Can you increase employee engagement by making benefits affordable?

[00:00:12] Welcome to the High Volume Hiring Podcast. I am Steven Rothberg. I'm the founder of College Recruiter and this is episode 125. Jeanette, my apologies in advance for forcing you to spend so much time with me. Just going to have to like get over it. You've got a quick path to heaven.

[00:00:29] Right. Milestone episode 125. So we're excited because today we have Michael Gomez with us and we're going to be talking about can you really increase employee engagement by making benefits affordable? Like, Michael, you have to tell us. And so just, you know, to introduce you a bit to our listeners and you can tell us a bit more.

[00:00:50] I know, basically you're talking in the green room, you have a lot of experience as a quote unquote classically trained HR executive. So we always love having practitioners on. So maybe just give us like a little bit more background on you and then we'll go in to say, you know, tell us like, can we really make these changes? So. Wow. Yeah. Welcome. Thank you. Appreciate it. It's good to be here with both of you. Well, you know, I'm a classically trained HR executive, 30 years of experience.

[00:01:17] Brands like AT&T, PepsiCo, Walt Disney, McDonald's. And most recently with the Tasty Restaurant Group is the 15th largest franchisee in the country. Right. They have six brands, you know, iconic brands and, you know, a great high growth organization, although young, seven years in the making.

[00:01:36] I am also 20 years as a, you know, HR OD consultant, executive search consultant. So I place executives, I mentor executives, executive coaching and a lot of OD strategic work. So that's my background. So when you say classically trained HR professional, are we talking Juilliard or what are we talking here?

[00:01:59] We're talking labor relations, employee relations, compensation, benefits, staffing, OD, education, learning management systems. That's the easy one. AI enablement, you know, stuff like that. Excellent. Well, I know, you know, this is a real hot topic. And, you know, we started talking about a bit in the green room about like employee engagement, you know, increasing this.

[00:02:26] You have a real strong point of view by, you know, you can increase this by making benefits affordable. You've done a lot of really interesting, cutting edge, innovative work. Maybe just start to like tell us a bit about, you know, your point of view on this as we get into, you know, some of this topic. Yeah. Along the path of looking at doing the gap analysis for your organization to build a human capital strategy. Yeah. Right. You have to look at the various disciplines. And we mentioned comp benefits, benefits certainly being one. Yeah.

[00:02:56] And when I looked at it, it's like, well, we offered, you know, good benefits. Yeah. Bronze plan, Blue Cross Blue Shield, an American worker, a minimal essential coverage plan. It's like, wow, you know, these are pretty good plans. They do a lot of offerings in the plan that you look at and you're like, this is what we're offering. And that's good that we're offering that. And sadly, that's where it ends. And no one stops to look at, well, who's actually using it? And when you peel back the onion, you see that 93% of the people were not.

[00:03:26] Why? Because they can't afford it. There's nothing left in their check. Yeah. So what are you accomplishing? And this is a problem that employers, you know, across the country, across industries have, especially at the hourly level. My goodness. Right. And so we needed to do something about it. And so what we did was we looked at the U.S. tax code under Section 125.

[00:03:48] We see that there's a 501c3 nonprofit for low-income, seasonal, and hourly workers that is, in fact, partnered with a minimal essential coverage plan. And in doing so, it offsets the cost of the plan entirely for the employee. Wow. Really? Right. So here we are, you know, in the QSR industry, hourly employees.

[00:04:18] That's what we have. And you know what? Within the tax code, there's a 501c3 for hourly employees, which is what we have. And so when you line that up against a minimal essential coverage plan called HealthWorks, it provides tremendous benefit to the employees at the same time at no net cost. So I was like, this sounds too good to be true. Right, right. What's the catch? Like, does this really happen? What's the catch?

[00:04:45] So I took six months for the most part to vet this plan. Wow. And when you get into it, you realize there's never been a legal challenge or a fine. It's audited by the Department of Justice every year. It's been through the Department of Labor audit successfully. And as a result, you know, growth is 5x as a result.

