Your Employees Want This Perk, and Giving It To Them Can Improve Your Bottom Line At the same time, you can also improve both your employees' well-being and loyalty.
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Do you offer a retirement plan or any sort of financial training program for your employees? If not, you may be missing out on some big benefits as a business owner. A recent study found that employees at companies offering financial wellness as part of their benefits package are overall 51 percent happier with their benefits package.
At my company, we've seen the positive effects of this type of financial education as well. We've worked to democratize and simplify access to high-quality finance education for employees. So we've tested various types of education-oriented solutions.
Data shows that access to financial education videos and courses as part of a retirement solution has helped business owners simplify and bolster their employee retention strategies.
Not only that, it can help reduce operating costs. The cost of financial stress on an organization adds up to more than $1,900 per employee per year, according to a 2019 survey from John Hancock Retirement. If you're a small- to medium-sized business owner with 25 employees, not offering financial education programs and comprehensive retirement solutions could be costing you at least $47,500 per year in lost costs.
With most business owners fighting inflation and a tough hiring market, the natural reaction has seemed to be to cut, cut, cut. However, there are ways that you can improve your employees' productivity while also improving your bottom line.
Understanding the types of retirement benefits your employees are looking for
We've done a lot of research regarding what exactly employees are looking for in today's competitive hiring market. Our research shows that it's important to offer any sort of retirement plan.
This is why 68 percent of workers worldwide ask during the job application process whether a company has a retirement plan or not. Additionally, 62 percent seriously consider the availability of such a plan when deciding whether to accept or remain at a job.
However, it goes beyond simply offering a SIMPLE IRA or traditional 401(k). Employees don't want you to give them a retirement plan they pay into and then leave them out in the cold. They want you to invest in their financial well-being. They are eager to learn about how to make their money work for them in a way that helps them create a sustainable financial future.
Employees want financial education and assistance
Oftentimes, we've seen that small business owners seem to think they know what their employees want without actually asking them what they want. So, what do they actually want?
25 percent of employees agree that the most desired employer benefit is a financial wellness benefit with access to unbiased counselors or training. And 70 percent feel financial wellness programs helped reduce stress and increased loyalty to their employer.
Simply put, employees want financial education even more than they want access to great retirement perks. After all, how are we expecting employees to thrive financially, professionally and personally if we're not giving them the tools they need to achieve their goals?
Why improving your employees' financial behavior improves your bottom line
Don't think this is a you problem as a business owner? You're in for a world of hurt, then. Not only is it very much a you problem, but it's a problem you can easily solve. And in solving it, you're improving your bottom line. It's a win-win no matter how you spin it.
Increased Employee Engagement
Seventy-three percent of employees say that their productivity at work is severely or majorly impacted by their financial worries.
To put this into perspective, let's say that nearly three-quarters of your workforce was severely impacted by the fact that your office was too cold to get any work done. If that were the case, you'd turn the thermostat up and help them get back on track.
Why is it any different when it comes to investing in their financial well-being? We've already established that 70 percent of employees feel financial wellness programs help reduce stress. So the numbers show that by merely investing in some sort of financial education program, your employees will be more productive as they're less stressed.
We've done some research regarding what kind of financial education employees respond to best. Most workers today are interested in some variation of financial video courses or financial education apps. The goal is to provide them with a high-quality education they can digest on their terms (we'll get into that shortly).
Increased loyalty and job satisfaction
Nearly every business owner in America has been affected by the Great Resignation. The exact reasons for this mass retirement are varied. But increasing economic uncertainty and the desire for a simpler life are two major factors at play here.
Many businesses have been left short-staffed. And there's a shortage of skilled workers. It's your job to provide employees with the perks and benefits they need to thrive. But also to ensure they're loyal to your company for a long time to come.
We've spoken to numerous business owners who are reeling from these retirements. They say they just can't attract great employees and retain them for long. And our answer is simply, yet again, that the numbers don't lie.
76 percent of employees are likely to be attracted to another company that cares more about their financial well-being. This means that over three-quarters of your workers are likely eyeing another company that offers financial education and retirement plans if you don't.
Simply put, if you invest in offering SIMPLE IRA plans, for example, that are bundled with financial education courses. You're able to not only increase loyalty and job satisfaction among your employees, but you're encouraging them to stay for longer.
The costs of employee turnover are reaching one and a half to two times the employee's salary. So investing in keeping your employees satisfied not only makes sense from an ethics point of view but from a business financial point of view as well.
Did you know that, on average, people spend 13 hours per month worrying about personal finances at work, causing a loss of productivity?
Using the model above, let's say you have 25 employees. Assuming your employees fall somewhere into the average range in terms of financial stress, you're losing out on 325 hours per month in productivity.
That's not good news for you or your bottom line. It spells one worrying conclusion: your employees aren't engaged on the job. This doesn't benefit you, your business or those who matter most, the employees.
Investing in their financial well-being is not only the right thing to do, but it's a smart business move. This starts by offering a comprehensive, simple retirement solution. Then ensure that solution comes with the financial training and education your employees need to build a better financial future for themselves.
Finding the right retirement solution as a business owner
Now, we know that most business owners at this point are thinking, this sounds great. I'm into it. But I just can't afford it. We speak to business owners daily who have this same objection.
However, finding the right retirement solution that helps you attract and retain talent doesn't have to be costly. The best solution will be so comprehensive that the increased productivity and engagement will lower costs enough to justify the small investment.
What should you be looking for? Namely, something simple and comprehensive. And in this sense, we're talking quite literally.
SIMPLE IRAs are the best option for small- to medium-sized business owners. They come with no annual filing requirements, reduced regulatory framework and a whole lot less paperwork. They're simple for you and your employees.
Additionally, look for a solution that offers your employees the ability to access the financial education and training they need.
At my company, we offer employees access to our IRA app. They're able to easily browse through financial courses and training videos that they can watch and digest on their own time. These courses vary in topics ranging from learning how to budget to understanding credit scores to understanding how to create a well-balanced portfolio.
Ultimately, you want to ensure you're giving your employees both basic and in-depth financial training that they're able to learn and grow with over time.
The bottom line? Investing in your employees' financial wellness pays off. We know because we've been there. And we've helped numerous other business owners improve their bottom line in the same way as well.