Four Steps to Strengthening the Financial Well-Being of the Workforce
More than a year after the start of the COVID-19 pandemic, finances continue to be the number one cause of employee stress, even on top of work, health and relationship stress combined.
In fact, nearly two-thirds (63%) of full-time employees say their financial stress has increased since the start of the pandemic, PwC reports in its 2021 employee financial well-being survey of 1,600 American adults. full-time employees.
Therefore, the survey found that employees whose financial stress has increased due to the pandemic are:
- four times more likely to have experienced a decrease in overall household income and to have difficulty meeting household expenses on time each month; and
- twice as likely to have used a payday loan or payday advance in the past year, to have taken out a loan or distribution to a retirement account, or to consider postponing retirement.
So how can employers foster a culture of financial well-being and support to help their workforce? PwC offers the following four steps.
1. Make a business case to support employee financial health
Employers who invest in improving the financial health of their employees can reap long-term benefits through important actions for the organization, but it starts with a commitment to the financial well-being of employees.
While some employers have taken cost-cutting steps over the past year, PwC suggests considering key metrics the organization values, such as productivity, retention, and physical health. “All of them have costs that have a direct impact on your organization’s bottom line in terms of lost productivity due to distractions, turnover costs like recruiting and training, and higher medical costs when issues go unresolved. quickly, ”observes the cabinet.
Additionally, employees are more likely to be drawn to another business that cares more about their financial well-being, and twice as likely to have avoided dealing with a medical issue because of the cost.
2. Recognize what is happening at home
The PwC survey found that overall household income fell for more than one in four American employees. Less than half (47%) say they would be able to meet basic expenses if they were out of work for an extended period. In addition, almost half (49%) think they will need to use the money in their retirement plans before retirement.
In addition, the burden of caring responsibilities during the working day affects the vast majority of people with dependent children, 83% declaring that they have at least one child at home during the working day.
According to PwC, one of the ways employers can help is by offering personalized benefits to help employees meet their individual needs. “As the American workforce has evolved into the most multigenerational in our history, employees are looking for a wider range of options to deal with their own financial situation, from student loan repayment plans to loan repayment options. retirement ”, underlines the study. And while incentives like workplace flexibility are important, employers may also need to rethink incentives and compensation programs to reflect a range of needs, depending on the company.
3. Leverage momentum to promote good financial habits
Employees need a trusted source of personalized advice for both ends of the spectrum: employees saving more and those struggling with serious financial problems, further suggests PwC.
Among two-thirds of employees who say they changed their spending behavior in the past 12 months, 43% saved more money and many cut back on spending on essentials, the firm notes. However, these spending cuts may not last.
“Employers have a unique opportunity to grab employee attention and offer practical advice, capitalizing on employees’ desire to protect themselves from future emergencies. Now is the time to encourage intention and prudence when it comes to managing and spending money so that employees do not find themselves in a worse situation later, ”the firm said.
Additionally, employee financial assessments can identify where people are struggling and allow organizations to focus and tailor resources for their most vulnerable populations, suggests PwC.
4. Implement a technological solution associated with human interaction and advice
Employees apparently want help with their finances. According to the survey, a third of respondents rank a financial wellness benefit with access to unbiased coaches as the employee benefit they would most like to see added to their organization. In addition, PwC has found that the use of employee financial wellness programs is at an all time high.
To be competitive, companies suggest that employers should provide financial welfare benefit packages that continually engage employees. This would include online tools that can help educate employees and help them track their spending and savings. Employees also expect a high degree of personalization and benefit from individual financial coaching to motivate them.
“Implementing such resources now can also help avoid repressed destructive financial behaviors as the pandemic subsides and consumer confidence improves, when employees may have more opportunities to travel and dine. ‘other discretionary spending,’ the company said.
PwC’s survey was conducted online in January 2021 among 1,600 American adults employed full-time in various industries.