Employee financial wellness has a significant impact on their productivity, retention, and mental health. The 2022 PwC Employee Financial Wellness Survey reveals that financially stressed employees are twice as likely to be looking for a new job and to be attracted to companies that care about their financial well-being. The survey also found that compensation is the number one reason why employees quit, according to a recent SHRM survey. In this blog post, we'll discuss how you can optimize your compensation strategy and improve employee financial wellness through best practices.

Insights from the 2022 PwC Employee Financial Wellness Survey

The PwC survey highlights the impact of financial stress on employees' productivity and mental health. Almost half of the financially stressed employees say that money worries severely impacted their mental health, and 76% say it had a negative impact on their productivity, with 1 in 4 saying the impact has been severe. The survey also found that financially stressed employees are more likely to use credit cards to pay for monthly necessities and to use payday loans. To address these issues, employers should prioritize employee financial wellness and offer financial education and support programs.

Shifting to a Total Compensation Mindset

Compensation is a crucial factor in employee retention. According to the SHRM survey, most organizations would need to increase compensation by 8-10% to address turnover. However, a total rewards package that includes benefits outside of compensation can be an effective way to improve retention and employee financial wellness. SHRM recommends providing a total rewards statement that includes benefits such as the company's contribution to health care costs, 401(k) matching, and tuition reimbursement. Increasing transparency and communicating that your total rewards package, including base pay, variable pay, health benefits, life insurance, retirement plan, and paid time off, is at or above market can also help.

Understand Employees Needs with a Financial Health and Literacy Questionnaire

Financial literacy is not one-size-fits-all, and employers should tailor their financial wellness programs to address employees' specific needs. A questionnaire or survey can help you determine what your employees need. Based on the results, you can customize your program to address the needs of the majority. The OECD questionnaire is an excellent example of a comprehensive questionnaire that can help you gather insights. You can also use a free service like Google Forms to conduct the survey.

In conclusion, employers can improve employee retention, productivity, and mental health by prioritizing employee financial wellness. Employers need to shift focus into a total rewards mindset, and understanding employees' needs through a financial health questionnaire can help you develop effective financial wellness programs that benefit both employees and employers.

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