Why Financial Wellness is so Important

Why is Financial Wellness so Important? This is probably a question that was asked about pensions and healthcare before they became the market norm for compensation packages.?‘Do we need to get involved in that? Is that our role? Is paying a salary not enough?’?Thankfully most employers are well past asking these types of questions and wellness programmes are now taking shape in most companies.

Employer Programmes

While mental health is now front and centre for most wellness programmes, many are failing to recognise that personal finance concerns are the number 1 stress in their employees’ lives1. As a result of this misunderstanding many focus on the symptoms and not the cause of this mental health issue.

"…many organisations are failing to recognise that personal finance is the number 1 stress in their employees’ lives."

To date we are seeing three archetypes of firms and how they are addressing financial wellness within their organisation:

• Luddites: Happy to maintain a blissful ignorance of the issue. If it’s not affecting the C-Suite then it must not be a problem anywhere in the organisation.
• Learning: Fully aware there is a problem and possibly have a financial wellness pillar within a programme. However, sponsorship is not at the executive level and so it remains a side of desk role for someone without any real resources to make an impact.
• Leaders: Executive level sponsorship of a programme with systematic delivery of independent financial wellness solutions available to the entire organisation.

We believe 2022 and 2023 will be pivotal years for financial wellness, sadly driven in response to high levels of anxiety and stress from the fallout of the looming economic issues we will face post-pandemic.

While some sectors of the economy will aim to build back better, others will not recover and as the digitisation programmes advance, individual roles will become redundant. While individual firms may feel immune to these structural changes it does not mean that employees’ households are.

So even if your company is experiencing booming growth do not assume that your employees are not suffering from financial stress.

Aside from the ethical and cultural reasons for ensuring that Employee Wellness is a key pillar of any People strategy, Wellness has a compelling business case. In simple terms, a happy team is a productive team. While this simply rings true, there has been extensive research on financial wellness which provides evidence and key insights into the impact this has on employees and their work lives.

Employee Engagement

The uptake in financial wellness services has increased significantly over the past 5 years. in 2016, 68% of employees used financial wellness programmes offered by their employer in contrast to 88% in 2021. That’s an increase of 20%2.?These figures alone highlight the demand and engagement impact financial wellness programmes are having with employees.

"Employee engagement in financial wellness programmes has increased from 68% in 2016 to 88% in 2021"

Impact on Productivity in the Workplace

Our personal financial circumstances are consuming our daily lives. Employees are constantly thinking about their bank balance and how they will manage until the next payday. In Ireland, 30% of employees struggle to manage their finances at the end of the month3. Inevitably, this struggle will have a knock-on impact on our daily, working lives. 45% of employees revealed that finances have been a distraction at work? with research showing that 3.6 hours of productivity is being lost each week when employees are stressed about financial matters?.

"3.6 hours of lost productivity due to stress about financial matters"

This is a significant impact on economic productivity and is hard to argue that it should not be on the top three agenda items for the talent focussed firms.

Employee Reward and Retention

The pandemic changed how we view the workplace and for many the potential of remote working was realised as a silver cloud in the most difficult of times. While many will return to work in some form of hybrid model, this will inevitably impact rewards programmes.

Subsidised gyms, canteens, and company cars are now less compelling for employees and the economics for employers begin to look questionable at best in a hybrid model. Attention will soon turn to the home office, mortgages, utility/broadband bills, and other aspects of financial rewards which are better aligned to a hybrid model. As an example, our research shows that 80% of employees said they would use an independent financial advisor through work if available but only 5% were offered one?.

"Employees who are struggling with their financial wellbeing and are not being supported by their employers are 2.2 times more likely to leave"

As we return to the office in the various forms of hybrid and remote models there is a need and unique opportunity for firms to rethink their approach to wellness and rewards. There is an easy win for employers who can get on the front foot and leverage their wellness programmes to deliver a more impactful and relevant rewards package.

For those who don’t, there will be consequences with research showing that employees who are struggling with their financial wellness and are not being supported by their employers are 2.2 times more likely to leave their place of work and move to a different company?.?

Is Financial Wellness important for your employees? Yes, just ask them.

Sources:

1. 2021 PwC Employee Financial Wellness Survey

2. 2021 PwC Employee Financial Wellness Survey

3. Financial Wellbeanz & Bounce Insights Survey January 2021

4. 2021 PwC Employee Financial Wellness Survey

5. Salary Finance Employer’s Guide to Financial Wellness (2019), MapMyPlan Financial Stress Report)

6. Financial Wellbeanz & Bounce Survey Insights, January 2021

7. Salary Finance Employer’s Guide to Financial Wellness (2019), MapMyPlan Financial Stress Report)