Guest Column
Karen Jurasek
Help employees weather through tough times
Promoting employee financial wellness through cyclical economic downturns
As downturns in the national economy and local economic factors exert pressure on manufacturers, retailers and service industry leaders to reduce labor expenses, employers are saddled with the unpleasant task of implementing reductions in work force, communicating elimination of whole shifts or minimizing the work week to less than the 40-hour norm. The impact such actions has on an employee facing these circumstances can be financially devastating. And yet this scenario has played out in our area, time and time again, leaving employees scrambling to support their families and maintain their living standard.
To further complicate these economic stresses, many of these same employees are facing home foreclosure issues. According to RealtyTrac Inc., which tracks and markets foreclosure properties, Illinois foreclosure filings in February jumped a whooping 32 percent compared with February, 2007. Figures as staggering as these can leave no doubt that some of your employees may be affected by the current mortgage crisis.
Partnering with Financial Services Institutions
As an employer, and especially during an economic downturn, it becomes crucial to form a strategic alliance with a financial services partner focused on the financial wellness of your employee group. As with every cyclical economic downturn, there is an eventual upturn in which employers can capitalize if they have been successful at retaining their skilled and experienced workforce through the slow period.
Forming a strategic alliance with a financial services partner now, demonstrates the goodwill of the employer in a tangible and effective way and builds loyalty among the employee ranks.
Credit Union Partnerships
Traditionally credit union membership has been tied to a single common element such as an employer. Many of our present-day local credit unions originated from such employer groups as Bell Telephone, Greenlee, J.L. Clark, Sundstrand and Elco Industries. Now, many area credit unions have transitioned to a community charter that allows membership expansion not bounded by a single employer. Credit unions are financial cooperatives that focus on service to their members rather than for profit or charity. As a financial services partner, they offer employee groups customized programs suited for dynamic economic environments.
Recent slow downs in the automotive industry caused a local fastener manufacturer to lay-off a group of employees and reduce most of the remaining workforce to a 32-hour work week.
Employees who were laid off and facing a substantial reduction in income, and the remaining employees, who were facing a 20 percent reduction in their income, looked toward their credit union for a plan for managing their finances.
Employee Benefit Programs to Weather the Storm
The plan was rolled out to employees with opportunities to:
- Skip payments on consumer loans and credit cards issued by the credit union for up to three months. This effectively frees up cash to make priority payments on such obligations as a home loan or car loan.
- Reduce payments to "interest only" payments on consumer loans and credit cards issued by the credit union for up to three months.
- Refinance other existing debt to lower monthly payments by reducing the interest rate or extending the loan term.
- Consolidate debts and bills to a single, low monthly payment. Includes high interest rate credit balances and other unsecured debt into a single loan with only one payment per month.
Credit unions can provide employers access to services that facilitate or enhance employee benefit programs; direct deposit, health savings accounts, IRAs and specialized club accounts.
As an example, employees at a Rockford-based manufacturing plant were unhappy about having vacation benefits distributed to them in a lump-sum, resulting in budgeting issues. Working closely with the plant's human resource director, the credit union developed a special vacation club account. The lump-sum vacation payment was made to the employee's club account, and the employee could draw from that account throughout the year. This specialized club earned a dividend yield higher than a regular savings account.
Karen Jurasek is president/CEO at Generations Credit Union. For more information visit www.findacreditunion.org or call Small Credit Union Development, Illinois Credit Union League, 630-983-2723 or joni.senkpeil@ilcusys.org.
The views expressed are those of Jurasek's and do not necessarily reflect those of the Rockford Chamber of Commerce.
