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Supporting Employees' Financial Well-Being: What Employers Can Do Today

Forbes Human Resources Council
POST WRITTEN BY
Marcy Klipfel

It’s been just a few weeks since taxes were due, and refunds and finances were top of mind for many. Now that the tax deadline has passed, have people moved on from financial concerns? Most likely, the answer is no. Financial wellness is an ongoing struggle for many American workers as low wage growth, rising healthcare costs and student loan debt put pressure on all generations in our workforce today.

We’re seeing this play out in a number of troubling statistics: The Federal Reserve recently noted that four in 10 Americans couldn’t cover an unexpected $400 expense without borrowing funds or selling something. Data gathered by my company found that 50% of employees would be “panicked” by a large emergency room bill. And, the government shutdown in early 2019 highlighted the reality that many Americans are living paycheck to paycheck.

Why It Matters To Employers

The financial well-being of our workforce, or lack thereof, is an important factor for any HR department. Financial worries and stress over money management have a significant impact on productivity. Recent data shows that employees with high levels of financial stress lose 41% more work time to absences than employees with low financial stress. And for those employees who identify as struggling with their finances, 32% are less effective at work.

As the leaders closest to employee well-being issues in our organizations, HR professionals can play a valuable role in improving employee financial health. Just as we concern ourselves with healthcare benefits, so too can we advocate for behaviors and programs that emphasize total well-being, including finances. In fact, the Employee Benefit Research Institute found that HR departments are the main motivators for financial wellness programs.

Steps To Take To Support Financial Well-Being Now

What can HR leaders do to address financial well-being immediately? Start with these strategies:

1. Provide the right tools.

Benefits are an important part of overall compensation, but employees frequently don’t understand their benefits packages, and they rush through the enrollment process, often spending less than 30 minutes during annual enrollment (AE).

Provide your employees with the benefits recommendation tools they need to fully grasp the benefits available to them and the effects those benefits have on their overall financial picture. For example, when faced with a decision about a PPO versus a high-deductible health plan, risk-averse employees may automatically choose the PPO. Tools that take into account the total cost of different healthcare options can guide employees to the most appropriate solution for their needs.

Your organization may also offer consumer accounts with pre-tax savings, such as FSAs and commuter benefits. A user-friendly online portal and mobile-ready platforms make it easier for employees to see what they’re saving, and benefits tools that show employees’ remaining balances on consumer accounts provide information in one streamlined solution. By helping employees gain a better understanding of how their benefits choices translate into real savings, the right tools take the first step toward empowering employees in their financial decision-making.

2. Offer savings vehicles.

By now you’ve probably heard how Americans are struggling to save: 20% save nothing at all, and only 16% save the recommended percentage of what they earn. Some employees need help topping off retirement savings, specifically baby boomers, while younger employees are worried about their monthly budgets and need help with student loan debt. And, many employees could use assistance with setting aside emergency savings. Offering flexible savings goal accounts that employees contribute to from their paychecks is a viable way to make saving a habit — one that employees don’t have to think about each month and that can be used for individual financial goals or to keep an emergency cushion.

Employers also should evaluate their employees’ different life stages and offer benefits accordingly. Student loan repayment benefits are increasingly common, and they’re an important benefit when recruiting millennial and Gen Z employees who are facing ever-higher amounts of student loan debt (although they may also be attractive to Gen X and boomers). These benefits can be matching contributions or refinancing assistance, and they can complement 401(k) savings so that employees can pay down debt while saving for the future.

3. Communicate year-round.

When we learn to read, we don’t practice for two weeks and then not read any more the rest of the year. It’s the same with benefits literacy: We need to stay engaged with our benefits information outside of a two-week AE window. With only half of Americans understanding concepts around debt, saving and insurance, it’s more important than ever that employees receive regular communications about their total compensation and its role in their financial well-being.

Make sure your employees are aware of any important deadlines or opportunities (such as an FSA deadline or the ability to make a catch-up contribution) by providing different types of communications to reach different populations. Mobile alerts and text messages should be table stakes, and chatbots or other AI-powered solutions can provide answers to employee questions anytime, anywhere. But it’s not just cutting-edge technology — making sure employees know their benefits contacts in HR is a way to provide face-to-face communications about the benefits resources they need.

More Than A Paycheck

As HR leaders, we know that employees look to their workplaces for more than just a paycheck. They rely on their employers for benefits, and an overwhelming number of employees say that companies should do more for overall well-being. To meet those needs, employers need to take financial well-being seriously, and HR is perfectly placed to drive those changes.

Implementing tools and practices that empower employees to understand and take control of their finances helps businesses and workers alike. Employees with low levels of financial stress are more productive. They spend less time dealing with personal financial issues at work and can bring their full effort and attention to their jobs. When people include financial well-being in their benefits, everyone wins.

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