Here’s how one auto industry business helps employees deal with financial stress.
I came across a great story in an American automotive trade publication.
It seems that in the tough times we’re all living in, a Texas dealership has developed a way to help their employees deal with some of the financial stresses the pandemic has brought about. They call it a “Superfund.”
Here’s how it works: Every employee who wishes to take advantage of the fund has a little bit of their pay deducted from each paycheque.
The deduction, in this case, is $2.50 per paycheque, or $5.00 for those who are paid bi-monthly.
The fund is controlled by an employee-manned board that meets on a regular basis to discuss any requests for financial support.
Since its inception, the fund has paid out over $100,000. The largest payout to date was $8,000 for funeral expenses.
To avoid abuse, the fund pays the supplier directly.
In other words, in the funeral case mentioned above, the fund would not cut a cheque made payable to the employee. Instead, it would pay the funeral home directly.
If you’re thinking this is a great idea, you’re right. It is.
However, this kind of initiative requires substantial employee participation.
It really wouldn’t work if only a few employees chose to participate, nor would it work if you’re running a small business with only a couple dozen employees.
You really need a critical mass for the contributions to add up enough in order to make a fund like this a plausible source of emergency funds for those who need it the most.
This example in Texas has approximately 50% of the almost 300 employees participating in the program.
In addition to the numbers, you’d also need a full-time manager.
In the Texas case, the HR department is handling the contributions.
To make a withdrawal, the employee makes a request, along with supporting documents.
Only the HR manager knows who the employee is, which is a smart strategy.
After all, you wouldn’t want to broadcast one employee’s needs or emergency situation to the entire company.
That would just put up roadblocks and prevent those in need from asking for help due to a fear of being judged.
Once a request for assistance is received at this Texas dealership, it’s handed off to a committee made up of long-term staff.
The committee then decides if/how to proceed.
This concept, although great, comes with some challenges.
As mentioned above, the size of the business must be substantial in order for the employee pool to be big enough for it to make sense.
Also, rules must be in place to prevent abuse of the system.
Then there are the legal questions: Does the business expose itself to any liabilities because of what they might or might not fund?
And what happens to an employee’s contributions if/when they quit or are fired?
A fund like this can be a great boost to morale during tough times like these.
If your operation is on the smaller side, and you’d still like to implement a fund like this, it could still be feasible provided that you make changes to the amounts the fund would be able to pay out to employees, and if you allow yourself a reasonable amount of time to fill up the coffers before you make your first payout.
Dave Redinger is a retired mechanic with over 45 years’ experience. He now works as a consultant and legal advisor on mechanical matters offering advice to garage owners and lawyers. You can reach him at automotiveexpert.ca