Financial wellness programs are more important than ever.
Why? Because happy employees create happy customers – in fact, according to Gallup, organizations that excel in engaging their employees achieve average earnings-per-share growth that is more than four times that of their competitors.
Meanwhile, researchers are telling us that financial stress has emerged as the number one form of stress for your employees. And there has always been a strong connection between stress and healthcare costs.
So it’s disheartening to see our employees struggling with fear and anxiety over the ongoing health crisis and what it’s doing to their financial security.
But there are ways to help them take control of their financial situation, reducing their stress – and it’s impact on your healthcare spending.
Welcome to 2020
Today, two-thirds of your employees are experiencing financial stress and, according to new data from Gallup, 50% fear bankruptcy due to a major health event. Things haven’t felt this tenuous since the Great Depression.
According to Forrester, more than 50% of workers are afraid of the spread of COVID-19. Death counts, political discord and protests over social injustice dominate the news as financial markets swing wildly.
Meanwhile, many people’s work lives are still in disarray. Most haven’t returned to the office and have no firm timeline for when they’ll be going back. Those that have returned are facing a “new abnormal” that includes regular COVID-19 testing and wearing PPE masks throughout the day.
The impact of financial stress on healthcare
The strong connection between finances, stress and healthcare costs supports the need for financial wellness benefits in the workplace.
The health of your employees is deteriorating because of financial stress. Those that are financially stressed – and that number has swelled over the last several months – are 11x more likely to have sleepless nights, 10x more likely to not finish daily tasks at work, 9x more likely to have troubled relationships with their coworkers, and 2x more likely to be looking for a new job.
Nearly three-quarters of employees experiencing financial stress also experience physical symptoms.
That affects businesses’ bottom line – people with financial stress tend to avoid getting healthcare, which leads to worse health outcomes and higher healthcare costs later on.
More than half of employees with financial stress say that they avoid getting healthcare due to worries about how much it will cost.
A workforce with a greater number of financially stressed workers sees a greater number of sick days, higher healthcare costs, and increased absenteeism.
Unscheduled absenteeism costs roughly $3,600 per year for each hourly worker and $2,650 each year for salaried employees.
Financial stress is costing you money, lessening efficiency, and having a negative impact on your employees’ ability to serve your customers.
But employers have the power to change that dynamic.
What employers can do
Historically, employers have stayed clear of dealing with employees’ personal finances. And that made sense – until recently.
But now, your employees are on overload. They are scared and confused, and struggling to make ends meet. By offering financial wellness programs, employers can help improve their financial – and physical – health.
And case studies demonstrate that savings from lower healthcare costs and reduced absenteeism more than offset the cost of implementing a financial wellness program.
The Defined Contribution Institutional Investment Association (DCIIA) calculates ROI on these programs of between 100% – 300%.
In fact, according to a study published by the Society of Actuaries, when employees at a company participate in financial wellness programs it decreases the employer’s healthcare spending by at least 4.5%.
That adds up: one company that offers a financial wellness program reported annual savings of $271.50 per employee.
Another company saved an estimated $1.8 million. It calculated those savings based on reduced absenteeism among those who used the financial planning center, one-on-one meetings, and webcasts/workshops included in its financial wellness program, compared to non-users.
Other statistics highlight the flip side of the financial wellness benefits story – where workers didn’t take advantage of available financial wellness programs, employers reported a 19.4% increase in healthcare spending for those employees.
How can employers prioritize financial wellness?
Here are six practical steps employers can take to develop and implement a financial wellness program.
These steps are based on hundreds of discussions with HR professionals across the US and UK, Salary Finance’s own research, and best practices shared by organizations that have gone through the process of developing and implementing a financial wellness strategy.
Step 1. Know your workforce
Financial wellness means different things to different people. Often, the workplace benefits offered don’t meet the needs of those that have the lowest financial health and who require the most support. Understanding the needs of employees at all levels of the organization will help you to understand who is most in need and help identify the most appropriate solutions for your people.
Step 2. Build a robust business case
It’s critical to have a clear business case that can be understood by all stakeholders that shows the financial impact and also how financial wellness fits in with the overarching people and business strategy.
Step 3. Enable culture change
It’s natural to want to support employees who are most in need, but it can be hard to know who those individuals might be – and they’re certainly not always the ones you first assume. Talking openly about money can be particularly difficult for those that are struggling due to an ingrained feeling of shame or embarrassment. Unless this taboo is challenged, the most vulnerable will remain hesitant in engaging with their personal finance issues.
Step 4. Focus on progress, not perfection
We know it can be difficult to know where to start. However, we also know that the financial health of your employees will not improve until you begin. Those that have implemented a meaningful financial wellness program began by addressing those with the greatest need first, starting more open conversations about money, and building a broader program from there. You’ll learn as you go and notice changes as momentum builds. The main thing is to start somewhere so you have a foundation to build on.
Step 5. Communicate awareness and availability
Even the most expertly selected range of benefits will have limited impact if employees don’t know about them or don’t know how to access them. Having a comprehensive and ongoing communications plan is critical. Organizations that communicate frequently, utilizing a range of channels, have the greatest levels of employee engagement and awareness.
Step 6. Measure the impact
Improving the financial wellness of an individual and a workforce takes time, as well as continued focus and resources. If an organization’s leaders can’t see the benefits and positive impact of the program, then it may lose its priority.
This is why it’s important to agree up-front on the criteria with which to measure success. This could be participation rates, engagement with financial education content, employee retention rates, job satisfaction survey responses, etc. These measurement criteria need to be an integral part of the business case.
Financial wellness ROI: beyond dollars and cents
Employees experiencing financial stress are most concerned with paying down existing debt and there are free, easy to administer benefits available to kickstart financial wellness program that can help them achieve those goals.
The return on your investment will be measurable in dollars and cents but, even more importantly, your organization will reap rewards in employee engagement; recruiting and retention and, ultimately, delighted customers.
Dan Macklin is CEO of Salary Finance. Learn more about the six steps to develop and implement a financial wellness program here.