We recently spoke with Erica Hayton, the Total Rewards leader at the Cystic Fibrosis Foundation, to learn why and how they added workplace emergency savings – a new and frequently requested financial benefit. Hayton shared her team’s experience with benefit strategy evaluation, provider selection, plan design, technical implementation, marketing and communication, and post-implementation measurement. Below, we summarize the key points from the webinar, which you can watch on Youtube.
Benefit Trends at Non-Profit Employers
Hayton pointed out that non-profit organizations often face challenges when competing against for-profit companies on the compensation side. However, they can excel in providing a strong benefits package that supports employee well-being.
Hayton emphasized, “We were really exploring some of these more interesting and new benefits that really do further support our employees’ well-being.” These innovative benefits go beyond traditional offerings to differentiate CFF as an employer of choice.
Considering the Need for an Emergency Savings Program
From the outset, Hayton mentioned that anecdotal evidence and employee feedback highlighted a distinct need for such an emergency savings program.
For instance, although CFF offers a high deductible health plan (HDHP) with a lower deductible and generous contribution to the health savings account (HSA), many employees hesitated to opt for it. Some employees were concerned they may need the money for a potentially large surprise expense. This suggested a lack of emergency savings, which in turn caused suboptimal HSA elections that could’ve earned them even more money.
“Leakage” from retirement savings through 401(k) loans and early withdrawals was another concern, especially impacting younger or relatively lower income individuals.
Hayton said, “we did some analysis of our 401(k) loans and hardship withdrawals for DEI inequities, and we saw employees with salaries between $50K and $75K were taking twice as many hardship withdrawals as you’d expect for their percentage of the overall population. We also saw disproportionate use of hardship withdrawals with females as well as with our Black employees.”
Driven by these observations and analysis, Hayton and her colleagues decided that a payroll-deducted emergency savings solution could enable better financial wealth and well-being while bridging gaps in line with their non-profit’s commitment to diversity, equity, and inclusion (DEI).
Evaluating Emergency Savings Accounts (ESAs) and Solution Providers
After deciding to add a workplace emergency savings solution, Hayton began evaluating different emergency savings accounts (ESAs) and solution providers.
Simplicity and easy access
Hayton’s top consideration was simplicity. Employees should be able to easily understand and navigate the platform, without needing to decipher complex instructions or processes. The simpler the platform, the more likely employees will feel comfortable using it. Similarly, quick and easy access to emergency savings was crucial.
As a result, Hayton landed on an out-of-plan emergency savings solution better fit these needs than an in-plan solution, which created an immediate sense of complexity and inaccessibility and required compliance with ERISA.
Saving for emergencies and large expenses
Next, Hayton saw how saving for goals beyond just an emergency can help employees plan ahead for large expenses and avoid credit card debt, while making the savings stickier. Sid Pailla, Founder and CEO of Sunny Day Fund, added that “virtual buckets for additional goals can help [CFF employees] save for things like having a baby or going on a vacation.” According to Pailla, this multi-goal approach meant more savings for employees and better data (anonymized and aggregated) for CFF to craft future benefits strategy.
Leveraging behavioral science
Hayton reflected, “There are a couple things specific about Sunny Day Fund that stood out to us, and one of them was the integration of behavioral economics in the platform…we really liked that. We wanted it to be easy for people if they needed to take the money, but we wanted to make them stop and think.” Sunny Day Fund uses mental accounting and loss aversion among other behavioral economic principles to nudge employees toward sound financial decisions.
Finally, Hayton highlighted the importance of selecting a provider that aligns with the organization’s goals and values, which in CFF’s case included empathetic people support. For example, Hayton recalled a case where an employee received a proactive call from Sunny Day Fund to clarify a contribution discrepancy. This personal touch and support proved valuable to their employees and the Total Rewards team.
