In today’s stressful world, employees’ personal problems, particularly financial ones, often spill over into the workplace. HR professionals should find ways to address this because the negativity associated with money problems can adversely affect productivity and hurt office morale. Recently, a study conducted by PwC discovered that one-third of employees who had financial issues were overly distracted at work, and about half of these people spent a significant portion of their workday dealing with their financial concerns.
Because financial difficulties are such a big problem both in and out of the workplace, HR professionals should look for ways to help financially challenged employees become more productive and more engaged. Left unaddressed, employee financial problems can negatively affect the business and even push customers away.
HR should understand that financial health begins in the workplace. Employees spend about 12 hours a month thinking about their money issues, so it makes sense to offer financial education in the workplace. Once employees have the financial tools and knowledge to address their problems, they will perform much better at work.
Here are some of the major ways employers can assist these workers and how these strategies will benefit everyone involved:
Why Employee Financial Wellness Is Important
So why is employee financial health important for employers? Well, according to a study by Paychex, nearly 50% of employees say they have little or no savings. This stress about money can adversely affect every part of a person’s life and is most easily seen in an employee’s work performance.
Money woes not only affect company culture, they also can adversely affect an employee’s health. Studies that show that a majority of employees with financial issues have associated health conditions, including migraines, depression, insomnia, and cardiovascular disease. These medical problems can not only cause higher absenteeism rates, they can also make medical insurance premiums skyrocket, which will adversely affect any business’ bottom line.
The increased rate of absenteeism is of particular concern for employers. This is a tremendously important side effect of financial problems because the Centers for Disease Control and Prevention (CDC) estimates that employees not showing up for work can cost businesses anywhere from $16 to $81 per hour in lost productivity. In response to this loss, the CDC recommends that employers focus on implementing employee wellness programs designed to improve physical and mental health.
Employees may find it hard to escape their financial problems while at work, and this can drag down productivity even further. Some employees even receive workplace phone calls and e-mails from creditors, which increases their stress and makes it harder for them to focus. Employees might worry about their inability to pay or provide for their family’s needs. They may also begin to feel disgruntled about their pay, believing that if they made more money, then they would be better able to meet their financial obligations. While this may, in fact, be true, an employer can be proactive by offering money management courses, seminars, and tools that help employees learn to make the most of their paychecks.
If your company decides to implement a financial wellness program, there are a few things to consider. Initially, the majority of your financial literacy education should focus on behavioral changes. This is important because just giving an employee a raise will not necessarily change his or her financial situation. Essentially, it is the employee’s mindset towards money that must be revamped, and this can only be changed through education in an environment in which the employee feels comfortable seeking solutions. Budgeting tools have also been shown to have a positive effect on employee engagement and behavior.
Make Benefits Selection Easier
Benefits sometimes take up a large portion of an employee’s income, and this is sometimes a source of financial stress as well. Between health insurance, retirement contributions, and voluntary benefits, many employees feel overwhelmed by the number of deductions taken from their regular paycheck. Most employers approach these deductions separately, which makes it hard for employees to see these deductions in the context of their larger benefits package. This not only causes stress when the employee sees the deduction, but it also causes anxiety during the benefits selection process.
To remedy this problem, companies should partner with a recommendation engine to support their benefits selection portal. This tool will allow employees to see a side-by-side comparison based on their unique situation. Once they are presented with all the information, it will be easier to choose a benefits plan that fits their needs. Recommendation engines present benefits in a package format based on the user’s answers to a series of questions about their lifestyle.
It’s expected that healthcare spending will grow by more than 5 percent per year through the year 2025. This is in addition to the tax associated with the Affordable Care Act (ACA), which means that healthcare expenses could soon outpace the rate of inflation. For employers, this means thinking of more proactive ways to cut benefits costs while giving employees choices that make them feel empowered
Financial issues are a serious employee concern, but they do not have to derail your business. HR professionals have the power to implement programs that will help employees succeed finically. From smarter benefits selection to financial wellness with a focus on behavioral changes, HR can come up with solutions that benefit both employees and employers.