Can an Employee Financial Wellness Program Improve Retention?

Considerations for Implementing an Effective Financial Wellness Program

High inflation has contributed to employees’ financial stress, as many struggle to navigate higher prices, uneven wage growth, and credit card debt. According to a recent management services company report, 8 in 10 employees live paycheck-to-paycheck, and 25% don’t set aside any monthly savings. When employees are stressed about their finances, they’re more likely to be distracted, less engaged, and less productive at work.

The 2023 Employee Financial Wellness Survey by professional services company PricewaterhouseCoopers (PwC) found that one in three full-time employees says financial stress has negatively impacted their productivity at work. Financially stressed employees are also twice as likely to search for other jobs, and nearly three out of four (73%) are more likely to be attracted to employers that care more about their financial well-being.

In today’s competitive business landscape, employers can use financial wellness programs to support their workforce and improve employee satisfaction, retention, and productivity. Here are the benefits of financial wellness programs and provides guidance on implementing successful programs.

The Impact of Financial Stress

Worrying about finances can negatively impact employees personally and professionally. In the past year, Employee Wellness Survey respondents said financial stress had negatively impacted them in the following ways:

• Sleep (56%)
• Mental health (55%)
• Self-esteem (50%)
• Physical health (44%)
• Relationships at home (40%)

Financially stressed employees are less likely to be engaged at work, feel a sense of belonging, or recommend their employer to friends or family. As a result, organizations may experience increased turnover, reduced productivity, and weakened company culture.

Understanding Financial Wellness Programs

Employers can offer financial wellness programs to help employees manage personal financial matters. These programs are designed to educate employees and help them reduce financial burdens. Financial wellness programs may include several resources, such as online education, budgeting tools, credit resources, financial coaching, or counseling. Examples of common financial topics include the following:

• Retirement planning
• Investments
• Debt management
• Household budgeting
• Credit management
• Savings
• Taxes

Financial wellness programs often go hand-in-hand with organizational initiatives that promote employee well-being, encouraging healthy behaviors that can contribute to positive mental and physical health.

Benefits of Financial Wellness Programs

Employers who address employee wellness issues, such as financial stress, may experience happier, healthier, and more productive employees. Financial wellness programs can benefit employers in the following ways:

Decrease employee stress

Financial wellness programs provide employees with the tools and knowledge they need to manage their finances effectively. This can reduce employee stress, improve productivity, and boost morale.

Reduce absenteeism

Financially stressed employees are more likely to take unplanned days off. This can disrupt team dynamics and harm productivity. Financial wellness programs can help employees manage their personal finances, resulting in fewer missed days of work.

Increase productivity

According to PwC, 56% of employees who are distracted by finances spend three hours or more per week dealing with or thinking about their personal finances at work. Financial wellness programs help employees regain control of their finances, which can create a more focused and productive work environment.

Improve attraction and retention

According to Bank of America’s 2022 Workplace Benefits Report, 84% of employers say that offering financial wellness tools can reduce employee attrition. Furthermore, financial wellness programs are an attractive benefit that can improve employee attraction in a competitive hiring market.

Implementing Financial Wellness Programs

Traditionally, employers have offered financial support through retirement plans, life insurance, and other financial and insurance benefits. However, retirement and financial benefits are just one aspect of a successful financial wellness program. To remain competitive, employers may want to consider providing a more comprehensive financial wellness program that provides employees with the tools, knowledge, and resources they need to get a handle on their spending and plan for future savings. These programs may include the following aspects or components:

• Financial education, including how to budget and avoid debt
• Loan consolidation opportunities
• Tools for budgeting and tracking spending
• Mortgage assistance and home-buying advice
• Access to financial experts who can advise on investing, saving, and retirement planning
• Emergency savings funds and loans
• Partnerships with financial planning organizations
• Tuition reimbursement programs
• Regular financial workshops
• Comprehensive retirement planning with employer matching
• Opportunities to buy group life insurance and other elective insurance

Employers can weigh the advantages of providing digital financial resources against the benefits of human counselors or advisors. Digital resources can provide employees anonymous, round-the-clock access to financial education and management tools. However, humans may be more valuable to help employees understand complex financial issues and to keep employees engaged and motivated over the long term.

Conclusion

Financial wellness programs can benefit both employees and employers. These programs can provide employees with the resources they need to successfully navigate difficult economic times, manage and avoid debt, and plan for retirement. Employers that successfully implement these programs may experience improved attraction, engagement, productivity, and retention, which can contribute to revenue.

© 2023 Zywave, Inc. All rights reserved.

Measuring Your Employees’ Wellness

How can you know if your employees want a financial wellness program or other wellness initiatives? Maybe you’ve tried internal surveys, but your staff is uncomfortable revealing information to their manager or HR. A third-party, unbiased Cultural Review could help you gain valuable insights into your workforce so you can address their concerns and needs effectively. Our HR consultants will conduct confidential interviews and provide a detailed report containing findings and recommendations, based on HR best practices and organizational structure. Fill out the brief form below to learn more.