The FinTech industry is devising new ways for companies and organizations to help employees overcome financial stress while stemming business issues, like excessive absenteeism, lower productivity and high turnover. The most impactful approach to combat this financial stress and achieve measurable business benefits is to provide timely access to earned wages.
Todd H. Baker and Snigdha Kumar of Harvard Kennedy School in Wall Street Journal op-ed based on their recent working paper:
“…research also found that such employer-sponsored financial products may improve employee retention, with turnover rates 19% lower among users of PayActiv.”
Employee Financial Wellness Key to Productivity
Mitigating stress of any kind, especially financial stress, enhances wellness. Companies across the country and globe are taking the financial wellness needs of their workers seriously by offering benefits to enhance financial wellbeing. In the process, companies are helping their employees and themselves with benefits such as a more engaged, productive workforce.
A majority of workers need enhanced cash flow to pay their living expenses. Many do not have enough money after expenses to open a bank account, qualify for a credit card, establish a credit history, or manage unexpected financial emergencies. As a result, many workers turn to alternative financial services, such as expensive payday loan that is predatory in nature.
Financial stress is at epidemic levels. According to the Consumer Financial Protection Bureau (CFPB), seven out of ten American workers report financial anxiety as the most common cause of stress. Individuals struggling with income insecurity often suffer from chronic physical and mental health issues. This compromises employee focus, productivity and retention, increases frequency of workplace accidents, stagnates career progress, and hurts families.
What Employers Can Do
If more than half your company’s workforce is financially stressed, the implications for the business are significant. According to Mercer’s Inside Employees Minds Survey, companies lose over $250 billion annually. About 5% of the total annual payroll. On a per employee basis this is an average of 13 hours and as much as 20 hours lost per month worrying about financial issues. Even at minimum wage this amounts to $200 every month.
According to Mercer’s Inside Employees Minds Survey, on a per employee basis an average of 13 hours and as much as 20 hours are lost per month worrying about financial issues.
Offering holistic financial wellness, on the other hand, can empower workers with the ability to handle routine expenses, address financial challenges, and stay prepared for financial emergencies – without incurring debilitating debt. Globally, the business community is recognizing the implications of financial stress in the workplace and is adopting financial wellness programs to give workers early access to their earned wages to enhance cash flow and alleviate financial stress.
When employees have a greater sense of control and ownership over their lives, they feel more motivated, less stressed at work, and have better relationships with their employer. This leads to increased productivity and reduces the number of stress-related issues on the job.