Credit unions play a distinct role in financial services leadership, particularly when in comes to corporate social responsibility (CSR). CSR strategies help credit unions earn a competitive edge in the financial services marketplace by building member loyalty and turning in-house financial expertise into a benefit for the community. But CSR strategies offer plenty of internal benefits as well. For example, a credit union can direct its CSR strategy inward and use its in-house financial expertise to educate employees on financial matters.
Help Your Own Employees With Your Own Expertise
An often-overlooked aspect of CSR is how a credit union can use it to focus on the needs of employees. After all, an institution can use its internal assets and expertise to benefit employees just as it benefits the greater community. Applying similar CSR strategies internally as well as externally helps employees while helping the bottom line.
Internal CSR efforts that encourage employee participation include rewarding volunteer hours or board service, implementing sustainability programs, launching fundraising campaigns, and matching gifts or canned food drive donations. These initiatives make employees feel better about themselves, support a cause, and encourage employee motivation and loyalty.
So how does an organization make its employees the beneficiary of a CSR effort? This can be a tough question to address, especially if the organization does not have an expertise that aligns with the needs of its employees. But for organizations that do — such as credit unions — there is a valuable opportunity. Personal finance is an issue that affects every aspect of a person’s life. Every employer has employees with financial concerns, but credit unions are one of the few entities with the internal resources to directly address the issue.
Employee Financial Knowledge Boosts Productivity
Employees who are knowledgeable about their own finances feel more in control and are, therefore, less stressed, better able to work, and happier in general. This boosts the bottom line for the employer. In a 2013 survey conducted by Canada’s Employee Financial Education Division,70% of businesses surveyed said they believe employee financial education will improve productivity; likewise, approximately 85% of employees that participated in a 1997 American Express Financial Advisors study wanted some form of financial education.
Why is financial education such a common issue? Because according to two studies published by Benefits Compensation Digest and the Personal Finance Employee Education Foundation, anywhere from 25-40% of employees report an inability to fully focus on work due to personal financial issues. If employees are concerned about their financial well-being, then they are more likely to be absent from work. If they are present, they are more likely to perform poorly. When people are worried about money, it is difficult for them to focus. What’s more, financially stressed employees spend work hours communicating with creditors about past due bills, talking with co-workers about personal financial problems, and researching personal finances. According to a second study by The Personal Finance Employee Education Foundation, employees waste approximately 15 days every year, five because of personal financial issues alone. This puts a dent in productivity and engagement.
How To Implement Employee Personal Financial Education
Financial education is a useful tool for reducing absenteeism, turnover, and workplace distractions, which are all associated costs of financial stress. Simultaneously, it can also improve the quality of life for employees. Although every large business has employees with personal financial issues, the in-house expertise that can redress these problems at credit unions give them a built-in advantage
Credit unions can use their own resources to make their own employees the direct beneficiaries of CSR programs, but any workplace education must be more than an information session, a brochure, or a website. Employees must be able to contextualize what they learn and apply the information to their lives to change behavior. For example, financial education discussions must include more than a rudimentary review of benefits and retirement plans. They should also include a range of topics related to the financial aspects of daily living, such as managing debts, building a budget, and planning around taxes and income. Topics can include specific matters such as setting goals, determining net worth and cash flow, managing income and debt, and planning for potential costs in later stages of life. This kind of broad curriculum allows every employee to participate in the program.
This kind of program won’t solve all employee financial issues, but it will help reduce the detrimental effects. However, unless they are in a crisis, most employees won’t seek help on their own or in a public arena. Therefore, employers should offer financial education away from work. Additionally, instructors should not sell the products they talk about.
There are five steps that are helpful in building a financial education effort:
Identify what education employees want.
Identify optimal delivery methods.
For example, the most effective delivery methods are live group seminars, one-on-one seminars, and live webinars. Self-study, workbooks, video tutorials, blogs — any means that do not allow for questions — are not nearly as effective.
Identify who could organize and conduct the education.
Many employers hire outside experts, but credit unions can fill this need using their own internal assets. Having credit unions teach their own employees means employees get experienced instructors with expertise without the sales pitch from an outside vendor or product.
Define what the education will provide.
Build a plan.
A corporate social responsibility program’s goal is to do good in a way that also benefits the company. Although the beneficiary of the good is usually the larger community, companies should also direct some of the in-house expertise to its own employees. And what better area for a credit union to target through internal education than the widely recognized issue of personal financial issues?
About The Author
Brandon Michaels leads the awesome group of Mazumans at $490 million Mazuma Credit Union in Kansas City. He took the reins at the ripe-old age of 31 and looks forward to changing the credit union industry. Prior to serving as the President & CEO, he served as the chief financial officer for two years. Brandon moved to Kansas City from the California Bay Area, where he was the vice president of finance/chief financial officer at San Francisco Fire Credit Union.
Brandon is a third generation credit union CEO. Although Brandon grew up in the credit union movement, he worked three years for the Federal Deposit Insurance Corporation as a bank examiner before making his formal entrance into the industry ... an industry he thought as a child, “you couldn’t pay me enough to work in this place!”
Brandon was recently recognized by the Credit Union Times as a Trailblazer 40-Below, a recognition awarded to credit union executives who are working at warp-speed to better the future of the credit union industry. Brandon is also a private pilot, an awesome dad to Charlotte and Kason, and a loving husband to his beautiful wife Kathi.