Four Steps to Strengthen Workforce Financial Wellness
More than a year after the COVID-19 pandemic began, finances remain a major contributor to employee stress, even beyond work, health, and relationship stress.
In fact, nearly two-thirds (63%) of full-time employees say their financial burden has increased since the pandemic began. PwC reports in its survey on the financial wellbeing of employees in 2021 of 1,600 full-time adults in the United States.
As a result, the survey found that the following people are employed whose financial burden has increased due to the pandemic:
- four times more likely that total household income has fallen and it is difficult to meet household expenses on time each month; and
- twice as likely to have taken out a payday loan or advance, taken out a loan or distribution from a retirement account, or considered postponing retirement in the past year.
How can employers foster a culture of financial wellbeing and support to help their employees? PwC suggests the following four steps.
1. Create the business case to support the financial health of your employees
Employers who invest in improving the financial health of their employees can get long-term benefits from metrics that matter to the company. However, this begins with a commitment to the financial wellbeing of the employees.
While some employers have taken steps to cut costs over the past year, PwC suggests considering key metrics of company values like productivity, customer loyalty, and physical health. “They all have costs that directly affect the bottom line of your business, including lost productivity from distractions, cost of sales such as recruiting and training, and increased medical costs if problems are not addressed promptly,” the company notes.
Additionally, employees are more likely to be attracted to another company that cares more about their financial well-being, and they are twice as likely to have avoided addressing a medical problem for reasons of cost.
2. Know what is happening at home
PwC’s survey found that more than one in four U.S. employees had overall household incomes down. Less than half (47%) say that they could cover basic costs if they were unemployed for a longer period of time. In addition, nearly half (49%) believe they need to use money for their retirement savings before retirement.
In addition, the weight of care responsibilities during the working day affects the vast majority of people with dependent children. 83% say they have at least one child at home during the working day.
According to PwC, one way employers can help is by offering personalized benefits that help employees meet their individual needs. “As the US workforce has become the most intergenerational in our history, employees are looking for a wider range of options to manage their own financial situation, from student loan repayment plans to retirement options,” the study points out . And while incentives like flexibility in the workplace are important, employers may also need to rethink incentives and compensation packages to reflect a range of needs, the company said.
3. Use the momentum to encourage good financial habits
Employees need trustworthy guidance that is tailored to both areas of the spectrum – those employees who save more and those who grapple with serious financial problems, PwC suggests.
Of the two-thirds of employees who say they changed their spending behavior in the past 12 months, 43% saved more money and many cut their spending on important things, the company said. However, these spending cuts may not continue.
“Employers have a unique opportunity to attract employees ‘attention and offer practical guidance, taking advantage of employees’ desire to protect themselves from future emergencies. This is the time to cultivate intent and prudence when it comes to managing and spending money so that employees don’t end up in a worse situation later, ”the company points out.
Additionally, employee financial assessments can pinpoint where people are struggling and allow companies to focus and personalize resources for their most vulnerable populations, suggests PwC.
4. Implement a technology solution coupled with human interaction and guidance
Employees apparently want help with their finances. According to the survey, a third of respondents rated a financial wellness benefit with access to unbiased trainers as the benefit to employees they would most like to see in their company. Additionally, PwC found that employee usage of financial wellness programs is at an all-time high.
To be competitive, the companies suggest that employers should offer financial wellness offerings that keep employees involved on an ongoing basis. This would include online tools that can be used to train employees and track their spending and savings. Employees also expect a high level of personalization and benefit from personal financial coaching to motivate them.
“Implementing such resources can now also help avoid pent-up destructive financial behaviors as the pandemic subsides and consumer confidence improves when employees may have more options for travel and other discretionary spending,” the company said.
PwC’s survey was conducted online among 1,600 full-time adults in the United States in a variety of industries in January 2021.