Have you noticed an increase in financial stress among your employees? Performance declining? People asking for raises or leaving the organization for higher-paying jobs? According to a recent Bank of America study, employees are struggling to cope with the challenging and inflationary economic conditions after the pandemic, and this could be affecting the overall success of your business.
Employee financial stress doesn’t just impact individuals; it reverberates throughout the workplace, leading to decreased productivity, low morale, and higher turnover rates. Fortunately, there are resources designed to relieve employees’ financial stress and give them peace of mind.
In-depth financial wellness programs address the root causes of financial stress and can significantly enhance productivity, boost employee engagement and retention, and improve overall health. If you’re in HR or considering adding wellness programs, this blog offers insights on why focusing on financial wellness is key to boosting your team’s morale and overall success.
What is a Financial Wellness Program?
To understand what a financial wellness program is, it’s helpful to understand what it is not. You might hear vendors in the benefits world throw around the term “financial wellness.” Since it is a relatively new term, it seems to lack any formal definition. Some vendors simply tack on “financial wellness” to their offering to make it more attractive.
These minimal offerings, while well-intended, fall short of providing meaningful support. They can leave employees frustrated and ill-equipped to address their financial challenges, potentially exacerbating financial stress rather than alleviating it.
So, what is a financial wellness program exactly? A financial wellness program is an initiative implemented to support employees in achieving and maintaining financial stability and well-being. Unlike traditional retirement education, which focuses primarily on retirement planning and investment strategies, financial wellness programs encompass a broad range of topics related to personal finance.
These programs provide holistic support to employees in managing various aspects of their financial health, including budgeting, saving, investing, debt management, insurance, and retirement planning. They often include educational workshops, online resources, tools and calculators, and one-on-one financial counseling. The goal of this continuous support is to assist employees in developing and sustaining healthy financial habits and behaviors, alleviating financial stress, and attaining financial security both presently and in the long run.
Measuring the Impact of Comprehensive Financial Wellness Programs
How can you know if implementing a workplace wellness program is going to be successful? While no one has a crystal ball when it comes to the ROI of wellness benefits, there is strong evidence to suggest that they will be worth your investment. In this blog, we will focus on 3 key indicators of employee success, and talk about how financial wellness benefits impact them.
Increasing Productivity by Removing Distractions
Financial stress is a productivity killer in the workplace. A recent SoFi Study revealed that three in four workers are stressed about financial issues, causing them to spend 9+ working hours per week dealing with their finances.
In a survey of 1,600 HR leaders and employees, Sofi found that employees are making big sacrifices and pivoting their personal and professional lives – with some taking on second, part-time jobs (25%), while others opt to carry higher credit card debt (25%) or tap into retirement savings (19%). When employees experience financial stress, it significantly affects workplace productivity, creativity, and morale. The biggest issue reported by financially stressed employees was balancing short-term expenses with long-term goals.
When employers help their people manage their finances better and reduce financial stress, the positive effects are evident in the organization. The alleviation of distractions helps to boost employee performance and productivity. Without their financial worries, employees focus better on their tasks and contribute more effectively to the company’s success.
Enhancing Engagement and Retention
Financial stress not only leads to lost productivity hours but also manifests in high attrition rates among employees, serving as an expression of their distress. According to The Employer’s Guide to Financial Wellness, financial stress leads to an estimated 11–14% increase in annual payroll costs due to lost productivity and higher turnover rates. Financial stress among employees reduces productivity, lowers employee engagement, and increases turnover, ultimately diminishing a business’s profitability and competitive edge.
Turnover has been a huge issue for many HR leaders, and the post-pandemic economy has worsened the problem. Unable to keep up with their cost of living, employees start looking for higher wages instead of budgeting what they have. Forty-four percent of full-time employees report that inflation has had a major or severe impact on their financial situation over the past year.
