As an employer, you are probably aware that employees are experiencing higher and higher levels of stress. Unfortunately, this is affecting employees’ ability to be present and productive in the workplace.
And what is one of the main causes of stress? Money woes.
In fact, a State Street Global Advisors (SSGA) survey found that nearly 60% of employees are emotionally stressed and distracted by their financial situations. But what specifically is causing this stress and more importantly, what can you do about it?
For many, stress is caused by not knowing where to start. A survey commissioned by Financial Planning Standards Council (FPSC) evaluated the financial habits of Canadians. The survey found a significant number are turning a blind eye to their personal finances due to confusion, a lack of knowledge, or simply being overwhelmed.
Therefore, implementing an employee financial wellness program is a great place for employers to start helping their team members.
Promoting Financial Wellness in the Workplace
Financial planning starts with the basics: Reducing debt, protecting ourselves and our loved ones, setting dollars aside to weather a financial emergency, and saving towards life goals.
Financial protection and regular savings are the first two building blocks of the financial pyramid. They are critical in laying the foundation for financial success. However, much of the current discussion around financial success centers on investing.
When it comes to investing, many people are confused by all the terminology involved. But more importantly, many feel ashamed that they are still struggling with the basics. A recent survey by the Canadian insurer, Manulife, found that for many, emotional barriers are blocking their path to financial literacy.
What Employers Can Do to Help
Since emotional barriers are interfering with financial success, how can employers help? Corporate culture is key. Let your people know that they are not alone and that help is available. In addition, employers can develop a variety of programs to help employees take small steps to improve their financial and mental health.
Employee Assistance Programs
Education around interest rates, consolidation loans, debt counselling, and structured repayment programs can help those who are struggling with debt.
Guidance can be provided through an employee assistance program (EAP), which protects privacy. EAP’s often form part of a strong health plan offering. For broader financial advice, employers may want to enlist the help of advisers by inviting them into the workplace, or offering subsidised sessions.
Workplace Savings Plans
Along with debt reduction, protection for oneself and one’s family is a foundational step toward financial success. Many Canadian employers assist employees in this regard by providing insurance coverage through workplace benefit plans.
Once debt is tackled and insurance protection is in place, a holistic strategy needs to address more long-term financial concerns. A study by the Social Market Foundation and Neyber found that 48% of workers are not putting any money aside for anything beyond their regular bills. Almost one-third have no savings or investments at all.
This means there's very little financial resilience in the face of the unexpected. This lack of financial resilience is unfortunately universal among employees in industrialized nations.
A workplace savings plan can help employees build a savings safety net. However, these plans tend to be overlooked for a couple of reasons:
- employees often use them for short term goals.
- employers may see them as administratively burdensome.
The good news for employers is that workplace savings plans can be part of a taxable wellness account, or be set up as a stand-alone account with a current service provider.
Once an employee has met their emergency savings goal, they can use these plans to start saving for longer term life goals such as home ownership, children’s education, or adventure travel.
One additional idea which helps staff save money on a variety of things, including Christmas presents, and groceries through providing supermarket vouchers, is an employee discount program.
Employer Sponsored Retirement Plans
For the longer term, individuals with robust retirement savings are far less likely to suffer anxiety about their financial position in the future. As part of a corporate financial wellness program, employers can consider offering Group Retirement Savings Plans or Pension Plans.
You can help increase savings and enrollment in these plans by offering automatic enrollment and employer matching contributions. In addition, these plans provide education about investing, which helps to further reduce money related anxiety.
Helping employees tackle the basics of financial planning in easy-to-take small steps will reward progressive employers with greater productivity. In addition, this does not need to break the bank. It can be simple, cost-effective, and according to a study by Barclays, if it succeeds in eradicating financial anxiety in the workplace, it could boost productivity by 4%.