Get off the ground with proper funding
From Apple to Amazon, every great idea needs funding to get off the ground. Without proper funding, an organization's business goals sit collecting dust on the idea board, never transforming into realized objectives. The same is true for employee spending account initiatives. Employee spending accounts are a key strategy for attracting and retaining employees and driving engagement, but without adequate funding to support them, the program will not achieve success.
According to a survey conducted by Aon Insight, modern workforce employees expect more out of their benefits packages. The modern workforce feels their benefits should go beyond standard health and dental plans. The quality of an organization's benefits program shows how invested they are in the mental, physical, and financial well-being of their team members.
When organizations show they care about the health and well-being of their workforce, employees will return the favor with increased productivity. Allocating proper funding to an employee spending account plan is a key way to demonstrate this organizational value and companies can expect increased employee engagement as a result.
It's easy to see how funding employee spending accounts can drive future profits, but how else do proper funding strategies save businesses money down the road? Read on to learn how a solid funding strategy for your employee spending account program can drive results at an organizational level.
Support employees with flexible benefits spending account programs
The one-size-fits-all traditional model of the past has become obsolete. When you look at today’s workforce, it’s easy to see that remote, in-office, and hybrid team members all have individual needs – and that is only taking into account work location, which just scratches the surface of the diverse needs of today’s diverse workforce.
With benefits spending accounts, employees are relatively free to spend the money in their accounts on whatever benefits are important to them. For example, in a wellness account, everything from gym memberships to massage therapy sessions can be on the table. Generally, the more flexible the benefit spending account is, the more employees appreciate the benefits available to them.
When employees choose the benefits that best support them in their work and home lives, their physical and mental well-being improves. This can positively impact on-the-job performance. Furthermore, when employees make healthy improvements in their day-to-day lives, companies can save more on insurance premiums and sick leave down the road. After all, healthy employees take fewer sick days and, in general, have fewer medical needs.
In addition, organizations that offer flexible benefits programs tailored to employees’ individual needs show employees that they're valued and supported. When employees feel they are valued, they stay with the company longer, thus resulting in short-term and long-term financial benefits for the organization. In the short term, employees are more productive, thus driving profit increases. In the long term, boosting employee retention saves money on recruiting, onboarding, and training expenses.
Determine a budget to fund employee spending account programs
A robust funding strategy strikes the perfect balance between company and employee needs. Organizations must determine exactly how much funding to allocate per employee, and how those expenses work within the company’s current budget.
According to the Bureau of Labor Statistics, the average cost of employee benefits (as of 2019) is $11.60/hour. Compared to the average hourly rate ($24/hour), employers should expect to spend between 1.25 and 1.4 times each employee's base salary in total.
Keeping these numbers in mind will help a human resources department and chief financial officer create a budget. For example, for team members with an annual salary of $50k, companies can expect to pay an additional $12k in benefits. HR leaders should consider how much of this spend can be allocated to flexible benefits accounts. (Remember: These numbers are based on nationwide averages. It's not about spending less; it's ultimately about offering more options to employees with the funds they expect!)
With its data collection abilities, the Forma platform is able to track spending account utilization and determine high and low engagement areas. This helps customers reallocate funding to capitalize on accounts with high usage and, ultimately, boost employee engagement.
Set the right disbursement method to drive employee engagement.
With the right budgeting strategies and proper funding, an employee spending account will be well on its way to equally benefiting both the organization and the employees. However, companies must still determine a cohesive plan for distributing funds to their employees. Communicating with employees about how they will receive funds, how they can use them, and other key program features, such as whether unused funds will roll over is paramount for a program’s success.
One of the easiest ways for companies to drive employee engagement is to offer employees an employer-sponsored debit card linked to their employee spending account. Employer-sponsored debit cards can be loaded on a monthly or yearly basis, and employees are then free to use the debit card on any pre-approved eligible expenses. Employees are accustomed to using their personal debit cards for most purchases, so instead of submitting time-consuming claims to HR, they can swipe their employee spending account linked debit card for pre-approved purchases. Employees also have immediate access to the funds in their employee spending account so they don't have to submit a claim and wait weeks for their reimbursement to go through.
When it does come time to file a claim, employees can file instant e-receipts thanks to their employer-sponsored debit cards. Everyone can be forgetful at times. Instead of digging for a lost receipt to file a claim, employees can use their digital records to provide proof of purchase.
Organizations may also consider digital credit cards for heightened security and convenience. With digital credit cards, employees can make online purchases with a digital number instead of sharing their physical debit card information. Companies can also assign the digital numbers to each individual employee so employees can use them on eligible purchases.
As with any credit card, employees risk going over their spending limits. Organizations can counter that risk, however, with a prepaid virtual debit card. Prepaid debits have set spending limits and expiration dates, so businesses can rest assured knowing their employees will never overspend.
Boost employee spending account engagement with Forma
Proper funding and disbursement strategies are crucial to building a robust employee spending account program. As modern employees expect more from their benefits packages, employers must pivot towards more flexible benefits options outside of traditional health insurance. However, those options must still fit within a company’s budget while providing employees with the benefits they desire.
Forma's employee spending account platform tackles all of these concerns and more. It also removes administrative burdens for the HR and finance teams by streamlining employee benefits programs in one cohesive place. Organizations are free to customize their benefits programs while also providing employees with prepaid debits cards for immediate spending.
Get in touch with Forma today to build the robust benefits plan your team members deserve.