28 April 2020
A primary cause of stress today is personal finance, and without proper planning and guidance, it can impact more than just the individual involved. With lower financial stress, organisations could potentially be saving millions in terms of productivity. It is no surprise that companies are increasingly allocating time and resources to elevate the financial wellness of their employees. Regular programs that teach and promote savings and household budgeting are conducted for Bachelors and workers with a Family. While implementations are carried out effortlessly, measuring the effectiveness of such programs is somewhat challenging. But it remains a critical task – since it helps understand the domains that require more focus according to your company demographics and whether the employees are more open to talking about their finances in a direct manner or indirect manner. The feeling of empathy and support also helps employees cope with their various problems.
Here we have 5 ways in which organisations can measure their employees financial wellness.
Missing work due to financial problems is not an uncommon occurrence amongst employee. Many do end up taking sick days to recover from the financial stress. Some of the major causes of absenteeism in a company are often depression and disengagement. Employees not committed to their job may simply not want to go and this often stems from stress, financial or non-financial. Of course, this has direct implications on the organisation – in terms of costs, repeated hiring, and lost productivity. Manage absenteeism remains a challenge since the reasons could range from genuine illness to lethargy. Low absenteeism rates are an indication that employees are happy with their work, healthy in terms of the cash-flow at home and generally motivated.
Financial wellness can greatly impact any individual’s state of mind and mood. An employee constantly stressed about their money and paychecks is going to exhibit lowered engagement and productivity. The concept of work-life balance does not imply compartmentalised sections of an individual’s life – when employees suffer financial hardships, they are likely to bring it into their work, subsequently affecting health. This can act as a double edged sword to organisations – increasing healthcare costs and lowering productivity. Having a control over your day to day, or month to month expensive can absorb a lot of unwanted financial shock. Most students already come with huge student loans, a continued productivity and engagement means that millennials have at least a good understanding about their finances.
Thanks to the complex ways financial institutions operate in, employees often remain unaware of the various interest rates that can be levied on a loan and the fact that interest can get compounded. Financial wellness programs should strive to educate employees about the drawbacks of loans on their long-term savings. While many organisations offer a corporate credit card in order to cover any company related expenses, it is important that employees are truly aware of the consequences of delayed repayments on a personal credit card. Fewer loans withdrawn against savings indicate that employees are able to save up and not living outside their means.
It is important to note that income and financial wellness are not directly related. A higher income does not guarantee financial wellness, and employees with lower incomes may be able live in a way that allows them superior financial wellness and independence. FInancial wellness means you give your employees the knowledge and tools to manage their finance, regardless of income. If employees are happy in their current job and not actively looking for a job change due to financial reasons, the company has probably worked hard and well on their employees financial wellness.
The first step to financial wellness involves employees identifying and analysing their financial status and its situation in the context of their goals. A large number of people may not be open to discussing their financial issues, and would rather hide it. A good first step to measuring financial wellness is de-stigmatising financial problems so that workers can talk about without guilt and shame.
As we’ve mentioned earlier in this post – it is important to recognise that financial wellness extends beyond the concept of just income. Without adequate planning, financial issues can get compounded, much like interest on loans. FInancial wellness programs continue to be adopted by several organisations globally, and as they evolve, we’re now moving to the natural consequential step – that of measuring their outcomes and ensuring it’s a win-win for all stakeholders.