What HR Professionals Need to Know About Organizational Financial Wellness
Most organizations try to prioritize employee wellness and understand that holistic employee benefits are important to prevent turnover. But unfortunately, most of us are missing a crucial ingredient: financial wellness. As a human resource professional, you know that good physical health is important for employees and you help prioritize it through health insurance offerings and exercise incentives. You also know the importance of addressing mental health issues through Employee Assistance Programs and other services. But somewhere along the way, financial health got lost in the shuffle.
But when it’s done correctly, organizational financial wellness options benefit both the employer and individual employees. Here’s why it’s important for your organization to prioritize employees’ financial wellbeing.
1. Stay ahead of the curve
In many ways, financial wellness programs are at the same stage physical wellness programs were twenty years ago. Remember when smoking cessation programs and weight loss incentives were cutting edge perks? Today, those programs are standard employee offerings.
In the 1990s, the federal government launched an initiative called Healthy People 2000 and set a goal that was ambitious for the time: 75 percent of employers with 50 or more workers should offer health promotion services as a benefit by 2000. This was the start of employee health benefits as we know them. It’s important to understand how employee wellness programs progressed because financial wellness programs are on a similar path.
But there’s a big difference between then and now — employee expectations have changed and markets are more competitive thanks to unprecedented job market growth. Because of this, employers need to increase employee engagement and retention in a competitive market. Plus, it’s getting harder to attract and keep millennials who are notorious for job hopping. In other words, your company cannot afford to sit on the sidelines and wait for financial wellness benefits to mature.
2. Increase employee focus and health
According to a recent survey from Bank of America Merrill Lynch, 86 percent of employees are somewhat or very likely to take part in financial wellness programs if offered. But even though most employees are interested in financial wellness benefits, less than half of employers actually offer them. There’s a huge disconnect between what employees want and what employers are offering, but the issue is actually more complex than benefits offerings; it’s about employees’ mental health.
That same Bank of America Merrill Lynch survey shows that 62 percent of employees do not feel financially well. But perhaps even more disheartening is that 45 percent of employees said that their finance-related stress had increased over the last twelve months. Across workers of all generations, 24 percent say their personal finances have been a distraction at work, and for workers who are already worried about their finances, 39 percent spend at least three hours each week either thinking about or dealing with financial problems at work.
Whether organizations like it or not, employees bring their financial stress and anxiety to work and it’s affecting their jobs, which is a legitimate concern for employers. But employees aren’t happy with the way things are either, with 40 percent of employees saying that they want help in achieving financial security. That number is much higher (81 percent) for employees who think that their financial problems have affected their productivity at work.
But here’s the good news — financial wellness benefits decrease financial stress and as a result, increase productivity. And perhaps even more importantly, these benefits help foster loyalty between employees and their employer.
3. Save your organization money
Even though the number of companies that offer financial wellness benefits continues to increase, there’s a major problem with current implementations: most organizations do not have formal measurements of success.
Without formal measures of success, it’s impossible to know whether financial wellness benefits are actually beneficial. But here’s the deal — you can measure success in a multitude of ways. Your organization might choose to define “success” as a 30 percent decrease in employee 401(k) loans. This measure of success would benefit both the organization and employees. The company would save money on loan processing fees and individuals would make sure they are ready for retirement and not borrowing against their future selves.
In order for your organization to successfully add financial wellness benefits, it’s critical to clearly define and track measures of success. Some measures of success that you may choose to consider include fewer wage garnishments, less absenteeism, increased participation in health savings accounts and 401(k) contributions, fewer payroll advances, or improvements in job performance. The best measures of success take into account both employer success (such as decreased expenses) and employee success (such as increased retirement contributions).
4. Use specific financial benefits to attract top talent
As SHRM.org recently reported, 52 percent of workers are stressed about their finances and 64 percent of millennials report the same. Thanks to ballooning student loans and other unique generational stressors, millenials and post-millennials are disproportionately worried about their finances compared to other generations. This is important for employers to note because these generations now make up 40 percent of the workforce and that number will continue to increase.
As you think about what type of financial wellness program will work best for your organization, you might want to consider student loan repayment benefits. Financial wellness programs that include student loan benefits are an excellent way to attract top talent. Modest contributions to millennials’ student loans can increase quality of applicants, decrease cost to hire, and cut attrition. And here’s the kicker — only 4 percent of employers offer this benefit, according to SHRM.org, so it’s a great way to set yourself apart from other companies while genuinely helping employees.
Plus, you’re likely to see a strong ROI on the benefit. According to a study from HR.com, millennials are willing to stay at a job 36 percent longer (an extra 1.3 years) when employers offer student loan repayment benefits. In addition, millennials prefer this benefit two times as much as they prefer 401(k) contributions and seven times as much as they prefer free office food.
With as little as a $100 per month match, employers can help reduce the overall time of an employee’s student loan repayment by three years.
Financial wellness is going to look different for every company. In fact, there isn’t even an agreed‐upon definition of what financial wellness means. At its core, financial wellness is a comprehensive approach to impacting and improving an employee’s overall financial health. Your goal is to find an offering that works for your organization and your employees. Because when you do, it’s the greatest win-win.