The American economy continues to struggle and employees across all socioeconomic classes need help to meet ordinary recurring expenses.
Over half the people participating in a recent CBS News poll said they’re concerned about their ability to afford month-to-month expenses. Other recent concerning statistics related to consumers’ current levels of financial stability include:
Even high-income households are unable to save, resulting in approximately 25% of Americans with no emergency savings. For these individuals, even the slightest unexpected financial emergency can be devastating. When brought to the workplace, this stress leads to escalating costs for the employer due to lower productivity and engagement, absenteeism, workplace injury, the rising cost of health insurance premiums, high costs of turnover, and attrition.
According to a recent article published in Forbes, business leaders continue to grapple with a host of challenges, including variants of COVID-19, financial instability, climate events, labor shortages, wage inflation, and supply chain disruptions. Acknowledging the effects of these events on their employees, they’re rethinking work, compensation and benefits, career path opportunities, and employee wellbeing amid what many continue to call the Great Resignation.
As part of this effort, employers should consider what they can do to help ease their employees’ levels of financial stress. Indeed, HR departments are increasingly citing incidences of employees approaching them for a pay advance or financial advice. It’s also been proven that distressed workers face numerous difficulties when they use alternatives such as often-predatory financial services and payday loans, which only lead to increased stress and trouble for people and employers alike.
Clearly, there’s never been a better time to consider implementing a company financial wellness program.
Implementing an HR benefit program for employee financial wellness enables the department to become a trusted partner for employees. It also lessens 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.
Financial wellness programs provide employees with information, coaching, and support to better equip them to manage their day-to-day personal financial challenges and concerns.
Financial wellness programs might include online, telephonic, and even in-person counseling and workshops to address some or all of the following aspects of financial education and wellness:
Here are some of the positive outcomes that a well-executed company financial wellness program can deliver:
According to the Society for Human Resource Management, financial stress leads to a 34% increase in absenteeism and tardiness among workers. Corporate financial programs that address common sources of financial stress such as credit card debt and student loans can ease this burden. They can also help people get better at financial planning, managing their household budgets, and setting up savings plans – all of which give them the sense that they’re taking back control over their finances and their lives.
Did you know that 70-95% of doctor visits are linked to money-related stress and that workers who worry about money miss two times more days per year than employees that don’t experience this kind of stress? Financial wellness programs can help curb people’s levels of finance-related health ailments, reducing the need to take extended absences from work.
When people are worried about how they’re going to pay their bills or feed their families, they’re not going to be 100% focused on their work. For example, workers who experienced increased financial pressure during the pandemic were four times as likely to admit that their finances have been a distraction at work.
Financial wellness programs can help reduce financial-related stressors and distractions that negatively impact employees’ ability to focus and concentrate.
People will feel better about themselves – both personally and professionally – when they have tools at their disposal that help set them up to achieve their financial goals. These goals might include establishing a rainy-day savings fund, reducing or eliminating credit card debt, putting money aside for a child’s college tuition, or saving for retirement.
When people finally get rid of the cycle of debt and financial stress and feel they’re making meaningful steps towards financial freedom, they are happier in their workplaces and more engaged at work.
Financially stressed employees are more likely to look for a new place of employment. That’s because, too often, they believe that taking a job where they can earn a bit extra will put an end to their financial woes.
Many financially stressed employees seldom take the paid leave days they’re due simply because they can’t afford to pay to travel or for the other expenses typically associated with a vacation. Over time, this can take its toll in the form of burnout.
A corporate financial wellness program that teaches people how to budget sensibly and set money aside for short-term goals (such as saving up for an annual family vacation) puts them in a position where to fully enjoy their paid leave benefits and take time off now and again to recharge.
While company financial wellness programs have been around for decades, they continue to evolve and adapt to meet the changing financial challenges and stressors plaguing many workers. As we’ve explored, they’re moving well beyond the employer simply contributing to their employees’ retirement accounts.
Now, there’s an increasing need for companies to include technology-enabled personal financial services, products, and support in their employee benefits packages.
In a tight labor market, it’s a smart strategy for attracting and retaining great talent and an effective means to help people achieve their personal goals and participate fully in work and life.
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 when they need funds and can independently 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 turnover costs and enjoy greater retention by addressing financial distress.
As we touched on earlier, 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.
Payactiv is the leading provider of Earned Wage Access service that helps employees manage day-to-day finances and bills without taking loans.
Our app provides a holistic approach to financial wellness and education with services that help build financial resilience by saving towards short- and medium-term goals. Our integration with leading HCM, Payroll, and T&A providers makes it simple to offer a comprehensive financial wellness benefit to employees at no cost.
Payactiv makes it easy to access, plan, spend, and save to live today with dignity while building financial security and savings for tomorrow.
Learn how Payactiv’s financial wellness program can work for your company.
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