In the wake of the pandemic, employees are placing great importance on financial wellness programs and benefits.
Johnny C. Taylor, Jr.
President and CEO of SHRM (Society for Human Resource Management)
Historic turnover, sustained wage inflation, and a widening skills gap is producing an ultra-competitive talent market. The Great Resignation is leading to losses in productivity, performance, and, ultimately, profit. Organizations are scrambling to find a competitive edge in the labor market to boost recruitment and stave off attrition. In the race to find strategic solutions, businesses are scrutinizing everything from compensation to workplace culture. As many are finding, workers’ preferences and expectations have dramatically shifted. The traumatic impact of 2020 has fundamentally altered the perspective of workers. The persistent threats to lives and livelihoods have had a catastrophic effect on workers’ physical, mental, and economic health. For workers, this era of economic instability has led to widespread financial hardship and stress.
These challenges also present opportunities for businesses to reset their workplace strategies to transcend the current economic trends and discover new avenues for success. Workers’ financial stress presents a window to broaden businesses’ appeal to current and prospective talent. According to a recent SHRM study, 74 percent of HR professionals indicate their employer has not added new benefits or expanded existing benefits to help employees manage their financial stress since the start of the pandemic. Employers have not offered any significant response to the financial stress plaguing workers. Such financial stress detracts from workers’ focus, engagement, and performance, exacerbating the problem of an already depleted workforce.
Strengthening your workforce
Financial well-being ascribes individuals the ability to meet current and ongoing financial obligations, secure their financial future, and make choices that allow them to enjoy life. But until recently, employers paid little attention to their employees’ personal financial circumstances beyond providing standard retirement savings plans, safety net insurance, and health savings accounts. Employers did not equate employees’ financial well-being with organizational success.
Offering tailored financial wellness programs can generate a strong return on investment via a less stressed and more engaged workforce. The SHRM report also delineates the difference between the needs of working and unemployed individuals to separate strategies for these two different groups. Just 6 percent of working Americans have contacted a financial advisor because of financial stress. In contrast, 22 percent of unemployed Americans have taken this approach to their financial well-being. In fact, unemployed Americans are likely to place a higher value on benefits, such as insurance, emergency funds, and financial planning and coaching than their employed counterparts. The unemployed represent a significant talent source for the future workforce. For workers, financial wellness benefits represent an opportunity to magnify the impact of their income by helping workers utilize sound financial strategies. For employers, it strengthens their position in the talent market for attracting new workers and retaining current ones.
Financial wellness programs
Financial well-being benefits encompass financial education, coaching, and planning. Finance seminars and webinars on investing basics and planning for retirement fall under the umbrella of financial education. Financial coaching offers more detailed advice about the basics of personal finance, e.g., budgeting, savings, debt, and credit management. Financial planning offers the most personalized support, with individual sessions with a financial advisor on wealth management, investments, and estate planning.
The appeal of financial wellness benefits varies across age demographics as well. Baby Boomers are less likely to indicate that the personalization of financial wellness benefits is important to them. Conversely, Generation Z, Millennials, and Generation X consistently see the personalization of financial wellness benefits as a higher priority.
Organizations should approach changes to their financial wellness benefits by considering the needs of both existing employees and their future workforce, which will include a substantial number of the currently unemployed. The expansion of financial wellness benefits is critical to addressing the previously unmet needs of workers and candidates who have endured two years of economic upheaval, while simultaneously advancing talent recruitment and retention. This represents an opportunity to strengthen the connection between workers and the workforce as each has a vested interest in the success of the other.