Nurturing Employee Financial Wellness: The Role of Employers
Financial stress has emerged as a significant challenge for today's workforce, adversely affecting employee well-being and productivity. BrightPlan's 2023 Wellness Barometer Survey found that a staggering 92% of employees are stressed about their finances. This stress has far-reaching consequences, impacting not only mental health but also physical and social well-being. 72% of respondents report that financial stress affects their mental health, 64% say it impacts their social health and relationships, and 60% say it negatively influences their physical health.
The repercussions of financial stress extend beyond individual employees; they also affect workplace productivity. On average, each respondent loses 8.1 hours of productivity per week due to financial stress, potentially costing US businesses nearly $200 billion annually in lost productivity and engagement.* The impacts of financial stress are not limited to employees alone. In fact, the toll is even more pronounced among business leaders, with C-Suite executives reporting an average loss of 16.8 hours per week, while HR leaders report a productivity deficit of 12.4 hours per week.
This stress is exacerbated due to a lack of financial knowledge, high debt, and low emergency savings. Only 18% of respondents have basic financial literacy and over a third have no emergency savings or only enough to cover up to two months of expenses. Additionally, 85% have debt and nearly half have more debt than is manageable. Despite employees being proactive and looking to improve their financial health, financial preparedness remains low.
Role of Employers
An overwhelming majority of HR leaders and C-Suite executives (95%) believe that employers should play an active part in helping employees with their financial well-being. However, there is a clear disconnect between the perspectives of employees and business leaders. Less than half (48%) of employees agree that their company offers the financial guidance, support, and tools necessary to achieve their life goals. Yet, 94% of leaders believe their organizations provide the necessary financial assistance. This disparity underscores the importance of bridging the gap and ensuring that employees receive the support that they need.
Here are some ways employers can help their employees achieve financial well-being.
Identify employee needs
Leveraging data and insights, discover where your employees are struggling and how you can best support them. Aggregated and anonymized employee data can help employers gain valuable insights into the financial challenges faced by their diverse and distributed workforce. It allows employers to identify common trends, such as high levels of debt, low savings rates, or other specific financial stressors. Moreover, analyzing aggregated data can help employers identify demographic, location or department-specific disparities in financial well-being. For example, they may discover that employees in a particular age group or department are struggling more with student loan debt or are less likely to contribute to retirement savings. This information can guide employers in designing targeted financial support that directly addresses the needs of their employees.
Implement a comprehensive financial wellness program
HR and business leaders can help alleviate financial stress and instill financial confidence by offering comprehensive financial wellness benefits that educate and guide all employees to achieve financial success. A holistic financial wellness program should address the needs of employees at every stage of life and include access to financial education, digital planning tools, financial planners, and the ability for employees to invest, track and manage their finances.
Employers can motivate financial well-being through incentives. For example, many employers offer matching contributions to employee retirement accounts. This encourages employees to take advantage of the employer's matching contribution while saving for their retirement. Other incentives might include bonuses or other rewards for achieving financial goals, such as paying off debt or building emergency savings.
Foster a culture of financial care
Finally, employers can advocate for financial wellness by engraining it into their culture, encouraging open communication related to financial issues and providing resources and support to help employees achieve financial stability. From onboarding to offboarding, financial wellness needs to be top of mind. Engage employees early on by demonstrating how their benefit selections and utilization can drive their individual and family financial well-being. Show that you're invested in their financial future by for example, contributing to their 401(k) or HSA accounts and offering an employer match. These actions encourage employees to establish healthy financial behaviors and make smart financial decisions.
High levels of financial stress coupled with low financial preparedness is a widespread challenge in the US, and it can have a significant impact on employees' well-being as well as business success. Employers have the opportunity to play a pivotal role in improving their employees’ financial well-being by offering comprehensive financial wellness benefits that educate and guide employees to achieve their life goals with confidence. Learn more about how BrightPlan can help.