When you think about employee wellness, physical wellness comes to mind and possibly emotional and/or social wellness.
Given the cost-of-living pressures we are all experiencing, personal financial wellness is an acute concern right now for employees.
So is there anything you as an employer can do to highlight your employee’s financial wellness especially given that the impact is mostly from external factors?
What is employee financial wellness?
How do most employees define their financial wellness? Usually, it means freedom from uncontrollable debt and being prepared for unexpected financial emergencies. A lack of financial wellness means large debt accumulation and living payday to payday.
From employees’ perspective, a lack of financial wellness isn’t as simple as someone having spending problems. At each stage of life, employees may encounter major expenses; some of which are unexpected – e.g.
- Elder care or any other supplemental care for a loved one
- Healthcare expenses
- Unplanned home or vehicle repairs
The other aspects of wellbeing, especially physical and social health, can have a serious impact on an employee’s financial wellness. An employee struggling with financial wellness may also find it affects their relationships or causes stress-related physical health problems.
The facets of wellbeing are interrelated; all of which can determine an employee’s financial wellness. Often, financial challenges are cyclical – i.e. as soon as one is resolved, another one arises.
Why is employee financial wellness a concern?
Financial wellness is an important concern for employees today, with ominous signs ahead:
Inflation has not only increased the costs of goods and services but has increased interest rates as well which means employee’s spending power is diminished.
Economic uncertainty continues to cast a cloud over the near future. Some workers may question how this could impact their company, leading them to worry about their job security and how they’ll meet personal financial obligations if they lose their job.
Recently, PwC conducted its annual survey about the financial wellbeing of full-time employees in the United States… the findings could be said to represent findings of any such survey in Australia:
- 57% of employees cite financial stress as the number one cause of stress in their lives.
- Nearly 1 in 3 employees run out of money between pay days.
- 53% of employees are most worried about expenses increasing.
- 44% of employees report inflation has severely impacted their financial situation over the last year.
- 49% of employees find it difficult to meet basic household expenses on time each month.
- 59% of employees feel their wage has not maintained pace with the rising cost of living.
Financial stress extends to employees of all income levels. Even among employees earning at least $100,000 per year, 47% are stressed about their finances and 15% run out of money between pay days.
Impacts of poor mployee Financial Wellness in the workplace
All this financial stress and worry don’t exist in a vacuum. It can impact every aspect of an employee’s home life and wellbeing, including self-esteem, mental health and personal relationships. These employees may also experience more physical health problems associated with lack of sleep, proper nutrition and exercise.
Inevitably, financial stress also spills over into the workplace. Employees can have a hard time focusing on work when their personal lives are chaotic. When employees struggle in one area of their lives, it has implications for everything else.
The PwC survey found that financially stressed employees are five times more likely to say personal finance issues have caused distractions at work.
Employees who are fixated on their financial situation are:
- Less engaged
- Less productive
- More likely to seek another, higher-paying job
- Why employees’ financial wellness matters to employers
Focusing on employees’ financial wellness isn’t a fluffy, feel-good initiative. It’s an investment in your business’ long-term success and growth.
Employees who are fixated on where their next dollar is coming from and how they’ll pay the bills likely aren’t spending much time thinking about quality work, good service and professional growth and development.
You’re not getting their best efforts.
You don’t want a distracted and stressed workforce that produces sub-optimal output and interacts with customers in a less-than-desirable way. Nor do you want to continually replace people who leave for a better salary – it’s costly and time consuming to recruit and train new employees.
However, solutions that worked in the past may not be sufficient for the challenges of the present and future. Right now, against a backdrop of economic uncertainty, employers are faced with a hyper-competitive job market and evolving employee expectations and demands in the post-COVID workplace
Responding to these factors have exerted upward pressure on wages and employers must strike a balance between:
- Keeping an eye on economic headwinds that are causing inflation that outpaces wage growth
- Controlling budgets and managing the bottom line
- Considering how to attract and retain talent.
As an employers, you need to always validate your business’ remuneration strategy to ensure it remains competitive. However, increased salaries may not always be feasible.
