Case Study Making A Loan

Case study: Making an employee loan benefit work

Simon Mounsey, February 18, 2016

A clear, ethical approach and understanding of the pressures of financial worries have made Agilisys' loan offering a success

The majority shareholding of Agilisys is held by an Employee Ownership Trust (EOT) on behalf of our employee owners. One of the core principles of the EOT and our employee value proposition is that the EOT exists for the benefit of our staff. Since forming the EOT one of our key areas of focus has been employee engagement – and specifically our employee owners’ welfare, benefits and what opportunities we have to continue to improve them.

We see a direct link between the financial health of an employee owner and their engagement at work. A significant proportion of our employee owners are, by virtue of their roles, income and age demographics, more likely to take advantage of high-interest ‘payday’ loans or other high-street equivalents. We already offered Employee Assistance Programmes (EAP) to employee owners most likely to be affected by financial concerns. However, we came to the conclusion that if we could do more to help our owners improve their financial health it would be something that they would really value and would make a positive difference to both their welfare and engagement.

We were aware of the SalaryFinance employee benefit and were interested in exploring it further. The platform helps employees pay off their debt faster by consolidating existing debt into a single, low interest, fixed-rate loan. The interest rate is the same for all employees, as repayments are collected from salary deduction rather than direct debit, which reduces the risk and cost. The arrangement is directly between the employee and the lender, with no cost to the employer, and therefore administrative overhead and exposure to the employing company is very limited.

While attracted by the benefit to our employee owners, and to further differentiate ourselves by being one of the first businesses in the UK to pilot this new approach, we had questions about how the benefit would be perceived, how valuable it would actually be and whether it is ethically appropriate for an employer to support lending of any kind. Our position is very clear and is supported by SalaryFinance’s approach – we won’t encourage employee owners to take on debt, but we do encourage them to consider whether they can save money on existing debts.

We surveyed our employee owners and it became clear that significant numbers (consistent with UK average figures) had personal debt, with a high proportion paying very high interest rates. With this data and the clear ethical standpoint confirmed, we trialled the platform across our customer service business.

The results

The platform performed well over the six-week pilot. The demand from employees was high, the average saving delivered to individuals was more than £500 (with some saving up to £1,400), and the feedback from employee owners taking up the benefit has been very positive. On this basis we have made it available to all staff and are beginning to see good take-up and feedback.

Our next step will be to measure our employee owners’ perception of positive impact on stress, wellbeing and engagement, which we will monitor over the first year of the benefit.

Final thoughts

Loan platforms are an effective benefit for employers that can quickly address one aspect of financial health for employees with no cost, minimal administration, and demonstrable outcomes.

The financial health of employees plays an important part in their wellbeing, satisfaction and engagement at work. At Agilisys, we believe that employers who consider and support their employees’ financial health will see ROI in lower absence rates, and higher retention and productivity measures. So we’ll continue to embrace our Employee Ownership status in future by looking out for more innovative tools that benefit our employee owners and our business.

Simon Mounsey is director of human resources at Agilisys

If you are not yet familiar with Mirador Financial, Excelsior Growth Fund's premier technology partner, then you may be interested in reading a recent case study outlining the fintech firm's success with EGF's online lending platform. When EGF launched its SmartLoan program in summer of 2015, it was in need of a promising technology partner to help streamline the online application and origination process. Mirador's online lending platform allowed Excelsior to compete with other lending marketplaces by processing and underwriting with speed, reliability, and lower costs for borrowers.

 

Together, Mirador and EGF were able to automate a sophisticated online process that cut approval times and origination costs in half. By setting automated parameters for immediate pre-apporvals and declines, the need for manual loan analysis was drastically reduced. As a result of the Mirador platform, EGF was able to reduce loan origination costs by 25-50%, reduce time for processing declined loans to virtually zero, and match other online marketplaces approval times at a fraction of the price.

 

Read the full article and learn more about Mirador Financial.

 

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Excelsior Growth Fund (EGF) promotes economic development and job creation in New York State by providing streamlined access to small business loans and business advisory services. An EGF SmartLoan™ can help businesses secure working capital, refinance existing debt, purchase machinery and equipment, upgrade technology or hire staff. With the easy to use online loan application, pre-qualification takes minutes; loans are approved and funded within days. EGF is a not-for-profit 501(c)(3) and certified by the U.S. Department of Treasury as a Community Development Financial Institution (CDFI).  For more information, visit www.excelsiorgrowthfund.org    

 

 

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