[00:05:06] But when you get into it, you realize that these plans are confused with a 105B plan, which has had issues, which is not required to be audited, which requires participation. And as a result, education and training on an ongoing basis. It is not fun. So this one's like the easy button compared to the one that's not. Oh, my gosh. Sort of making it like, you know. Oh, my gosh. Can we get some more?

[00:05:35] Easy button versus like, oh, there's a lot of red tape. Yeah. But, you know, buyer beware. I got to tell you, these decisions are very, very important. So, you know, I looked at it, vetted it, you know, our, you know, the ERISA attorney, 20-year ERISA attorney, Jared Pope, now CEO of WorkShield, called it the golden egg within the U.S. tax code for hourly workers. Now, keep in mind that there's 100 brands in the portfolio. They all have ERISA attorneys.

[00:06:04] That's 100 ERISA attorneys looking at this, right? So it has a number of benefits. You know, if, let's say, for example, you pass away. All of a sudden, you have a term life insurance policy, $25,000 to your family or your designated recipient. Wow. At a time of need. At no net cost to you. You don't pay it. It pays you, right? What plan do you know that does that? Okay. So you get in an accident, you get a check.

[00:06:32] You get admitted to a hospital, check for $1,000. You need to stay for a month, money every day thereafter for 30 days. Discounts on prescription drugs. And for what? For being auto-enrolled. It's amazing. It's fantastic. From a recruiting standpoint, you talk about, like, the benefits of, like, okay, why would you want to choose that company over another one, right? Like, these are benefits that are, what I'm hearing is free, right? Like, to the employee. It's at no net cost.

[00:07:00] In fact, you get a little bit more money in your check. So everybody gets a raise. I mean, it's like, wow. So I live this, right? And so, but part of my, one of my concerns is like, wow, so we're going to have to show the mechanics of the transaction on the check. We're going to have to show the health work plan, the cost, and then it being offset by the nonprofit, every check. And I'm like, can our payroll provider do this? You know what I mean?

[00:07:30] And so we had to look at the configuration that was needed and get the teams together and the HRS was involved, right? And they pulled it off. Okay. But I didn't know. Okay. I was worried. But they pulled it off and a hundred other brands have pulled it off. But that was one area that I didn't really, wasn't an expert in. And I didn't, wasn't controlling. Yeah. And so I worry about stuff like that. Okay. Have you ever wondered what really makes a generation tick?

[00:07:58] Who gets to pick the name and why the slang keeps changing? Don't worry. I can help. My name's Dr. Megan Grace. On hashtag Gen Z, I share the voices and experiences of Generation Z, how they're different from other generations, what moves them and why they do what they do. In each episode, we go beyond the buzzwords and the stereotypes to dive into real conversations and the insights that matter to making intergenerational collaboration a reality. You can catch hashtag Gen Z on the Work Defined Podcast Network and wherever you listen to

[00:08:27] podcasts. For the members of our audience, and I'm going to put myself into that group. Although I like to call myself a fully recovered lawyer, my wife would say partially is a better description for that. And I did some Section 125 work for Honeywell years and years ago when it came out. I'm not familiar at all with the 501c3. So for the practitioners, for the people who are listening that just don't know anything

[00:08:52] about this, are you talking about the employer becoming a 501c3 organization? Is this another organization? Is there some grant? I mean, like walk us through sort of, Ian, like what were those books? You know, like Coding for Dummies. You know, all those four dummies books. Give us a two minute. How to do this. If there's no cost, like who pays for it? Well, let me say this about that.

[00:09:19] First of all, it's a partnership between HealthWorks, right? The company is Worksite HR, they're a California-based company. Okay. And the name of the plan is HealthWorks, which is partnered with this 501c3. So the company that adopts it adopts a plan that has that partnership. The plan has that partnership. And as a result, the mechanics occur within the organization and the accounting where they

[00:09:46] pay for the plan, but then money's returned from the nonprofit offsetting that for the company, also within the employee checks. That's the functionality of it. Okay. The other thing I would say about it in terms of really understanding it is that the company will actually take your payroll weekly by weekly and run it through their model and tell you exactly what it's going to do. And that was one of the big pieces for me, right? Because they're like, yeah, we're going to look, it's going to kick back 2.5 million in

[00:10:16] FICA and Sumo tax savings. I'm like, really? Is that real? You know, I'm like from Missouri. I'm the show me state. I'm like, show me, you know? And they're like, they did. They're like, here it is. And it worked out. Every month you see the money's like, you know, coming in. And so I had a chance to, you know, vet the plan, you know, implement it, you know, see the benefits and see it all being realized as well as in the stories, which is the funnest part. Yeah. Right. The phone calls. It's like, did you hear about Mary? No. No, it happened.

