What are organizations doing to help employees manage financial difficulties?
SHRM (in collaboration with Elevate) explored this question in their recent survey Employee Financial Stress. They found that 61 percent of HR professionals would describe their employees’ financial health as no better than “fair,” where 38 percent would describe theirs as “very good” or “good.”
Organizations that had more full-time hourly employees were more likely to have a response of “fair” compared to organizations with fewer full-time hourly employees who were more likely to report better financial health amongst employees.
Employees and financial stress
Half of HR professionals (50 percent) reported that the age group most likely to experience financial stress was 25 to 34 year olds, though 29 percent reported that 35-44 years old experienced more financial stress. This makes sense as both age ranges reflect periods of significant life changes, such as starting a first job, buying a home and having a first child.
If 61 percent of HR professionals would describe their employees’ financial stress as no better than fair, it begs the question as to what efforts, if any, organizations are making to help employees become more financially literate and skilled.
SHRM and Elevate’s survey found that 70 percent of HR professionals report employees being “somewhat financially literate,” and while 17 percent of employees are described as “very financially literate,” an additional 17 percent are considered “not at all financially literate.”
So, we can cycle back to the initial question then of what organizations are doing to help employees manage financial stress?
Needed: financial literacy training
The research finds that 19 percent of organizations offer employees loan products from a third-party provider, and 18 percent of organizations offer payroll advances. Almost three-quarters of HR professionals report that offering third-party provider loan products have a positive impact on employees’ overall ability to manage their financial difficulties. Slightly over one-half of HR professionals reported pay advances having a positive impact.
When it comes to common services that organizations offer to employees to help manage their finances, retirement planning and consultation takes the top spot at 81 percent, followed by financial literacy training for investing at 42 percent. Some, although few, organizations also offer financial services including financial literacy training for basic budgeting (25 percent) and credit score monitoring (8 percent).
Financial stress can lead to workplace tensions
The fact that a combined 61 percent of HR professionals describe the overall financial situation of their employees as no better than fair (50 percent fair, 10 percent poor, and 1 percent very poor) may hint that organizations should take a look at their financial benefits program and tailor it to the needs of their employees.
For example, if an organization has a high percentage of Millennial employees, and the data suggest Millennials are experiencing the most financial stress, this could be a starting point.
We can highlight too, that if this is the case, it could be a point for inter-generational workplace tension – if there are highly perceived financial differences among different demographic groups. Organizations might also consider some of the positively received but less used financial benefits.
Understanding the personal financial stress points in your workforce will be a first step in providing meaningful support for a stressor that can derail productive employees in your workforce.
This originally appeared on China Gorman’s blog at ChinaGorman.com.