Payroll and Employee Financial Wellness: How Organizations Can Support Their Workforce

Hello and welcome to the fifth edition of 'Inside Track'!

I write this in an airport lounge pre-Nashville PayrollOrg Congress.

Yes, I’m excited! However, I committed to post biweekly so here we are!

Anyway - you know that feeling when you come across something that just really hits home?

Well, that's exactly what happened to me recently. So, I’m lucky to have the idea for this addition of ‘Inside Track’ fall into my lap...

Our Customer Success Manager, ( Natalie Lloyd ) teamed up with Paul Johnson of PREMIER PROPERTY SOLUTIONS (UK) LIMITED and James Matthewson ACSI of OneWealth Ltd to give a fantastic LinkedIn webinar / bite-sized financial education session that got me thinking about how much of an impact payroll folks can have on the financial well-being of their workforce.

And then, as if that wasn't enough, a personal connection whom I greatly respect – Chris Kirby of LACE Partners dropped a hugely insightful and inspiring LinkedIn post that really drove the point home. Chris mentioned the employees he’s served within payroll that remember him and his work. One even mentioning that without resolving a payroll issue, they wouldn’t have been able to pay their mortgage!

These two nuggets got me fired up. So today, I wanted to dig deeper into how companies can step up and support their employees' financial wellness.

The Importance of Financial Wellness...

Let's be real, financial stress is no joke. It's like this silent killer that's creeping around the workplace, is effecting a lot a people. Check out these stats from PwC: 63% of employees said financial stress is taking a toll on their health, and 35% admitted it's even affecting their work performance.

And don't even get me started on how the whole COVID-19 situation has made things even worse. People are losing jobs, getting their hours cut, and dealing with all sorts of extra expenses. The National Endowment for Financial Education did this study and found that a whopping 88% of people were feeling the financial heat because of the pandemic, and 41% saw their income take a nosedive.

So, it's pretty clear that companies can't just sit back and watch this happen. Supporting employee financial wellness isn't just the right thing to do, it's also good for business. When your people are financially secure and not constantly stressing about money, they're more likely to crush it at work and stick around for the long haul.

The Role of Payroll in Financial Wellness...

Okay, so here's where payroll pros come in like superheroes.??

You guys are in a unique position to really make a difference when it comes to employee financial wellness.

You're sitting on all this financial data and you could use it to give your people the insights and resources they need to take control of their money situation.

Of course, there will need to be some kind of opt-in / opt-out to protect sensitive data but here are some ways you could make it happen...

1.????? Financial Education:

This is huge. Payroll can step up and provide some serious education and resources to help employees navigate their pay, benefits, and retirement options. We're talking workshops, webinars, online resources - the whole nine yards. Cover topics like budgeting, saving, and getting out of debt. By giving your people the knowledge and tools they need to make smart money moves, you can help them kick financial stress to the curb and feel more in control.

2.????? Early Wage Access:

Okay, so this is a cool trend that's been popping up in the world of financial wellness. It's called "Pay-On-Demand," and basically, it lets employees tap into some of their hard-earned cash before payday. This can be a total lifesaver when unexpected expenses come up and they need to avoid those sketchy payday loans. However, we need to be mindful about the cons of Pay-On-Demand too.

Pros of Pay-On-Demand:

• It gives employees more flexibility and control over their money. They can get their hands on their earnings when they need them, instead of having to wait around for payday.
• It can help them dodge late fees, overdraft charges, and high-interest debt. By getting paid early, they can avoid turning to expensive loans or credit cards to cover surprise expenses.
• It might even boost employee satisfaction and keep them around longer by taking some of that financial stress off their shoulders.

Cons of Pay-On-Demand:

• There's a chance it could encourage employees to live paycheck to paycheck instead of saving for the future. If they get too used to accessing their wages early, they might have a harder time building up an emergency fund or saving for retirement.
• It could create some extra admin work for payroll teams. Implementing a Pay-On-Demand program might mean adjusting processes and systems, which could be a bit of a hassle.
• Depending on where you are, there might be some regulatory hoops to jump through. Payroll pros will need to do their homework and make sure they're following all the rules and regulations around early wage access programs.

3.????? Retirement Planning:

Payroll can be the MVP when it comes to helping employees save for their golden years. By offering retirement plans and providing education and resources to help them make smart choices about their retirement savings, you can set them up for success. Hook them up with info on investment options, tools to help them figure out how much they'll need in retirement, and guidance on how to max out those employer matching contributions.

4.????? Benefits Communication:

Payroll and HR can team up to make sure employees are totally in the loop about their benefits options. We're talking health insurance, flexible spending accounts, the works. By providing crystal clear communication and education, you can help them get the most bang for their buck when it comes to benefits and avoid any costly mistakes. Payroll can also help employees understand how their benefits choices impact their take-home pay and overall financial situation

5.????? Collaboration with Other Departments:

To really knock this financial wellness thing out of the park, payroll can join forces with other departments like HR, finance, and employee assistance programs. Coordinate financial education efforts, share data and insights, and develop targeted programs to tackle specific financial challenges your employees are facing. For example, payroll and HR could put their heads together and create a financial coaching program for employees who are struggling with debt or budgeting.

In summary - employee financial wellness is a BIG deal for companies.

It impacts everything from employee productivity and engagement to their overall well-being.

As Chris Kirby have so eloquently pointed out, payroll pros have this incredible opportunity to make a real difference in this area. By providing financial education, early wage access, retirement planning assistance, benefits communication, and very simply - doing your job brilliantly, you can help create a more financially secure and happy workforce.

Now, there's no one-size-fits-all solution when it comes to supporting employee financial wellness. Every company is different, with its own unique set of challenges and resources. But by making financial wellness a priority and tapping into the superpowers of payroll professionals, organizations can build a team of financially empowered employees who are ready to take on the world.

So, to all my payroll friends out there, let's take this to heart.

Stay on top of the latest trends and best practices in financial wellness, collaborate with other departments, and use your powers for good.

Together, we can create a workforce that's not just surviving, but thriving.

Oh and by the way Paul Johnson and James Matthewson ACSI provide JGA Recruitment employees with financial advice and I'm sure they would be more than happy to help out you and your businesses too!

Onto Nashville! If you’re in town, please reach out. I’d love to meet up!

Until next time,

Tom.

M: +44 (0)7971 553 798

E: [email protected]