If you could add just one thing to your salary and benefits package that would help employees deal with financial stress, what would it be? A raise? A bonus? More hours? Recently, many employers have begun to offer financial wellness benefits.
Sixty-two percent of employers feel “extreme responsibility” for their employees’ financial wellness. That’s a fourfold increase since 2013, according to a 2020 benefits report by Bank of America. That may be because 83 percent of employers realize, according to the survey, that when employees learn how to deal with financial stress, their productivity increases. And greater productivity leads to greater profits.
Profits are among several reasons why companies are increasingly interested in financial wellness benefits. Employers can leverage these programs to improve the company culture and enhance their arsenal of tools for attracting, retaining and leveraging the best talent.
Add Benefits That Matter
Not all programs are created equally, however. Some employers offer solutions to cash emergencies, such as payroll advances or student loan support. For example, Salesforce and Talkdesk offer refinancing for student loans. These programs provide short-term relief and may prevent employees from dipping into retirement savings. They do little, however, to help employees build a secure financial future.
The best financial wellness benefits tackle the root of the issue. The problem with payday loans and student loan refinancing is that they push the debt around, providing a quick-fix but no sustainable behavioral change.
Of course, in the long run, surplus income and a well-funded retirement account can’t hurt. For that, employees must first build upon a foundation of practices that lead to sound financial habits (tools like ScoreMaster allows people to make payment plans and take other actionable steps to improve their credit score and overall financial standing). There are many financial wellness benefits that can help employees better manage their finances right now. What keeps people up at night is the lack of control over their day-to-day finances, spiraling levels of debt, and the desire to manage credit more responsibly. Most of us were never taught, for example, how to use credit cards or manage our credit scores.
Unfortunately, 51 million people added to their credit card balances in 2020. As life normalizes, many will prioritize paying down that debt and getting their finances back in order. Even before the pandemic, however, an estimated 80 percent of people were living paycheck to paycheck.
If you’re going to provide financial wellness benefits, you’ll want to select tools and programs that employees will actually use — that help them make the behavioral changes that lead to greater financial security. Because let’s face it: pay raises will be meager to non-existent over the next few years. Companies can, however, get a lot of bang for their benefit bucks. Harris poll data shows that employees estimate their benefits package’s value over 30 percent higher than it actually is. And when employees take advantage of the benefit, it enhances that perception of value.
Making the Business Case for Your Financial Wellness Package
So, financial wellness is good for the company and good for its employees, but can you make a solid business case to include this program in your benefits package? Each company is unique, and your employees may be less stressed than average. However, assume that roughly one-third of all employees are significantly worried about money. In turn, 34 percent of these people report that financial concerns affect the quality of their work. Would you see overall productivity drop by one-sixth in this case?
Of course, you’ll need metrics to prove the benefits. When employees are relieved from financial stress, the company will benefit from:
- Decreased absenteeism.
- Increased engagement and concentration.
- Better quality control.
- Fewer personal phone calls.
- Reduced risk of theft of company assets.
As with all benefits programs, you’ll also want to conduct periodic surveys to understand how your program should evolve.
Type of Programs to Consider
The financial wellness benefits trend started pre-pandemic and has accelerated even more during recent periods of economic uncertainty. Eighty-three percent of companies offer financial wellness benefits of some kind, and they are no longer limited to retirement planning. There are some creative options that empower employees to take control of their money situation — these include financial planning workshops, lunch & learn events and access to financial products, consultants and coaches.
Some companies are partnering with local financial services firms to create in-house financial wellness programs. LinkedIn is one and they provide financial classes to help their employees set budgets and invest wisely. Popular topics include debt reduction, student loan repayment and financial goal-setting.
Of course, traditional retirement, tax webinars and investment workshops have existed for decades. But many people struggle with basic budgeting. So if you’re looking for a way to launch your program, this may be an excellent place to start. These can be in-person or online workshops, counseling or coaching sessions, by telephone, or any combination. Not surprisingly, Bank of America is on board with its own counseling program for employees.
Application and Self-Service Tools
There are some wonderful online tools and applications available. Many allow users to track their spending, fund their savings accounts and manage their budgets — all from the convenience of a smartphone. These are great, although they may have limited utility when it comes to reducing financial stress. It can be difficult for employees to manage their finances with no cushion for emergencies and an overreliance on high-interest-rate credit. Most everyone has a credit card … or four, according to recent research. And everyone has a credit score.
ScoreMaster is an application that can help employees get their best credit score. A better score means more favorable terms when borrowers apply for a loan, lease a new apartment or refinance credit card debt. With ScoreMaster, each employee user receives a plan that is unique to their credit situation. It meets employees where they are today, with customized strategies that tell them what to pay when, helping to optimize their credit score. The tools can also protect employees from identification fraud. With a game-design interface, employees will appreciate how easy ScoreMaster is to use.
Companies are uniquely positioned to provide financial tools to their workforce. After all, many people turn to their employer for assistance when they have a problem. Just as health issues don’t disappear at the office door, money troubles tend to follow employees wherever they go. Financial wellness tools are a welcome addition to your benefits package.
Sources:
Bank of America – 2020 Workplace Benefits Report
The Wall Street Journal – More Companies Help Employees With ‘Financial Wellness’ Plans
Tech.co – 20 Best Companies for Employee Benefits and Perks
Built In – 100 BEST LARGE COMPANIES TO WORK FOR
Human Resource Executive – Creating effective financial-wellness programs
CNBC – 51 million Americans increased their credit card debt because of Covid
The Washington Post – A breakdown of what living paycheck to paycheck looks like
AICPA – Americans Favor Workplace Benefits 4 to 1 over Extra Salary: AICPA Survey
MetLife – Navigating Together: Supporting Employee Well-Being in Uncertain Times
BusinessWire – Financial wellness program popularity rises among employers, up 63 percentage points in two years
Salary Finance – THE EMPLOYER’S GUIDE TO FINANCIAL WELLNESS 2019
Debt.com – Fewer Americans are Budgeting in 2019 — Although They Think Everyone Else Should
CNBC – Americans have an average of 4 credit cards—is that too many?