There is a tremendous business opportunity for companies to invest in the financial well-being of their workers.
Roughly 85 percent of Americans are anxious about their financial lives, and that anxiety is directly impacting their work. Financial stress contributes to productivity losses, increased absences and healthcare claims, higher turnover, and costs associated with workers who cannot afford to retire on time. Financial struggles are not limited to particular types of work, specific industries, or salary ranges; financial issues impact employees and businesses across the spectrum.
Fortunately, employers are uniquely well-positioned to help employees improve their financial health, that is, effectively manage their day-to-day financial lives in order to weather life’s inevitable ups and downs, and pursue meaningful opportunities. Employers should take a comprehensive approach to financial wellness that not only educates employees but also provides them with access to the types of safe, affordable financial products that better help employees spend, save, borrow, and plan. Doing so can improve an employer’s’ bottom line, engender employee loyalty and satisfaction, and serve as a distinguishing benefit when recruiting new talent.
To construct an effective employee financial health strategy employers need to get a sense for how employees engage in fundamental financial behavior. How do employees borrow money and where are they able to access credit? Do they have emergency savings for unexpected expenses? How are they planning and budgeting for the future? With answers to these questions employers can identify the financial areas where employees are uniquely struggling and design programs that offer specific tools and services to help alleviate those stressors and strengthen financial health.
Sometimes employers shy away from efforts to better understand the financial challenges of their employees, believing that such information is too personal to bring into the workplace. However, as with health information, there are ways to anonymize employee data so that an employer does not know personal details but does have a sense for various challenges facing different segments of the workforce. Since employers ultimately pay the price of financial stress that permeates into the workplace, they certainly have a role to play in curbing it.
This paper includes “spotlights” on what we consider the most innovative and effective financial products to address income volatility, unexpected expenses, and other financial health challenges confronting many American workers.
There are clear steps to implement an effective Employee Financial Health Strategy.
- Understand the opportunity to improve employee financial health. To begin, companies should understand what financial health is and its significance in the workplace. This paper serves as a basis for orientation.
- Align your organization in support of employee financial health. While Human Resources is a critical component to a successful program – and frequently spearheads these initiatives – it is nonetheless important to garner support from various stakeholders across the organization, including senior leadership.
- Talk to your employees about their financial needs. An effective program addresses specific employee needs. To that end it is imperative that employers talk to employees about their financial health through conversation, surveys or focus groups that respect and ensure privacy.
- Identify and implement appropriate solutions. Armed with an accurate gauge of employees’ financial health challenges, employers can then reach out to benefits brokers, retirement providers, fintech companies, and other service providers to discuss appropriate, high-quality solutions that help employees spend, save, borrow, and plan.
- Drive engagement. A successful strategy rollout, and consistent employee engagement over the long-term, requires significant internal support from marketing and communications to ensure that employees understand what solutions are available to them and the benefits of participating.
- Measure success. Tracking employee engagement helps employers determine program impact and answer key questions, such as whether the initiative provides employees with the right services and whether employees are remaining engaged over the long-term.
- Commit to improvement. Measuring success not only reveals a program’s efficacy, it also can highlight and inform opportunities for improvement. As with other benefits programs, an effective financial wellness initiative hinges on consistent evaluation and, where appropriate, refinement and improvement to maximize value both for employees and employers.
Employee financial health solutions create opportunities for employers to strategize for a healthier and more productive workforce while also strategizing for a healthier and more valuable business. We hope that this paper assists you to better understand the benefits of a comprehensive employee financial health strategy that extends beyond financial education. Together we can strengthen the workplace and help employees effectively manage their financial lives.
This paper benefits from strategic contributions to and financial support from Morgan Stanley. The opinions expressed in this paper are those of CFSI and do not necessarily represent those of our sponsors.
Employee Financial Health
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