What Covid-19 Has Taught Us About Financial Wellness
PwC recently released data from its 2019 Employee Financial Wellness Survey.
Here are some of the highlights:
59% of employees said financial or money matters is the top cause of stress.
Employee loyalty to a company depends on the company’s consideration and commitment to the financial wellness of its workforce.
81% of Millennials, 75% of Gen Xers, and 52% of Baby Boomers will find a company more attractive if it cared more about their financial well-being.
But financial wellness can also have repercussions beyond employee loyalty.
Poor financial wellness, according to SHRM is the number one cause of lost productivity, excessive unplanned absenteeism, workplace distractions, and lower job performance. The financial wellness of your employees is your problem. And the COVID-19 pandemic has further aggravated this.
More employees today are concerned about their financial health, more than they do about their physical and mental health. And according to HR Executive, most of these employees are looking to their employers for help. Employers need to adapt their programs through the coronavirus pandemic to properly address employee financial wellness challenges. But how can they do this?
Get interested in the facts
You only know what happens when you start to listen.
As much as 78% of the workforce today lives from paycheck to paycheck, according to a Career Builder survey. Some are drowning in debts from student loans to other expenses. Many employees have little to no plans for the future with only 41% considered well on track or close to retiring by age 65. The shutdown, amidst government response to the COVID-19 crisis, seems to have further exacerbated the condition for more employees.
Employers who want to help their workers improve their financial profile should start by actively listening and studying their employees to know what’s causing their financial stress. This can mean creating a survey based on a focus group with diverse backgrounds and lifestyles to get an accurate picture of employees’ financial health.
Develop a comprehensive plan
Financial wellness is a broad term and your plan should be as comprehensive as it can.
Your financial wellness plan should reflect not just your vision and objective but also the needs of your employees. These needs could include planning for the future or emergencies, being able to live within one’s means, or making smart money decisions, among other things. All of these should help you define what financial wellness means for your company, with respect to your employees. These needs, along with your vision and objectives should, therefore, be ingrained into your overall employee development programs for maximum effectiveness.
Promoting financial literacy and education
Research has also shown that improving financial literacy can help improve not just an individual’s financial well being but also decrease their emotional stress and anxiety. Employers have to understand the importance of helping employees improve their financial literacy to gain the confidence to make better financial decisions.
But most employees are impulsive and tend to spend based on the moment. This makes things more complicated than just teaching employees how to budget or manage their finances.
The approach should be employee-centered and should be tailored to employees’ existing habits to make it work. According to an Entrepreneur piece by Steve Clements of Willis Towers Watson, any such approach should involve:
Identifying and considering employee priorities;
Selecting the relevant financial tools for your workforce from apps to websites, financial advisors, etc; and
Setting pre-agreed boundaries such that while employers get to help employees improve their financial literacy, the employer’s actions are not seen as intrusive or being over-involved in employees’ personal situations.
Additionally, the approach should also be targeted, providing employees with focused guidance without overwhelming them with too much information.
The coronavirus outbreak has further dealt a great blow on employees’ financial wellness. According to HR Executive, two out of three employees report feeling stressed now before the COVID-19 pandemic began. Employees’ financial well-being should be a priority now for employers more than ever. Employers will be able to get the resources and opportunities they need to be at their best. Employers will also benefit from the improved productivity and other direct benefits of a financially healthy workforce. For everyone, it’s a win-win!