Plan Design and Cash Incentives
To incentivize employee participation and ensure the program’s effectiveness, the Cystic Fibrosis Foundation differentiated its ESA offerings based on employee salary levels. Employees earning under $100,000 annually were provided a higher sign-up bonus and a six percent per quarter reward rate on balances, recognizing the financial challenges faced by lower-paid employees, particularly amidst inflation. Hayton says, “we knew we wanted to do something for everyone, but there was a real focus on our lower paid employees based on some of this data and with what’s going on with inflation.”
Pailla explained, “when we’re talking about this six percent quarterly reward, we’re talking about something that’s a lot higher than the national average savings interest rate, which is around .39% per year – that’s one of the reasons people don’t really save. CFF came in and by giving employees a 25%+ annual interest rate, which is roughly the annualized version of that six percent quarterly, it just catches people’s eyes.”
When it comes to encouraging employees to save, economic incentives like sign up bonuses and turbocharged interest rates can make a big difference – both in an employee’s decision to contribute and their decision to withdraw only for their intended goals.
Technical Implementation of an ESA Program
Similar to HSAs or retirement savings, emergency savings programs involve payroll and banking automation. Hayton stressed the importance of working closely with the chosen provider to understand the approach, address any technical challenges, and ensure a user-friendly experience for employees.
An effective integration process involves a two-way flow of information between your organization’s HRIS system, such as Workday, and the emergency savings platform. In the case of Cystic Fibrosis Foundation (CFF) and Sunny Day Fund, this included transferring census and deduction information from Workday to Sunny Day Fund, as well as ensuring that enrollment and contribution update data flowed back to Workday from Sunny Day Fund.
After the initial implementation, it’s wise to test before a system-wide launch to catch any potential hiccups. Hayton shared an anecdote of one test payroll that elevated a potential data issue, which was promptly adjusted ahead of launch.
As Hayton pointed out, the goal is to make the process as straightforward as possible for the HR IT team and for employees.
Marketing ESAs and Communication Channels
Successfully launching a Workplace Emergency Savings Program involves more than just setting up accounts or technology. Clear and consistent communication is just as important. Hayton shared the following approaches that CFF used to market the new emergency savings benefit:
Especially for remote workers with computer access, webinars can be a great way to explain the new benefit, demo how it works, and highlight its incentives. It’s also an opportunity to answer any questions employees might have in real-time and get people excited live.
Beyond a simple invitation to enroll, emails can be a powerful tool to deliver targeted messaging. For example, Hayton worked with Sunny Day Fund’s team to create specific email campaigns based on their chosen incentive structure.
Within existing HRIS or benefits administration portals, short videos and recorded webinars can be added to so employees can engage at their convenience. Hayton added customized videos from Sunny Day Fund to their Workday portal in minutes.
Hayton mentioned that mailers are a part of their future strategy to communicate the Sunny Day Fund benefit because they can be effective for employees who might not frequently check their emails or for those who prefer printed materials.
CFF has an internal employee-represented working group that serves as a feedback loop for new initiatives. In rolling out Sunny Day Fund, they championed the program while providing great initial feedback that bettered communication and launch.
Measuring Success after Emergency Savings Implementation
Hayton emphasized the importance of analyzing data to identify patterns, such as participation rates across incentive groups, contribution amounts, and goal categories beyond emergencies. This allows employers to gain insights into their employees’ financial needs and aspirations, leading to tailored support, program refinement, and enhanced employee experience. Listen to Hayton talk about engagement at launch and how it improved over time.
Implementing Emergency Savings Program is Simpler Than You Think
Implementing an ESA program supports employees during times of financial need and contributes to their overall well-being. Emergency savings could also enable organizations to take a step towards bridging wealth gaps caused by 401(k) loans and withdrawals or suboptimal benefits participation. Finally, as shared by Hayton, the process is simpler than most HR or Total Rewards leaders think, especially when they partner with a provider with a proven playbook.
To learn more about Cystic Fibrosis Foundation or to support their mission to cure cystic fibrosis, please visit www.cff.org.