The Great Recession of 2008 was the single biggest financial catastrophe to hit the U.S. in the Post World-War II era. Though this may seem like old news, and the country may seem well on its way to recovery, millions of Americans (and many of your employees) are still reeling.
In a survey last year by Country Financial, 1 in 3 Americans still feel as though their personal finances haven’t fully recovered or never will. Going even further, a full 67% of Americans say they’re worried about their financial future. Rents have risen 30% since 2010, credit card debt hit a record high in 2017 at more than $1 trillion, and 44% of Americans can’t come up with $400 in the event of an emergency.
All of this is to say, many of your employees are stressed out about money.
And it’s not just your employees who are suffering. As their employer, it’s you that’s suffering as well.
It turns out that when your employees are financially stressed, it has a pretty big impact on your bottom line. A Mercer survey found employees spend about 150 hours annually of their work time worrying about money. And that costs you a bundle whether your company has 5 employees or 500.
The good news? As an employer, you are in a strong position to affect real, positive change in your employees’ lives.
Many companies have begun seeing success from offering financial wellness benefits, which educate their employees and use behavioral science to nudge them towards better financial habits. These benefits, which include programs like personalized financial advising and low-cost, easy-to-use 401(k)s, go a long way towards alleviating financial stress and setting employees up for a brighter financial future.
Best of all? Financial wellness benefits have a real impact on your bottom line.
In this article, we’ll show you the top 4 reasons why so many companies are making employee financial wellness a strategic priority in 2018.
1. Attract and retain employees
Being stressed about your finances is a huge mental drain. You think about it constantly, and you’re always on the lookout for a way out. Many times, this might entail switching jobs, even if the pay increase is minimal. Offering financial wellness programs may go a long way towards alleviating these avoiding the turnover that results from financial stress.
According to a study by MetLife, when financial planning programs are offered, 51% of employees are more likely to accept a job with a new employer, while 53% would be more loyal to their current employer.
Given that if employee turnover costs 30% of an employee’s yearly salary, the retention benefits alone might be enough to justify a financial wellness program – especially when you consider that some benefits like an improved 401(k) cost your company next-to-nothing.
2. Improved engagement
Financial stress can hurt your employees’ engagement in a number of different ways. When employees are worried about making ends meet, paying off debt, or any similar concerns, they may spend hours of their workday on the phone with banks, worrying about creditors, or simple being distracted. According to the Financial Fitness Group, for every 100 employees, your company loses 22.5 workdays per year due to financial distress.
So financial stress has a major impact on employees’ productivity while they’re at work, but it also causes them to be absent more frequently. A 2016 Towers Watson survey found that workers stressed about their finances are absent from work 3.5 days per year – almost double the absenteeism of workers that aren’t stressed. A Rand Europe survey of 30,000 Britons in 2017 found that those with financial worries lose on average six days per year more than those without concerns, in absenteeism and presenteeism, according to a report in the Financial Times.
Both absenteeism and lost productivity add up to a serious impact on your profitability. By alleviating financial concerns, financial wellness programs can go a long way towards increasing your workforce’s productivity and their attendance.
3. Lowered healthcare premiums
Financial stress – really any kind of stress – puts a significant strain on the body and leads to all sorts of health problems. Financial stress increases heart rate, blood pressure, and it suppresses memory, concentration, and metabolism, which can increase the risk of heart disease, stroke, digestive problems, weight gain, and more.
Long story short, financial stress leads to all kinds of health problems, which means higher health insurance premiums for employers. Luckily, financial wellness benefits help with that too. The exact impact financial wellness benefits can have on healthcare costs is unclear, but there’s one report of a large public company, which reported an annual savings of 21.57% on healthcare costs for heavy users of their financial wellness program.
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4. Retirement planning
While under financial duress, employees are having a hard time saving – and this is delaying their retirement. According to a survey by Gallup, 40% of Americans believe they will retire after age 65. Surprisingly, this too can hurt your bottom line.
The reality is, with age come health problems. An increase in insurance claims from a higher volume of older workers may lead to a significant increase in healthcare premiums. On top of this, older employees are often paid higher due to a longer tenure.
By putting employees in a position to participate in retirement programs such as the 401(k), your company stands to significantly reduce costs. In fact, according to one model, having employees retire in a timely manner can save you $596 per employee in the first year, and more in successive years. Which is to say – increasing 401(k) participation can have a significant impact on your bottom line.
Financial stress is major problem in today’s society. Not only does it majorly hamper your employees’ happiness, but it’s also hurting your company’s bottom line. Which is to say, your employees and your company are in this together.
With financial stress at a real high point in society, and with the lifespan beyond retirement age at an all-time high, assisting your employees with their financial wellness might be more important than ever. You get to make a true difference in your employees’ lives, and you can improve your bottom line. Everyone is happy in this scenario. The world is truly a better place. Less worries, less stress, and more profits. What’s not to like?