The financial concerns of employees are becoming more important to businesses and their HR departments and as a result, are playing a central role in their employee wellbeing strategy. Just like we mentioned in ‘How to Make Great Employees Stay at Small Businesses’, life can be stressful and from a mental health perspective, financial stress can lead to lost productivity and time away from work. In fact, 55% of employees said they would like financial support from their employers.
The best way is to empower employees by providing financial wellness programs and help them build their savings to have money set aside for unforeseen emergencies. Reuters’ piece on employee emergency funds, describes how human resources manager Erica Simmons of the Springdale Ice Cream and Beverage Factory in Cincinnati, set up emergency savings accounts for their employees with automatic payroll deductions. Results show that employees are enthusiastic about the initiatives and regard them as an incentive to save even more money.
With more companies following suit, it will help mitigate the fact that a large majority of employees lack savings and cannot cover emergencies. In fact, a guide to emergency funds by Marcus details how 38% of Americans spend almost equal to their income every month, with 41% unable to cover a $400 unexpected expense. A lack of emergency savings is leaving many Americans vulnerable to financial trouble. This is where HR should be providing employees information on ways to save like ‘Save As You Earn’ schemes and share incentive plans for employees to become shareholders where they work.
But financial unwellness is not only affecting employees, it is also affecting employers. Money coach Ashley Feinstein Gerstley illustrates how employees with the lowest levels of financial wellness can cost employers anywhere from $94 to $198 annually. It is, therefore, critical that your HR department focuses on timely communication, face-to-face financial education workshops and online resources on your company’s benefits portal to help employees budget spending, reduce crippling debt and save for retirement.
Pension planning is another major issue and an area where employees tend to struggle. Part of the reason is poor communication from their employers and, in turn, lack of knowledge. Currently, over 66% of people between the ages of 21 and 32 have no retirement savings. With millennials making up the largest generation in the U.S. labor force, the majority don’t understand retirement savings and generally prioritize paying off student debt, buying a home or tend to spend on immediate wants and needs.
HR can help by changing people’s behaviors around spending and educate them about pensions and investments. Providing education through lunch and learning, presentations and one-to-one coaching sessions are important steps to raise awareness. Additionally, providing information that is concise and easy to digest regarding the benefits of 401(k) programs, especially when they are employer-matched, is important to help get employees on board.
Finally, in addition to educating employees to help them budget, spend less and reduce debt (credit card debt in particular), HR needs to be mindful of life stages across generations. The American workforce includes five generations each with their own corresponding financial needs and concerns. Therefore, it’s important that HR understands the difference in generations and knows the best way to communicate with each to meet their specific needs. From engaging boomers face-to-face, for example, to providing easily digestible digital mobile-friendly content for millennials, each strategy to improve financial wellness among employees need to tailor fit.
Written exclusively for Effortlesshr.com
by Bernadette Hess