The American economy continues to struggle and no one is immune. Employees across all socioeconomic classes need help to meet ordinary recurring expenses. More than 25 million middle class Americans are living paycheck to paycheck, according to a 2014 report by Tami Luhby. Even high income households are unable to save, resulting in approximately 25 percent of Americans with no emergency savings. For these individuals, even the slightest unexpected financial emergency can be devastating. This stress, when brought to the workplace, leads to escalating costs for the employer due to lower productivity and engagement, absenteeism, workplace injury, rising cost of health insurance premiums, high costs of turnover and attrition.
Human resources (HR) departments are aware of this phenomenon and understand the impact it has on employees and the company as a whole. In a recent survey by The Society for Human Resource Management/Elevate, 53 percent of HR professionals polled said that an employee approached a company representative for a pay advance in the last year, and 47 percent said that employees approached a manager or supervisor for personal financial advice in the last year. It has also been proven that distressed workers face numerous difficulties when they use alternatives, often predatory, financial services, which lead to increased stress and trouble for organizations.
There is something HR can do to help employees relieve some of the financial-related stress while also relieving HR from its overwhelming administrative burden. Implementing a HR benefit program for employee financial wellness enables the department to become a trusted partner for employees. It also lessons the burden of cumbersome day-to-day administrative responsibilities that prevent your team from concentrating on your organization’s growth plans while supporting your human capital strategy of attracting, growing and retaining employees.
Today’s financial wellness programs are innovative, fiscally responsible, and enable workers to empower themselves while the company benefits from higher employee engagement resulting in increased profitability. With an employer-sponsored financial wellness program, employees can access earned wages just when they need funds, and are independently able to build a personal, workable pathway to financial autonomy and savings. Products and services altering the timing of distribution of wages help employees smooth their consumption and better meet their spending needs while avoiding alternative and costly methods of accessing cash. An employer-sponsored financial wellness program also establishes HR as a forward thinking department that is an employee advocate and a change champion.
Promoting financial wellness in the workplace allows employers to incur greater profitability, and curb lost productivity due to absenteeism. Employers can also curb high costs of turnover and generate goodwill by addressing financial distress and experience greater retention and loyalty.
Employees who are at work not worrying about money, or how to balance their expenses are likely to be more focused and productive. If an immediate cash need arises, access to earned but unpaid wages is simple, powerful and an effective tool that employers can offer to their most valuable asset, human capital.