Revisiting Financial Wellness Amid the Pandemic
The coronavirus pandemic has resulted in one of the most financially difficult times for workers around the world. The extensive COVID-19 restrictions have devastated the global economy, plunging it to a record low. The US unemployment rate reached an unprecedented high in over 70 years, with nearly 10 million fewer people in paid employment as of November 2020.
Employees faced job losses, vacations, and wage cuts that put them in dire financial straits. More than 84 percent of Americans say they feel stressed about their finances as a result of the COVID-19 outbreak, with about 20 percent saying they received financial assistance from a charity or community support center as a result of the outbreak.
With financial stress being one of the leading causes of stress and burnout in the workplace, the economic impact of the pandemic could also affect the health and wellbeing of employees.
An employee who is struggling to make ends meet or is worried about losing his job during this health crisis is more likely to avoid medical treatment for cost reasons. Also, these employees are less likely to do their best at work, take more sick days, and report unplanned absences.
Granted, these show the striking correlation between an employee’s financial health and a company’s productivity, so business owners may need to rethink workplace financial health after COVID-19.
Improve financial literacy
One of the main causes of financial stress that business leaders and HR managers need to address is lack of financial literacy.
Until now, financial wellness programs have mostly focused on 401 (k) plan contributions and other compensation, and employees have had to make basic financial decisions themselves.
A 2019 Charles Schwab survey found that more than 70 percent of thousands of participating employees said they did not have a written financial plan. Their reasons were that they didn’t have enough time to create one and they didn’t have a financial advisor to help create the plan.
In the wake of the financial downturn caused by the health crisis, workers need tools and resources more than ever to improve their financial health and make smarter financial decisions – and they expect their employers to provide them with those resources.
In the post-pandemic workplace, employers must offer financial literacy programs with a variety of approaches, including self-service applications, e-learning options, or access to webinars and interactive tutorials with experts to provide personalized training on financial management.
You can also use digital resources to enhance your financial wellbeing initiatives. Some mobile apps have built-in financial tools that help people develop financial plans, create budgets, and analyze their 401 (k) savings. You can also hire financial service providers to provide personalized financial advice and employee support programs that teach about financial management. For example, the National Endowment for Financial Education (NEFE) offers a free online program called Smart About Money that equips people with a basic understanding of financial planning and management.
Conduct a needs analysis
Delivering an effective financial literacy program that benefits workers requires a personalized approach. A basic understanding of your workforce population and their individual needs is a good place to start. Ask specific questions such as: What are your most pressing needs? What are your priorities? If you have an older group of workers, how do you save for a child’s education or help an older parent with healthcare costs? If your workforce is mostly Millennials, they may prefer student loan debt or paid time off more than saving for retirement.
The needs assessment should also include an assessment of the employer’s assessment of tax laws and regulations, a competitor’s service offerings, and existing state and federal employee compensation and benefit laws.
This preliminary needs analysis lays the foundation for a successful financial wellness initiative. This assessment will help you determine which accomplishments will be most useful in helping your employees meet their key financial goals.
The data gathered during this evaluation could also help employees identify gaps in their financial benefit packages and make the necessary adjustments. If a benefit plan is in place, you may also need to run a usage review of each benefit plan to see how well and frequently employees are using it.
After you have completed the needs analysis and the gap analysis, you can formulate a new benefit plan and weigh the costs of providing the prioritized services against your budget. At this point, you may need to answer critical questions such as: How much will the prioritized benefits cost the company? Do we have the resources to manage them? Do our employees have to make a contribution? can we eliminate underutilized or undervalued benefits? Do we need a broker or third party organization to manage some plans?
Periodic evaluation of the benefit effectiveness
It is not enough to provide financial wellbeing resources and tools to your employees or to design a new benefit plan based on your needs analysis; you also need to periodically review the benefit plan program to see if it is working at all.
Changes in the economy, business climate, and workforce can change the benefit plans, so it is important that you regularly review these benefit offerings to ensure that these benefit offerings meet the needs of your employees and the goals of the company. Create metrics to rate employees’ financial health per time and create a customized recommendation based on your results.
You can also consider using external benchmarking data to measure the effectiveness of your financial wellness programs and benefit plans, or consider performing a needs assessment on a regular basis.
Help your employees improve their financial health
The coronavirus pandemic has plunged the world into an unprecedented financial crisis. Employees report feeling stressed about their finances more than ever. For this reason, more than ever, business leaders need to improve their financial wellbeing plan to better equip their employees with the resources and tools to improve their financial wellbeing and, therefore, their productivity. To learn more about the strategies you can implement to improve the financial health of your employees, visit Healthcare Revolution and get insights from the leading experts in the field.