Among this group, 49% are struggling to keep up with household expenses – relying on credit cards and hardship loans. Forced to take drastic action to make ends meet, many employees are seeking higher income elsewhere. When looking for new jobs, 73% of financially stressed employees say are more attracted to an employer that cares more about their financial well-being than just 54% of non-financial stressed employees.
In working with many clients over the years, Mentoro has helped to reduce the detrimental effects of turnover. Whitney Queen, Mentoro’s president, put it this way:
“One of our clients in the telecommunications space was experiencing a high rate of turnover. Their biggest issue was hourly employees leaving for a rival because they offered a slight bump in pay. By using Mentoro and our educational program, the company successfully communicated that with the free benefits that they offered – financial wellness being one of them – the cost-benefit of moving was negligible.”
When employees feel secure in their financial future, they feel secure in their job decisions and have confidence that they can continue to grow within their current company.
Improving Employee Health and Well-being
One of the most practical ways that financial wellness programs can contribute to organizational success is by improving the health and well-being of its employees. Ongoing financial stress links to a host of health problems that increase absenteeism and healthcare costs. Just to name a few, financial stress contributes to:
- Anxiety Disorders: Financial stress has a strong link to debilitating anxiety.
- Depression: According to Social Science & Medicine, individuals experiencing financial stress are 25% more likely to develop depression.
- Heart Disease: Financial stress has been known to cause coronary heart disease, and may be an unrecognized risk factor in this area.
- High Blood Pressure: Financial strain is associated with elevated blood pressure.
- Insomnia and Sleep Disorders: 77% say they lose sleep over money worries at least sometimes.
By reducing financial stress through financial wellness programs, companies can not only reduce healthcare costs but provide a real impact on employee’s overall well-being.
Important points
In today’s challenging economic environment and competitive talent landscape, financial wellness programs have become an indispensable part of a comprehensive benefits package. By assisting employees in managing their finances more effectively, companies can realize a multitude of benefits. Here are a couple of important points to take away from the information:
- Enhanced Productivity: Financial wellness programs significantly reduce financial stress among employees, leading to increased focus and productivity. Research indicates that employees spend about 9+ working hours per week handling financial matters, a burden that can be significantly alleviated through effective financial wellness programs.
- Improved Employee Engagement and Retention: Addressing financial stress through wellness programs boosts employee morale and loyalty. Studies have shown that high financial stress is associated with an 11-14% increase in annual payroll costs as a result of lost productivity and higher turnover rates. By offering comprehensive financial support, companies can enhance employee satisfaction, loyalty, and retention.
- Positive Impact on Employee Health and Well-being: Financial stress is a significant contributor to various health issues, including anxiety, depression, heart disease, high blood pressure, and sleep disorders. By implementing financial wellness programs, companies can improve employees’ overall health and well-being, leading to reduced absenteeism and healthcare costs.
Implementing a financial wellness program is not just a perk; it’s a strategic investment in both the employees’ well-being and the company’s future.
How can Mentoro help bridge the gap?
If your organization doesn’t have a financial wellness program in place, Mentoro can be a valuable partner in addressing this gap. Here’s how:
- Bite-Sized Financial Courses: Knowledge is power when it comes to personal finances. Our courses empower employees to master their money. From budgeting and saving to investing and retirement planning, our comprehensive courses empower employees to make informed financial decisions.
- One-on-One Financial Mentorship: Our expert financial mentors provide personalized guidance and support to employees, helping them navigate financial challenges and develop sustainable money management habits. This individualized approach fosters trust and enhances employees’ confidence in managing their finances.
- Money Management Tools: Our digital platform offers a wealth of resources, tools, and calculators to assist employees in assessing their financial situation, setting financial goals, and tracking their progress. Accessible anytime, anywhere, these online resources make it convenient for employees to progress in their financial wellness journey.
Partnering with Mentoro can help your organization implement a successful financial wellness program, driving employee satisfaction, improving financial well-being, and ultimately contributing to organizational success. Schedule a demo now to see how Mentoro can be a valuable asset to your company.