Companies of all sizes are constantly looking for ways to enhance benefit programs, retain valuable employees, and improve productivity. What if I told you there is one strategy that is emerging across the country that can help address all of these objectives at the same time? This strategy involves helping improve the “Financial Wellness” of your employees.
For those of us who have been around a while, the personal finances of employees has been the proverbial third rail of Human Resources. We have been trained to avoid this topic in the workplace and the reasons have been many. It’s too personal, too complicated, and too legally risky.
The facts are that 40% of individuals surveyed say the stress associated with financial problems affects their productivity at work and 55% say they stress about money issues on a daily basis.
Considering the lingering effects of the Great Recession on personal saving rates and the explosion of student loan debt, the problems facing your employees are not likely to be resolved any time soon. The current state of personal finances has resulted in a massive appetite for financial education.
Forward thinking companies have recognized this epidemic and have begun to take proactive steps to help their employees make better financial decisions, reduce their stress, and improve their workplace productivity. For those companies who want to help, but continue to harbor concerns about the legal risk involved, drawing a parallel between physical and financial wellness may offer a great perspective.
For years, companies have sponsored wonderful workplace wellness programs to help employees make better decisions about their health, and many have enacted rewards to help provide that extra incentive. The hesitancy regarding legal risks appears to have been accepted in light of the ample evidence of the benefits of such programs. What makes the topic of financial wellness different? Financial wellness is a common sense component to any total wellness program since studies have shown a direct connection between an individual’s financial stress and health issues, such as anxiety and depression. The unfortunate facts are that, if employees do not receive any form of financial education at their places of employment, they are unlikely to receive them anywhere else.
Strategies for Delivering Financial Education
There are a number of effective – and legally safe – ways to sponsor financial education that are low cost and will have a positive impact on your employee’s financial wellbeing. The key is to sponsor programs that offer guidance instead of advice. Personal financial advice is still best delivered by professionals who are licensed to provide your employees with customized solutions. Here are a few suggested areas that employers might consider:
Encourage employees to fully utilize the company’s 401k plan. Encouraging employees to begin to save for their retirement by leveraging the tax advantages and possible matching contributions of your existing 401k plan is a great way to begin to establish lifelong saving habits.
Provide workshops that address basic financial wellness. These workshops can include topics such as the basics of developing a personal budget, managing student loans, how mortgages work, consolidating debt, and how to manage credit cards, to name a few. These workshops can be offered on a voluntary basis as an added benefit to employees.
Utilize outside talent and expertise. It is important to remember that you don’t have to have all of the answers or possess all of the knowledge. In every community, there are numerous services anxious to help educate your employees. Your 401k plan’s administrator or investment advisor can be excellent resources for expert presenters. Leverage these resources to ensure that your employees get the best possible guidance.
Sponsor group sessions. Many companies have experienced great success by segmenting employees with similar challenges into support groups. This approach is based on the assumption that employees learn best when they share a common challenge. For example, employees can be organized into groups based on factors, such as:
- First time home owners
- Employees with large student loan debts
- Recently divorced or widowed employees
- Single parents
- Employees preparing for retirement in 5 to 10 years
Mentoring programs. Some employees prefer confidentiality and some topics are best addressed on an individual basis. Aligning volunteer employees who have experienced and conquered similar challenges in a one-on-one setting can be extremely effective.
Help employees make informed decisions about their company benefits. Despite the best efforts of their employers, most employees remain very confused about what benefit plans they should participate in. Helping employees see beyond just the premiums when choosing a health plan, or the importance of insuring against the loss of their income by enrolling in the Short-Term and/or Long-Term disability programs, can have long-term personal financial implications.
Just like in matters involving the management of their physical health, employees must be motivated to take an active role in learning about personal finance and making the necessary changes to improve their financial health. Companies can – and should – play a larger role in sponsoring programs that provide their employees with the resources they need to change the financial direction of their lives. Studies have also shown that 43% of employees without support said their stress level increased in the past year compared to 26% of employees who have access to supporting programs. The efforts involved in sponsoring these programs have provided measurable advantages to companies.
Besides the obvious enhancement to employee morale and engagement, the Cambridge Credit Counseling Corp. estimates that employers who implement some form of financial education in the workplace realize a 3:1 return on their investment through improved productivity. For companies looking for new ways to improve employee engagement, enhance benefit programs, and improve productivity careful consideration should be given to filling the urgent need for financial education.
This piece was originally written by Fahrenheit HR. OneDigital acquired FahrenheitHR in September of 2016.