3 Reasons Employers Should Focus on Employee Financial Well-being
Why should employers care about helping their employees to understand their finances?
When we go through school, and higher education, we are trained to be academically smart. To think, to learn, to specialize. However, a key piece that is missing in our traditional education system is financial well-being. We are not taught about the importance of saving, of investing, of diversifying our assets. Essentially, how to run our personal finances like a business.
If done correctly, we can make our money work for us. When we have financial freedom, it can release a huge amount of fear and anxiety in our lives. According to a report published in April 2021, in which 19,000 American adults were surveyed: “researchers found that financial stress and anxiety are highly linked to low levels of financial literacy, problematic financial behaviors and decreased financial security.” And 60% of those surveyed by the American Psychological Association said that money is a significant source of stress.
And while you might think of financial stress as the preserve of those on a low income, it also affects those on a high income. High income does not necessarily equate to long-term, sustainable wealth. If you do not know how to handle your money, you will always struggle.
Employers must help all their employees to better understand financial well-being. In any company wellness strategy, financial education must be included because of its link to overall mental, emotional and physical well-being.
I talked to Greg Wilson, head of Goldman Sachs Ayco Personal Financial Management’s Workplace Solutions. He firmly believes that to remain competitive, as an employer, you need to help your employees to create personal financial well-being. In a survey conducted by Ayco, they found that 55% of U.S. companies are currently providing financial wellness benefits, and 64% of those companies are providing it from top to bottom. It is no longer just the preserve of the C Suite.
There are three compelling reasons why employers need to provide financial wellness benefits.
It feeds into employee productivity
Many people in the corporate world are time poor. Between work and family, it takes effort to focus on yourself and your family’s financial well-being. Especially where trying to understand personal finance and income is overly complex. However, poor financial understanding causes stress and anxiety, which impacts upon overall well-being. Stress in employees’ personal lives will impact their day job.
Giving employees back that feeling of being in control of their finances allows them to refocus productively.
When employers create an environment where their employees are able to focus on their day job, without being distracted by money concerns, it makes employees more productive at work. As Greg Wilson said, six out of the top ten stressors are financial and this has a profound impact on all-around well-being.
Employee expectations are shifting
Employees now expect more from their employers. And they’re prepared to quit their jobs and move to another company to have their expectations met. The role of the employer is now more prominent in people's lives, and people expect a certain duty of care.
Employees want to work for companies that foster a culture of inclusivity, that focus on diversity, equity and inclusion (DE&I), that care about the mental, emotional and physical well-being of their employees. This employer-employee alignment on a values level is more important than ever before, especially because the pandemic has made many of us reflect on what is important to us.
Gallup’s 2018 survey shows that younger employees, in particular, want to work for employers who look out for their well-being. One of the core tenets of a comprehensive wellness strategy is financial well-being.
Living values, at a company level, is what counts (not just stating them). Engaging and listening to your employees, and then taking care of their holistic needs is what employees are looking for in the new world of work.
Attracting and retaining top talent
The fight for talent has never been more pronounced. We’ve all heard talk of the Great Resignation. A record four million people quit their jobs in April 2021 alone, according to the U.S. Labor Department. And surveys indicate that this is a trend set to continue. A Microsoft survey of more than 30,000 global workers showed that 41% of workers were considering quitting or changing professions this year (2021).
As an employer, you need to remain competitive and one way is to create a people first culture, where employees are more engaged, feel more included and are therefore more likely to remain loyal.
As an employee, having help from your employer to get the most out of your money and create wealth in the long-term shows you are valued. The tangible impact on employees of financial education can be life-changing. As an employer, providing the support to create those transformations for your employees in their financial health is going the extra mile.
And it becomes a positive feedback loop because when you have higher retention, it helps to attract other top talent to the company through a network effect.
Entrepreneur Leadership Network Contributor