[00:10:47] She was, had an accident in Montana. She had to get airlifted to the hospital. HealthWorks paid for it. Are you kidding me? No. Yeah. And then because she had an accident, they sent her a check and because she got admitted to the hospital, they sent her a check for a grant. Are you kidding? It's like that, right? That's wonderful. You hear about John? Yeah. He passed away. The family got 25,000. It's like, oh, wow, that's good. They needed that money.

[00:11:13] But when you benchmark other organizations as we did, you know, for example, for one, you know, really, you know, talented franchisee, you know, Ganesh, you know, Anthony Robinson is the chief operating officer over there. And he adopted this plan like four years ago. He was like way ahead of everybody. He saw the light. Okay. There's a hundred brands doing this. I wish I was like number one. Okay.

[00:11:36] I got in late, you know, because you lose the opportunity to save money as a result of not being in and not making the right decision. But anyway, I got to tell you, when we bench worked with them, they saw a hundred point drop in the numbers. So 230 turnover, 230% down to 130%. You realize, what is that worth? That's 100K in that one restaurant. How do we know that? Well, Center of Hospitality Leadership, right?

[00:12:05] Cornell University did have done multiple studies on turnover. Pizza at a restaurant, 25 in a restaurant, 150% turnover. It's costing you 140K. So the percent is close to the cost, right? Across a whole bunch of restaurants. For us, that's $7.5 million. That's amazing. Okay. So it's massive in terms of the impact and cost in terms of turnover. So it's a huge opportunity there.

[00:12:32] It's a sure thing on a FICA and suma tax benefit, a sure thing. And what's also a sure thing is the benefit to thousands of lives that you're providing these benefits to at no net cost to them. Again, this sounds like amazing, not too good to be true. I joke around. I'm like, you know, Jersey girl living in New York, so very skeptical. Like, is there any downside? Like- What's the catch? Like, is there anything?

[00:12:59] Because this sounds like, assuming your company qualifies and the employees do at the, you know, compensation level, like, any downside? Like, at all? Because I'm not here at anything. And I just got to ask. I got to tell you, I'm still looking for it. You know, I would say this. I remember this has to do with, you know, taxes, right? And if you're not, as an employee, electing not to have state and federal tax taken out

[00:13:27] of your check, well, you can't participate. Okay. So that would be FYI. And how many people out of 7,500 did that impact? Well, 14 people for us. Okay. But I still sent them a letter. Yeah. I still sent them a letter. Okay. Yeah. So the other key to success with this is to educate people what it is. And so we had, like, massive training sessions, video, you know, teleconference and calls all over the country, right? Yeah.

[00:13:54] Presenting the model, educating people beforehand, right? And then giving them an opportunity. If you don't like this, you know, tell us, we won't enroll you. And then if you enroll and you don't like it, you can get out. You can get out. Yeah. You can get out. So very flexible. But I think ultimately, you know, as HR professionals, we want to have impact, but we want impact that's sustainable. Yes.

[00:14:19] That long after we've left, we can look back and see people are still benefiting from the processes, systems that we put in place, right? And that certainly is one of the legacies. Absolutely. Well, this is cool. I'm going to put the links to, like, what was it? HealthWorks? HealthWorks, Worksite HR, HealthWorks. You know, here's my email, mike at mvidelivers.com, mike at mvidelivers.com. Anyone reach out with questions?

[00:14:49] Yeah, absolutely. Absolutely. Happy to answer questions on the program. I know a lot about it and happy to be assistants to both of you. Awesome. Well, thanks, Mike. Appreciate it. Thanks, everyone, to our listeners. And until next time, have a great day, everyone. Cheers. Thank you. Thanks, Mike. Thank you.