So, what else can be done to help employees navigate these unprecedented times and work through their personal financial issues so they can focus on their jobs – e.g.
- Provide solutions to employees so they can focus on their jobs.
- Equip them with the specific tools they need.
- Direct them to the right resources at the right time.
If done thoughtfully, you can build a loyal, engaged workforce that serves a loyal, engaged customer base.
How to enhance financial wellness in employees
1. Adopt a culture of wellness
To maximise the potential of their people, the very best employers look at the whole health of each employee and their family members. This is what a culture of wellness is all about. To start, recognise that:
- Every aspect of employee wellbeing is interconnected. – i.e. if one aspect of wellbeing suffers, it touches everything else.
- Employee wellbeing impacts the whole workplace.
- It is your responsibility as an employer to proactively address employee wellbeing.
The five pillars of employee wellbeing which should be addressed to address employee well-being in the workplace are:
2. Look beyond their wages
To provide robust benefits and services to employees at all stages of life, consider adding the following options to your benefits package:
- One-on-one financial coaching
- Educational resources to support financial literacy
- Connection to free resources who can help employees find certain services within their budget, such as childcare or elder support
These services are often provided through an employee assistance program (EAP) or can be provided as standalone services. Financial advice is one of the little-known benefits of EAPs!
Although technology can aid in finding resources, some employees may prefer a live professional with whom they can interact and ask complex questions.
Some retirement plans offer access to financial professionals, but employees may appreciate the option to obtain advice from an objective source who does not earn commissions on financial transactions.
You may also consider providing periodic education – workshops or webinars – hosted by outside professionals that are focused on finances and money management.
3. Drive awareness of available resources
Your benefits won’t deliver much value if few know about them and use them. Make sure employees are aware of the total rewards – all the available benefits, including financial wellness services – that you provide to them.
How can you do this?
- Emphasise this in your employee onboarding.
- Communicate regularly with employees.
- Find vocal, influential employees and encourage them be conduit to rest of the organisation in spreading awareness.
4. Work to reduce stigmas
Fortunately, employees’ embarrassment around seeking help with financial issues is decreasing. Still, combat any existing hesitancy that may exist among employees in using your company’s financial wellness services – e.g.
- Have leaders set the example
- Share stories of how the services have helped leaders and colleagues, even in ways that many employees may not have considered.
- Remind employees these are widespread challenges impacting most everyone and covering diverse issues – “we’re all in this together”
- Assure employees the services are confidential.
Summing it all up
The current environment has placed extreme financial stress on employees, which can not only diminish their physical, mental and social health. It can impair their professional performance in the workplace.
Employers can no longer view personal and professional challenges as separate – instead, competitive employers of the future understand the negative impacts on business of ignoring employees’ financial wellness.
They’re creating a culture of wellness and providing resources that aim to reduce this significant stressor in employees’ lives so they can focus on their jobs.
Akyra can provide information on employee assistance programs that are a cost-effective option for your employees to address all facets of employee well-being.
Akyra’s Key Takeaways
- Employee financial wellness is defined as the state of being free from uncontrollable debt and prepared for unexpected financial emergencies. It involves avoiding large debt accumulation and being able to handle major expenses, some of which can be unexpected, such as childcare, healthcare expenses, elder care, divorce, and unplanned home or vehicle repairs.
- Financial wellness is a significant concern for employees due to various factors like inflation, economic uncertainty, and increasing living expenses. The PwC survey cited in the article reveals that financial stress is a top cause of stress in employees’ lives, affecting their ability to meet basic household expenses and leading to distractions at work. Even high-earning employees can experience financial stress, and this stress can impact every aspect of their lives.
- Employee financial wellness matters to employers as it directly affects employee engagement, productivity, and retention. Financially stressed employees are less engaged, less productive, and more likely to seek higher-paying jobs elsewhere. Employers need to address this issue by providing financial wellness solutions, tools, and resources to help employees navigate their personal financial challenges, ultimately creating a loyal and engaged workforce.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not intended to be legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.