Humanix\'s support for their employees helps retain our best talent.

1. Helping an Employee in a Personal
Financial Crisis
As more Americans face distress, small businesses are
trying to find solutions, including loans, that benefit
workers and companies alike
By John Tozzi
Last October, in the throes of the financial crisis, Nancy Nelson gathered the staff of her
Spokane (Wash.) recruiting firm Humanix to deliver this message: "If you're finding
yourself in a corner where you can't see your way out of it"—whether from credit-card
debt, medical bills, or a mortgage or car loan—"first look to us and see what we can do."
Since then, the $11 million company, which is owned by its 16 employees, has made
more than $15,000 in short-term, interest-free loans to seven workers. Cindy McGinty, a
52-year-old recruiter who has been at Humanix three years, borrowed $1,000 for car
repairs after an accident late last year. In July, when she needed emergency dental work,
the company agreed to lend her the cost, which she expects to be in the thousands. "They
saved me," McGinty says simply.
As more Americans face financial distress, small businesses are trying to find solutions
that benefit employees and companies alike. Workers' money problems manifest on the
job in poor performance and turnover. While it's hard to measure the toll that personal
financial woes take on employers, one estimate from the Personal Finance Employee
Education Foundation put it as high as $4.5 billion annually—the cost of missed time,
hours on the phone with creditors, and low performance because of stress, for example.
Janet Raffel, a Chicago consultant on workforce development, estimates that a financially
unstable worker can cost a business as much as $480 per month in lost productivity and
absenteeism.
Building Loyalty
One-third of employers provide some services to help workers manage their finances,
according to a new survey of 400 employers by the New York nonprofit Families &
Work Institute. But smaller companies lag: Only a quarter of firms with between 50 and
100 employees offered assistance, compared with 44% of firms with 1,000 or more
workers.
Many companies can't afford Humanix's approach of lending workers money directly,
especially in a slump. Mitch Bolnick, CEO of security company BCD Low Voltage
Systems in Phoenix, let several employees borrow from the company in the past for

2. emergencies like car repairs. But with sales slow this year and his staff of 16 already
taking pay cuts, Bolnick has held off on new loans. "This year we've had to explain to
them what the situation is and why, and they understand," he says. Still, he says assisting
employees when possible helps BCD build loyalty among workers: Two have told him
they turned down higher-paying offers.
What can small businesses do to help employees in crisis? Some efforts come from
workers themselves. Staff at CRSA, a 61-employee architecture firm in Salt Lake City,
began a "We-Care Fund" five years ago to raise money for a colleague who had a
premature baby. Funded through voluntary payroll deductions, the account typically has
$3,500 that can be drawn on for workers' medical emergencies or other urgent needs.
Most employees contribute a few dollars each pay period, and a staff committee reviews
applications.
Other programs, particularly for low-income workers, try not only to help them out of
immediate binds but encourage them to manage their money better over time. Four years
ago, the eastern Kentucky nonprofit Mountain Association for Community & Economic
Development began hearing from companies that workers needed advance loans. "My
cash flow's in chaos because employees come to me wanting advances and never pay me
back," one employer told Larrey Riddle, MACED program director. That, along with the
growing number of payday lenders in Appalachia—one opens every four days in
Kentucky, according to the Brookings Institution—spurred MACED to develop The Save
It! Loan program as a pilot two years ago. Workers at participating companies can
borrow between $300 and $500 through the credit union. Borrowers qualify based on
their income (between $12,000 and $60,000) and employment history, not their credit
rating. The repayment is collected automatically from their paychecks over 10 months at
18% interest. The credit union also collects an amount equal to half the loan's principal
and puts it in a savings account for the borrower, so employees automatically save as they
repay their loan. The goal is to help workers build savings and keep them from the debt
traps that payday loans often lead to. Eleven employers, with payrolls ranging from 20 to
400 workers, participated in the pilot, which made 385 loans worth about $120,000.
Confidentiality
Absent such innovative solutions, small companies can offer some support as a benefit
through employee assistance programs (EAPs). Such programs generally cost a few
dollars per employee per month, and offer confidential help for a range of issues,
including domestic problems, addiction, and financial woes—a particular concern right
now. Melanie Hardie, a senior financial consultant at Ceridian Lifeworks, says the
number of calls her team gets about foreclosure has gone from one or two each week to
four or more daily. About a quarter of Ceridian Lifeworks' business is from small
accounts, which the company classifies as under 350 employees. "Most companies, small
businesses or large businesses, don't have the qualified professionals in-house," says
Hardie. "Really we're an extension of their human resources department."
As the recession grinds on, more companies find themselves managing workers facing
personal financial crisis. And while employers like Humanix treat workers like family,
taking care of them makes business sense as well. "I don't want to make it Pollyanna,"

3. says Humanix's Nelson. "If an employee has a stressful financial situation at home,
they're not going to be fully engaged in their job."
Tozzi covers small business for BusinessWeek.com.