This article is authored by Emily Douglas and originally published by HRD.
You could consider financial wellness to be the most important employee benefit around. However, whilst helping your employees understand and improve upon their personal financial situation is an honourable diversion, if employers don’t approach the situation with tact they could miss the mark entirely.
And, despite the fact that financial woes weigh heavy on the minds of many employees, businesses still seem unwilling or unable to discuss the taboo topic with transparency. A report form Willis Towers Watson found that just one third of employees are satisfied with their current financial situation, with money worries being cited as the leading cause of stress amongst the population.
“Employees are lingering on the job and they’re postponing their retirement,” explained Karen Hall, VP, financial education and employer services, at TE Wealth. “This hasn’t gone unnoticed by employers. If you want to move people along and help replenish top talent this can be an issue for businesses.
“On an individualistic level, poor financial wellness impacts upon employee mental health, on their stress and anxiety levels. This in turn impacts on engagement in the company, workplace morale and overall productivity. The work I do in financial education tends to be with companies and employees who enjoy a moderate to high income. When we look at low to moderate incomes across different sectors you can see they’re so much more restricted. Whilst there’s so much good work going on to help employees deal with their mental health and their worries in the workplace, in reality this is really aimed at those few higher income workers. For the lower income sub-section of the employment sphere, these worries are a daily prevalence – and one which is almost impossible to deal with.”
In fact, it’s so widespread in the lower income groups that most businesses probably won’t have the ability to help those impacted deal with the issues at hand. It’s almost as if we’re in a little box, speaking about benefits and retirement plans for high earners – but we’re ignoring an entire subsection of staff.
“There are existential issues surrounding the sudden interest in financial wellness in the workplace – but there’s no quick fix silver bullet,” added Roland Chiwetelu, consultant at TE Wealth. “Just look back at decades of incomes not matching up with inflation, of people struggling to make it on their salaries. In the past few years, especially in the developed world, incomes of the general population simply haven’t kept up with living costs.”
It’s really important for senior management to include financial wellness as part of their overall wellness strategy. This is because financial wellness feed into the other organizational-wide objectives they’ll be trying to achieve.
“If you look under the hood of Employee Assistance Programs (EAPs, almost 60% of them have a financial component,” explained Doretta Thompson, director at Chartered Professional Accountants of Canada.
“Financial stress has a huge impact on absenteeism, on productivity, on stress – so having management support the initiative is really important. I’d also advise keeping it simple, making it fair, making it accessible, and making it safe. Concentrate on those four components”
Money has, in a way, become the very last workplace taboo topic. As Thompson quipped, people are more likely to talk about their sex lives than their personal finances. This silence presents a big challenge for companies.
“There’s research saying that people who take on financial difficulty can take up to five years to reach out and ask for help,” she told HRD. “That often means it’s incredibly difficult to resolve the situation. Organizations need to educate employees on the warning signs of financial worries, of how to ask for assistance and give them the confidence to talk about money in a reasonable and transparent way.”
So, what can be done? There’s no simple answer to the problem – and certainly no monetary one that smaller organizations can proffer. Hall suggests coming at this from a preventative rather than curative approach, encouraging Millennials to look for careers which offer financial wellness as part of their benefits packages.
“I always tell young people coming into the workplace to look for the job with the pension plan,” she told us. “Millennials rarely think about that when first starting in a role, but it’s a lot of extra compensation that would come in helpful down the line. Contract workers, on the other hand, won’t enjoy many – if any – of these benefits.”
And despite the prevalence and widespread nature of this problem, leaders are only just beginning to debate the problem.
“It’s becoming trendy, right now,” added Hall. “The whole wellness aspect is being brought up in conferences all the time. We need to talk about financial wellness as a continuum. It’s the state of being verses the employer’s choice. Will they give them financial education? Will they increase their employees’ financial literacy by providing that education? How can leaders proactively help staff improve their finances?
“This gives them the comfort and the confidence to make personal changes to help improve their overall situation. This allows them to be better prepared for an emergency, work through sudden life events and enjoy a flexible lifestyle with their finances.
“A company that has a zero percent pension plan, where employees must put int heir two per cent before they will, is a tad discriminatory against low income people. Those earning less simply aren’t able to do that. Companies really need to step back and think about what their purpose is. Illness, for example, can lead to a huge financial set back. Whether that’s personal illness or having to say to care for sick or elderly relatives. Single parents are also incredibly vulnerable when it comes to financial wellness.”
In a sense, it’s like we’re slicing and dicing benefits. It’s wonderful if a company can afford to supply an impressive perks package, but smaller business will have a more difficult time of navigating this perk. So, where do we go from here – should you want to roll out your own financial wellness platform?
To begin with, it’s always a good idea to ask your employees when at they’d like and need. Ensuring inclusivity of the voices is also incredibly important so that you have a fair and diverse opinion base.
“When you’re developing your program, begin with asking people what they need,” continued Thompson. “In the past, employers thought when they made the switch to defined contribution pension plans that employees didn’t want them to provide any information or education around financial literacy. However, the data shows this is just not true – they do want them to play a role.”
Oganizations could consider developing an annual program which offers sessions and practical guidance; issues such as recognizing debt, planning for retirement, having a financial safety net.
“Try and have a discussion with your employee group,” agreed Chiwetelu. “You could poll surveys with your staff to see how they feel about implementing a financial wellness strategy. The answer will most likely be yes – employees are very keen on this type of workplace education. From the same survey, you can also glean what the hot topics are around benefits. Ask how they would like to receive the education.
“Are they more likely to want a group seminar? Would they prefer individualized talks? These are all important factors to understand.”