As we slowly (but surely) emerge from the pandemic, many people across the country are still struggling financially. A new survey found that 26% of people believe their financial situation will get worse in 2022 and inflation is a primary concern. The other top reasons cited by those who don’t anticipate any financial improvement include the lingering effects of the pandemic, stagnant or declining wages, personal debt, and fluctuating interest rates.
For years, responsible employers have stepped in to offer financial wellness programs to workers. But given the gloomy financial outlook facing so many people in the year ahead, if you’re an employer, now might be a good time for you to revisit your financial wellness program and identify any areas for improvement or diversification.
In this article, we’ll examine some of the best practices and approaches for optimizing your employee financial wellness program.
Financial wellness can be defined as a state where one can meet routine expenses, address financial challenges, and stay prepared for financial emergencies. Financial security, financial dignity, and financial savings go hand in hand with financial wellness. Perhaps the strongest indicator of achieving a state of financial wellness is having the freedom and choice to say no to alternative financial services that are predatory in nature.
Globally, business communities are recognizing the implications of financial stress in the workplace and are turning to financial wellness programs to alleviate this type of stress. The understanding is that a financially healthy workforce is profitable for businesses and their bottom lines.
Picture a situation where it’s the beginning of the week and John is $200 short of making his monthly rent due on Wednesday but doesn’t get paid until Friday. If John is late this month, he’ll be penalized by 10% of his rent. John is financially stressed. Now imagine John coming to work in this state – distracted and constantly worrying about that $200, causing his productivity to fall. John may even consider taking the day off to make alternative arrangements for the money. The impact on the business resulting from John’s financial situation is a fall in productivity and increased absenteeism. If more than half your workforce is financially stressed, the impact is magnified.
Employees are experiencing the burden of financial stress and are looking for an employer-endorsed solution. Therefore, an employee financial wellness program is a win-win for both parties.
It’s been proven that there’s a direct link between financial anxiety and people’s ability to focus on their work. One out of every three employees admits to being less productive at work due to feelings of financial stress. And it eats into their productivity: highly stressed workers can spend about 2 to 5 hours each week trying to sort out their finances during working hours. Think about it – that’s a whole lot of time that’s not being devoted to serving your customers.
Even more concerning is that people who are distracted by personal problems are more likely to cause accidents in the workplace, even if they’re generally conscientious and satisfied with their jobs. This introduces the unwelcome prospect of legal liability for employers.
In addition to being emotionally “absent” and not fully engaged in their work tasks, many workers display increasing levels of absenteeism. Absenteeism happens when an employee starts missing work frequently or doesn’t keep to their contracted number of hours.
According to recent studies, financially stressed employees are more likely to be physically absent (not showing up, arriving late, or leaving early).
Given that common physical manifestations of stress include stomach problems, fatigue, and headaches, it’s not surprising that financially stressed people tend to take more sick days. Financial issues can also lead to people engaging in alcohol and drug abuse or suffering from mental health issues, all of which can result in them taking time off.
When this happens, it’s not unusual for the employee’s colleagues to pick up the slack, which could cause them to feel overwhelmed or even resentful. According to a study conducted by Federal Occupational Health (FOH), employee assistance programs can lead to an almost 70% reduction in worker absenteeism.
When your employees suffer from financial stress, it can affect your business’s bottom line. Financially stressed employees are more likely to quit or look for another job, which doesn’t bode well for their employers.
According to recent research, the annual cost to US business relating to staff turnover amounts to a staggering $1 trillion. When measured in monetary terms, the cost of replacing a departing employee can range from one-half to twice their annual salary. This typically comprises:
Absenteeism can decrease profitability if employees with specific roles aren’t present. Companies that have high levels of absenteeism also typically see an increase in overall labor costs. This is partly due to increased overtime pay or a need to hire contractors to fill the gap created by absent workers.
High levels of staff turnover also impact the organization in other ways. For example, related knock-on effects include poor employee morale, damaged customer relationships, and loss of brand affinity in the marketplace. Managers may also be negatively affected due to the additional burden of allocating and overseeing projects.
Offering the program is the easy part; getting employees to use it to their benefit is the real challenge. Even after human resource managers invest heavily in planning and implementation, there’s no guarantee that employee uptake and usage will be promising.
So, how can HR increase program enrollment and usage? Based on our experience, here are some tips for increasing workplace financial wellness program uptake to end financial stress in the workplace.
Employees are often unaware of the benefits offered by their company or how the benefit works because its true value was not communicated effectively. This can be fixed easily by periodic awareness campaigns of the programs offered by the company. When the tangible benefits of a program are clear, employers can count on an uptick in the overall morale at the workplace.
If employees can’t see the simplicity of a program, they may feel the benefit is not worth the trouble. Some may feel embarrassed to seek clarification and choose not to use the benefits program altogether. A short explainer video highlighting practical usage is most effective during the adoption stages.
Today, smartphones are more affordable and accessible than ever. Employees are more likely to use a benefits program they can access anywhere rather than one that requires logging into a web portal or scheduling a consultation. Whether seeking financial advice, using budgeting tools, or analyzing spending trends, employees want information at their fingertips.
Since financial wellness is a sensitive area for employees, privacy and discretion are important. Employees may hesitate to use a program to share their financial details with a person hired by their employer. A program that allows employees to use financial tools independently to gain financial resilience is more likely to be used liberally than one that requires constant interaction with a wellness guru.
While many benefits check off the financial wellness box and provide guidance, only financial wellness programs that provide real-life, actionable solutions for employees can effectively improve recruiting and retention numbers.
It’s clear that employees have the desire to improve their financial lives; what they need is a solution that reduces day-to-day money worries as well as helps prepare them for tomorrow: a holistic financial wellness solution. The good news is, Payactiv is here to help. Learn more about our offerings here.
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