As an employer, you are probably aware that people are experiencing higher and higher levels of financial stress. Unfortunately, money worries affect how present and productive employees are in the workplace and their job performance.
And what is one of the main causes of stress? Money woes.
The National Payroll Institute reported a 20% increase year-over-year in the percentage of workers categorized as 'financially stressed,' bringing the overall total to 37%. Workers frequently find themselves preoccupied with financial concerns during their work hours, leading to a significant estimated productivity loss of $45 billion for employers. In today's economic climate, businesses are increasingly recognizing the importance of supporting employee financial well-being as a part of their overall benefits offerings.
So what specifically is causing this stress, and more importantly, what can you as an employer do about it?
The major causes of financial worries nowadays are:
Unfortunately, younger Canadians are affected the most by financial difficulties. 72% of younger Canadians say that financial stress has had at least one negative impact on their lives, compared to less than half (48%) of those over 35.
Implementing an employee financial well-being program is a great place for employers to start helping their team members.
Financial well-being starts with the basics of financial planning: 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 centres on investing.
Many people are confused by all the terminology involved in investing. But more importantly, many feel ashamed that they are still struggling with the basics. An interesting survey by the Canadian insurer Manulife found that emotional barriers are blocking many people's path to financial literacy.
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 and benefits to help employees take small steps to improve their financial and mental health.
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. EAPs often form part of a strong health plan offering. For broader financial advice, employers may want to enlist the help of advisers or certified coaches by inviting them into the workplace or offering subsidized educational sessions.
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:
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.
An employee discount program is another idea that helps staff save money on various things, including Christmas presents and groceries, by providing supermarket vouchers.
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 enrolment in these plans by offering automatic enrolment and employer matching contributions. In addition, group retirement savings plans or pension plans provide education about investing, which helps to further reduce money-related anxiety and avoid mistakes.
A comprehensive approach to financial wellness not only includes financial wellness tools but also provides resources such as financial education programs and financial coaching. By offering these resources, businesses can help employees make informed financial decisions about their personal finance and financial planning, especially during critical life stages and events, such as student loan repayments, retirement planning, and credit management.
Investing in financial wellness benefits can have a direct impact on employee engagement, satisfaction, retention, and productivity. This holistic approach considers the diverse income levels and financial pressures employees face, offering tailored financial guidance and educational resources to support them through various life events. Mobile apps and financial wellness platforms can also play a crucial role in this journey, providing employees with access to essential financial topics and practical advice whenever they need it.
By addressing financial worries and reducing financial distress through targeted financial wellness initiatives, businesses can enhance not only the financial health of their employees but also their overall physical health and employee satisfaction, creating a workplace culture that supports long-term business success. Moreover, offering rewards tied to financial wellness achievements can further motivate employees and reinforce the benefits to employees' well-being. In this way, financial wellness strategies can be a powerful component of a business strategy that strengthens the overall health of employees and contributes to a competitive edge in employee retention.