As the Covid-19 pandemic subsides, more companies are realizing a need to prioritize employee financial wellness.
Studies have found a direct correlation between financial stress and workplace productivity. In fact, financially stressed workers are 5.8 times more likely to miss deadlines, and 4.9 times more likely to produce lower quality work.
It's not easy when more than three-quarters of full-time workers in the U.S. are living paycheck to paycheck. By offering financial wellness initiatives, HR personnel can enhance the employee experience and accelerate staff engagement. Financial wellness is more than budgeting seminars, however.
While non-wage compensation options such as emergency funds, financial planning, and tuition and student loan assistance should be a standard for employees, it's also important to consider more radical strategies like providing on-demand pay that gives workers the chance to collect a paycheck after each workday.
Are financial wellness programs truly worth the investment? And if so, how can HR departments help? Let’s take a look below.
HR personnel often focus on enriching the employee experience in order to forward the company’s goals, creating a mutually beneficial relationship. However, HR departments can only do this when they have a clear understanding of the workforce.
This can require certain skills that are often taught early on in training programs and educational courses. Human resource specialists in business are trained in identifying staffing needs and employee programs. This allows managers to adjust according to what employees need beyond healthcare and 401(k) plans, while optimizing company performance.
For example, fewer than four in 10 Americans could afford a $1,000 unexpected expense. With the third most desired benefit, on-demand pay services, an employee that has incurred such unexpected expense can immediately request to get paid for that day or for the days since they were last paid. This allows employees to avoid paying higher prices for short-term loans, effectively falling into a debt trap that cost $255 billion in 2020 on fees and interest.
It's only when supervisors make the necessary tailored adjustments that employee financial wellness can be fostered. This allows both the worker and the company to transition and make it through stressful financial moments.
More companies have become aware of the importance of developing financial literacy training programs for employees, especially in light of global phenomena like the Great Resignation. Burnout, lifestyle changes, higher pay, and better benefits were commonly cited reasons.
Offering training programs can reduce employee turnover, which has increased by 117% since 2013. Retention would save U.S. businesses more than $630 billion annually, or $1,000 to $5,000 for every new employee. This is where HR teams and companies come into play.
HR managers and supervisors can use the data from earlier consultations. With employee wellbeing, satisfaction, and productivity in mind, HR can create financial literacy training programs customized to specific needs. This can include coaching, seminars, workshops, and leadership mentoring — helping employees plan ahead to lessen future financial burdens and maintain financial wellness.
Despite the best efforts to foster open communication, 50% of financially stressed employees are still hesitant to ask for help with their finances. This is where the benefit of technology shines. Digital platforms — giving workers access to unbiased, relevant content — offer a level of privacy that other educational methods like public workshops or presentations can't.
At the same time, these can provide a level of efficiency that processes company transactions like HCM and payroll at a mission driven rate. With no changes to your client’s payroll process, it is on-demand pay services like our Clair On-Demand Pay that helps clients reap the benefits of having financially healthy employees — all while never charging for wage advances.
High profile users such as PayPal and Walmart are already utilizing this emerging financial wellness tool and the results definitely show. A report on finances and wellbeing reveals that 74% said financial wellness tools reduced their stress. This works hand-in-hand with available HR counselors to answer more complex financial concerns, and help employees improve their financial health over the long haul.
Financial concerns are a normal part of life for employees and even companies. Too much, however, can tip the scales over to overbearing stress that will impede employee potential. Make it a mutual goal to create a healthy financial lifestyle, with human resources as the in-between guide to properly manage financial wellness.