As we continue to navigate this new Great Resignation era, businesses are trying to find new ways to fill job openings and retain their best employees. Organizations of all industries and sizes have their work cut out for them. According to an August 2021 poll conducted by PwC, 65% of employees are looking for a new job to negotiate for a higher salary, expanded benefits, and greater work flexibility.
Even though it is not a new issue, employee financial stress became one of HR’s top priorities during the pandemic as cash-strapped employees struggled to keep up with unexpected bills or loss of income. In fact, 63% of employees reported that financial stress increased since the start of the pandemic according to PwC’s 2021 Employee Financial Wellness Survey. Nearly three-quarters of those workers said they would be attracted to another employer that cared more about financial wellbeing than their current employer—and more than half of those who had not yet faced increased financial stress agreed. As if the pandemic weren’t stressful enough, now workers face an additional financial struggle–rising inflation that’s at multi-decade highs.
In this article, we’ll explore why employers are looking for new ways to help employees improve financial wellness. Find out why offering or expanding financial wellness programs can help increase productivity and improve your organization’s bottom line. Plus learn about new tools and resources available that help employees improve financial flexibility and how your business can measure the success of your financial wellness program.
Survey says more employers feel responsible for financial wellness
According to Bank of America research, 62% of employers surveyed said they felt extremely responsible for employee financial wellness during the pandemic compared to just 13% in 2013. This feeling of responsibility has led to an increase in employer-sponsored programs that encourage and help employees budget, create emergency funds, and deal with unexpected challenges like medical bills and home repairs.
Traditionally, businesses have focused their financial wellness programs primarily on retirement savings through company-sponsored 401(k) plans. Over time, we have all learned that financial preparedness is about more than just retirement and these programs have shifted to also provide workers with advice on student loan debt, saving for milestones, and even offering paycheck advances for emergency situations.
Surveys show that employees both want and need these additional financial wellness programs. According to BrightPlan’s annual Wellness Barometer Survey, financial stress causes an average of 15 hours in lost productivity and engagement each week, leading to an estimated $4.7 billion loss per week for employers. The survey shows that most employees want support and guidance from employers on personal finances including financial education, tools for investing, access to a financial professional, and unbiased money resources. More than 9 in 10 employees noted that access to enhanced employer-provided benefits would have a positive impact.
How to help employees manage financial stress
According to a SHRM/Morgan Stanley survey conducted in June 2021, 74% of HR professionals said their organization had not yet added new benefits or expanded existing programs to help employees manage their financial stress. If your business is one of those still trying to determine the best path forward, there is increasing evidence that helping employees reduce financial stress could help decrease absenteeism and turnover. In addition to retirement plans and safety-net insurance offerings, here are some things your business should consider:
Provide education-related benefits. The survey also found that about 1 in 5 workers consider education benefits like tuition reimbursement, 529 savings plans assistance, and student loan repayment, an extremely important employer-sponsored financial wellness benefit.
Offer classes and other resources that improve financial literacy. Give employees the information they need to create a budget, reduce long-term debt, save for milestones, and create an emergency savings account.
Include financial tools for DIY-minded employees. There are many digital platforms available that can be personalized to each employee’s situation. AI-powered tools allow employees to see their current balance sheet and plan a roadmap tailored to their age, job type, career plans, etc.
Don’t forget the human element. Experts say offering an option for human financial support counselors is essential to success, whether it is a live chat option, teleconference, or in-person meeting. In fact, one-third of PwC survey respondents ranked access to unbiased human coaches as the benefit they’d most like to see added to their company’s financial wellness program.
Employers reduce immediate financial stress through pay on demand option
As workers find it more difficult to meet household expenses on time every month and feel strapped for cash, some employers are offering same-day pay programs to lure in new hires. A 2019 survey found that more than 60% of employees prefer immediate access to wages which can be delivered through a variety of methods including traditional electronic funds transfer or newer technologies like PayPal, Apple Pay, and Venmo.
With access just about anything on-demand these days, the traditional bi-weekly paycheck seems out of touch with the way people live. New app platforms allow employers to offer customized pay options. Employers should consider any fees involved since sometimes these fees are deducted from an employee’s pay, requiring employee approval. Before proceeding, employers should also check state and local laws to ensure compliance.
Track and measure employee engagement with your financial wellness program
It’s essential to track employee usage of your financial wellness offerings and measure effectiveness. Many employers look at benefits and payroll data to see if employees are maxing out contributions to retirement plans and taking advantage of safety-net coverage. You can also use negative indicators like 401(k) hardship withdrawals and emergency payday loans to gauge employee financial stress levels. Additionally, your business can evaluate absenteeism, productivity, and health-care costs to see if there are any signs of stress. Finally, don’t be afraid to ask your employees directly, either through conversations or polls, to find out if your financial wellness programs are a valued benefit.