The Inc.com blog Boss School throws out an interesting thought on lending your employees money. In the December 18, 2007 post entitled "This Company is not a Bank -- Or Is It?" the author suggests that it is good employee relations for the boss to lend valued employees emergency money. His example is one of an hourly employee driver who gets in trouble with the DMV. He lends the driver $5,200 to pay off the fines.
Where would this behavior fall under the concept of best-practices HR? Further, if this is a good practice, how does it fit (where, for who, in what situation, etc.)?
Under the broadest definition of employee rewards for continuing performance, we find:
-- monetary compensation, or wages and bonuses (current or near current)
-- risk based compensation, or options, phantom stock (equity or near equity schemes)
-- retirement benefit plans, like 401Ks, defined benefit plans
-- health plans, including doctor, hospital, and dental coverage
-- other benefits (vacation, group life and disability insurance, education assistance, etc.)
source: The Employee Benefit Research Institute.
I'm going to say that since the lending CEO or CFO makes an employee loan with the full intention to get back the money, and get it back promptly at that, then this is an "other benefit", akin to subsidizing a mortgage or MBA. As such it's a fourth or fifth level offering, crucial to certain employees, meaningless to others. The likeliest users would be hourly employees, and younger ones who have fewer resources amassed.
Would lending your employees money fall under a must-have offering? Certainly, especially in a small business where you have an employee base with above characteristics. I wouldn't consider it a higher target than offering group health care or some variation thereof, but many workers might value this benefit more than a 401K - where the dollars seem way far off. Afterall, you value, know, and trust these folks, why not help in a pinch?
Good reason to hold a wad of hundys in the back pocket or secret drawer, yes indeed.
Where would this behavior fall under the concept of best-practices HR? Further, if this is a good practice, how does it fit (where, for who, in what situation, etc.)?
Under the broadest definition of employee rewards for continuing performance, we find:
-- monetary compensation, or wages and bonuses (current or near current)
-- risk based compensation, or options, phantom stock (equity or near equity schemes)
-- retirement benefit plans, like 401Ks, defined benefit plans
-- health plans, including doctor, hospital, and dental coverage
-- other benefits (vacation, group life and disability insurance, education assistance, etc.)
source: The Employee Benefit Research Institute.
I'm going to say that since the lending CEO or CFO makes an employee loan with the full intention to get back the money, and get it back promptly at that, then this is an "other benefit", akin to subsidizing a mortgage or MBA. As such it's a fourth or fifth level offering, crucial to certain employees, meaningless to others. The likeliest users would be hourly employees, and younger ones who have fewer resources amassed.
Would lending your employees money fall under a must-have offering? Certainly, especially in a small business where you have an employee base with above characteristics. I wouldn't consider it a higher target than offering group health care or some variation thereof, but many workers might value this benefit more than a 401K - where the dollars seem way far off. Afterall, you value, know, and trust these folks, why not help in a pinch?
Good reason to hold a wad of hundys in the back pocket or secret drawer, yes indeed.
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