is why 2023 is going to be the year of the CHRO. It has never been more important for companies to focus on the health of their workforce, and this means providing benefits that employees will actually use, facilitating professional development, and creating a workplace culture that makes everyone feel valued. Satisfied employees aren’t just more likely to stay with the company and contribute to a positive work environment – they’ll also provide better service for customers and improve your brand.

When employees receive the recognition and rewards they’ve earned through your benefits program, your company will be in a much stronger position to navigate a difficult economic environment and emerge even stronger.

Employees need more robust support

The dominant narrative about today’s workforce is that employees have become more demanding and selective, but this is only half the story. Employees have endured one shock after another for several years – from the overnight transition to remote work (amid the fear and uncertainty of a pandemic) to a global economic crisis that has put immense pressure on their bank accounts and retirement savings.

Over half of Americans have taken early withdrawals from their retirement accounts, while the savings rate (which surged during the pandemic) has collapsed below pre-pandemic levels. The stubbornly high turnover rate isn’t just a consequence of shifting employee expectations but also a reflection of employees’ growing desperation to find work that meets their financial needs.

Related: The pandemic pushes the ‘reset’ button for CHROs

CHROs are responsible for accommodating employees’ needs and providing the support that will keep employees at the company. At a time when workforces are becoming increasingly diverse, it’s vital for HR teams to offer benefits that meet employees where they are and address their specific concerns.

How CHROs can show employees they’re valued

Beyond the financial stress employees face, an overwhelming majority also say they’re disengaged at work. According to Gallup, just 21% of employees report that they’re engaged, while 33% say they’re thriving at their companies. Gallup reports that elements of workplace engagement include: “recognition or praise,” the fact that someone at work “encourages my development,” and opportunities to “learn and grow.”

While positive reinforcement and other cultural factors are important, employees also need tangible evidence that their companies prioritize their well-being. CHROs should have open discussions with employees about which benefits will address their unique personal and financial situations – benefits that will help them avoid emergency measures like pulling money from their retirement accounts.

Related: Rainy days are here: Employees need help weathering inflation-related financial stress

For example, companies can allow employees to repurpose the value of their unused PTO and put it toward student loan payments, childcare costs, life-planning accounts, and a wide range of other priorities. Companies should never assume that all their employees have the same needs; CHROs can ensure that benefits packages are comprehensive and individualized.

Getting the most out of your HR budget

As companies are forced to trim their balance sheets amid a significant global economic contraction, CFOs and CHROs need to cooperate to implement more cost-effective human capital strategies. This is another reason HR teams should reconfigure their benefits packages to provide robust support for diverse employees while simultaneously reducing unnecessary costs associated with inefficient benefits programs.

Convertible benefits can help CHROs accomplish this goal by reallocating resources that have already been budgeted to personalized forms of support for their employees. PTO is a widely underused benefit, and many employees are particularly disinclined to take advantage of it— employees use less PTO if they’re lower income, women, or nonwhite. If employees were allowed to repurpose their PTO, they could allocate it toward different goals based on their individualized needs: While older workers could put it toward their retirement, younger workers could pay off student loans.

This is just one example of how cost-effective benefits packages can be built around employees’ needs. CHROs face a difficult and unpredictable 2023, but by recognizing which benefits will help employees most, they will improve engagement, morale, and ultimately retention.

Rob Whalen is co-founder and CEO of PTO Exchange.