Apply behaviorally informed design can be applied at key moments throughout your relationship with your employees.
Even before someone joins your company, you can emphasize your company’s commitment to its employees’ financial health. For some workers, the availability of helpful financial health benefits can be a reason to choose your company over another.26 By making it clear that not only are financial health benefits available but that your leadership wants its employees to use them, you can help overcome a potential roadblock to participation, particularly for low-wage workers who may be distrustful of benefits.
During onboarding, your employees’ attention to benefits may be at its highest, but so is the risk of choice overload, which can lead to inaction. You can help your employees make financially healthy benefits decisions by using defaults. For example, if your company provides the ability to direct a portion of each paycheck into a savings account via split deposit, you could suggest a default percentage of the paycheck to go to emergency savings when new employees sign up for direct deposit.
Low-wage employees, particularly if they are struggling to pay bills, may have the least amount of mental bandwidth right before payday. Using planning prompts and reminders to encourage employees to follow through on their financial goals can be powerful in this scenario. Automation can also make it easier to stick to long-term goals; if employees are signed up to automatically save a portion of each paycheck, for example, they don’t have to make this decision every payday, when they are more likely to be focused on short-term needs.
Like onboarding, open enrollment can be an overwhelming time for many employees. Faced with a complex array of choices, some employees might avoid choosing altogether. Active choice can be useful to overcome this bias, especially in situations where employees are required to opt into a benefit and have not elected to participate. You can also take advantage of the tendency toward loss aversion by calculating how much money an employee is leaving on the table by not meeting a company 401(k) match.
There are opportunities throughout the year to remind employees of their financial goals and the benefits that are available to them. For example, the start of a new year, birthdays, and work anniversaries can prime the fresh start effect. In other moments, planning prompts may be useful in encouraging people to save or pay down debt, such as the period before bonuses and merit raises take effect, or in the spring when many employees are expecting tax refunds.27 Consider using other regular milestones, such as monthly updates, quarterly meetings, or annual retreats, as moments to remind employees about their benefits and encourage them to focus on their financial goals.
As an employer, you might not always know when your employees experience a financial shock, but you can watch for strong signals: For example, when an employee sees a big swing in their pay due to a raise or an hours reduction, or if they request a 401(k) loan or hardship withdrawal. These moments create opportunities for small interventions that promote financially healthy behavior. If a shock is positive (e.g., increase in pay), then an employee might be receptive to prompts to save or pay down debt. If a shock is negative (e.g., decrease in hours or major expense), you might consider providing referrals to financial counselors to help your employees manage their overall financial situations.
You are also likely to know when your employees experience certain major life events. Like with financial shocks, these events provide an opportunity to proactively provide your employees with support for their financial health. For example, if an employee takes parental leave or adds a child as a dependent to their health insurance plan, you might use that opportunity to encourage them to begin automating a portion of each paycheck to a dependent-care flexible spending account or 529 plan.
Even when your employees leave the company, you can support them with their financial health. You might, for example, provide them a simple primer on how to roll over their 401(k) balances to an IRA or a new employer account, or provide access to a service that automates this process for them.
Step 1: Understand Barriers
Employees, especially low-wage workers, experience numerous barriers to effective engagement with financial health benefits.
Step 2: Apply Behavioral Insights
Insights from behavioral science can be used to simplify benefits decisions, motivate employees, and provide support.
Step 3: Leverage Employee Touchpoints
Behaviorally informed design can be applied at key moments throughout your relationship with your employees, from the time they first hear about the job until they leave the company.