Employees’ Financial Concerns
The current environment of rising inflation and global instability is taking an enormous toll on America’s workforce as working people in the U.S. are experiencing increasing difficulty in meeting basic day-to-day financial needs. In a recent PwC Employee Financial Wellness Survey, two out of five full-time employees indicated rising costs and inflation continue to be their top financial worries. Only 42% said their compensation is keeping up with rising cost-of-living expenses.
Financial Literacy’s Impact in the Workplace
This should be a wake-up call to employers as the predicament presents several problems:
- Financially-stressed employees are far more likely to be searching for a new job. With so many employers already experiencing unprecedented employee shortages, the added burden of increased employee turnover is the last thing they need.
- Critical financial burdens reduce employee confidence in their current employer. Employees who feel employers are indifferent and don’t care about their personal situation often become resentful which leads to a toxic work environment.
- Financial stress often leads to self-esteem and mental well-being issues for employees, which can cause significant productivity problems.
How Employers Can Encourage Financial Wellbeing
Employers who demonstrate a genuine concern for their employees, especially in the area of financial well-being, will be the winners during this challenging cycle. Fortunately, there are several productive steps employers can take to ease those burdens and support employee financial wellness. A key emphasis must be on education:
- Provide financial education and resources
Employers can offer financial education programs and resources to help employees improve their financial literacy. This may include workshops, seminars, online courses, and access to financial planning tools or resources that can help employees better understand budgeting, investing, retirement planning, and other financial tools and concepts.
- Offer flexible work arrangements
Flexible work arrangements, such as telecommuting, flexible hours, or job sharing, can help employees save on commuting costs, reduce childcare expenses, and improve their work-life balance. This can lead to increased job satisfaction and financial well-being for employees.
- Provide access to financial counseling or assistance programs
Offering access to financial counseling or assistance programs that provide confidential guidance goes a long way in helping stressed employees find relief. This may include budgeting assistance, debt management, or financial planning services. Such programs can help employees better manage their finances and reduce financial stress.
- Provide opportunities for career development
These can include training programs, mentoring, or tuition reimbursement, which can help employees enhance their skills and increase their earning potential. By supporting employees in achieving their career goals and improving their financial prospects, employers are able to promote company loyalty, job retention, and a positive work environment.
- Offer employee assistance programs (EAPs)
EAPs are programs that provide employees with free access to confidential short-term counseling and support services for a wide range of personal and professional issues, including financial concerns. Here employees find resources, referrals, and support to help them navigate financial challenges and improve their financial well-being.
- Offer or increase employee benefits
Employers can offer a range of employee benefits, such as health insurance, life insurance, disability insurance, and flexible spending accounts (FSAs) or health savings accounts (HSAs), which can help employees manage their healthcare expenses and protect against unexpected financial setbacks.
- Encourage work-life balance
Employers can promote work-life balance by encouraging employees to take time off, limiting excessive work hours, and discouraging a culture of overwork. This can help employees better manage their personal and financial responsibilities, reducing stress and improving overall financial wellness.
- Conduct regular salary reviews
Employers can conduct regular salary reviews and provide fair and competitive compensation to employees. Fair compensation can help employees meet their financial obligations, reduce financial stress, and improve their overall financial well-being.
- Offer retirement savings plans
While these may not solve the immediate needs of financially-stressed employees, offering retirement savings plans with employer-matching contributions can help employees build their retirement nest egg and improve their long-term financial well-being while promoting an attitude of support and concern from the employer.
Bring Financial Literacy Tools to Employees
“Get started by finding an alliance partner that has the same passion for education that you’re trying to bring to your employee base,” says Jason Goldy, CFP®, ChFC, CEPA, Executive Vice President, The Pelora Group. “This is not a one-size-fits-all solution, but a more catered approach to understanding what financial areas people want to be educated on the most. It is important to tailor a program that is going to deliver that in a fashion that is actionable and impactful to your employees.”
Take heed, employers! The financial well-being of employees is more important than ever. It is crucial that employers consider the unique needs and preferences of employees and take action to implement or improve financial wellness programs and policies. Consulting with financial professionals and conducting employee surveys will help employers better understand their employees’ financial needs and tailor support accordingly.