Recently, the financial stress weighing on employees has taken centre stage, significantly impacting employee well-being.
A series of lockdowns between 2020 and 2022 left 21 million people unemployed, with the income of about 97% of the households declining. Subsequently, geopolitical tensions in Ukraine and Global Macroeconomic Uncertainty has meant that the cost of living has gone up.
Inflation soared to 6.7% last year on the back of huge rises in fuel and food, leaving many households with challenges.
According to a survey by EY, a study showed that 81% of Indian employees faced financial shortfall between pay cycles, and nearly half reported that they were stressed about their finances.
Why does this matter for businesses?
Well, employees grappling with financial insecurity often demonstrate a dip in their productivity, impacting the company’s performance, be it sales, service, process efficiency and, thereby, profits.
Nearly three-fourths of employees said financial worries had a negative impact on their productivity.
A few organisations have recognised this predicament and pre-emptively given benefits and support through this challenging period.
However, a glaring challenge persists in transparency, especially when it comes to most companies outside a handful.
A majority of employees don’t feel comfortable sharing information about their finances based on a survey.
As we progress into the year, understanding and supporting employee financial wellness is pivotal for thriving workplaces.
By integrating robust financial well-being programs, companies aim to enhance employee well-being, drive productivity, and curtail absenteeism, attrition and related costs.
At its core, financial wellness paints the picture of an individual’s stable and confident financial state. Imagine meeting day-to-day expenses, monthly bills, and annual obligations without a hitch. But it doesn’t stop there. True financial well-being means having a buffer—savings for unforeseen circumstances and exigencies.
In this ideal scenario, stress or worry about finances remains absent.
A survey by the Economic Times found that 40% of respondents did not have enough emergency savings to meet unexpected expenses, 30% said that they may not be able to meet monthly expenses, and 20% felt that they wouldn’t be able to keep up with debts.
At the heart of any thriving business is a motivated, performing workforce which hinges on the employee’s well-being.
While the ideal scenario is one where employees seamlessly compartmentalize personal challenges from work, it’s too much of an ask—especially when financial wellness is at stake.
The ripples of financial insecurity manifest beyond mere workplace distraction. To bridge monetary gaps, some employees may turn to secondary jobs or side hustles, inadvertently compromising their primary role’s productivity. And the effects aren’t just physiological. Financial instability has tangible physiological consequences.
According to Delloite’s Mental Health Survey, Poor Employee mental health due to financial stress cost Indian companies nearly $14 billion in absenteeism and lost productivity.
A telling survey indicates that 46% of individuals with debt bear the additional burden of a mental health diagnosis. An alarming 86% concede that their debt exacerbates their mental health woes.
The blueprint for an effective financial wellness program hinges on understanding and addressing employees’ unique financial quandaries. Taking a preliminary step, companies ought to discern their team’s needs.
While personnel data may reveal some financial insights to get a clear picture, a tailored questionnaire designed to get an insight into employees’ financial landscape would yield richer information.
Confidentiality and anonymity are crucial to collecting accurate data and gathering honest and correct information.
A well-designed financial wellness program enhances the employee’s financial knowledge and gives them the confidence to manage their personal and family finances better.
The ultimate aim?
To free employees’ minds from the stress and challenge of financial unpredictability. For the program’s effectiveness, it should include financial planners and foundational financial literacy modules such as debt management, investment strategies, and retirement planning while offering tangible financial incentives like hardship grants, cash awards, and employee discounts to support employees during challenging times.
Looking at employee well-being data is a good place to start to understand how well an organization is doing on employee wellness. This data shows how employees feel and how effective the company’s well-being programs are. A few ways to measure it are:
Job satisfaction is a good indicator of employee well-being. Job satisfaction surveys are a good tool to glean valuable insights into the overall state of well-being among employees. These surveys act as a barometer of employee contentment and loyalty. A commonly used metric for employee loyalty is the Employee Net Promoter Score (eNPS) – it gauges how likely employees are to recommend their workplace to others.
In an eNPS survey, employees are typically asked to rate their workplace on a scale from 1 to 10. A score of 8 to 10 indicates a strong and healthy workplace, while a score below 6 suggests that changes and improvements are necessary.
Job satisfaction surveys and the eNPS are good for assessing and monitoring employee well-being, providing valuable data to the management to make informed decisions and implement changes that enhance workplace satisfaction and, by extension, overall well-being.
Instituting Mood Tracking through an app or a service can help employees record their feelings over time. It helps management understand their emotional ups and downs, enabling the company to understand what demotivates or motivates an employee.
Employee engagement is another important indicator of employee wellness, reflecting the dedication and involvement of employees in their work. Two effective ways to assess employee engagement are:
Monitoring employee behaviour and obtaining feedback from managers or HR experts can provide valuable insights into engagement levels.
Conducting a drivers analysis to pinpoint the factors that have the most significant impact on your organization’s employee engagement.
By evaluating and understanding employee engagement through these methods, organizations can take proactive steps to enhance engagement levels and promote overall employee well-being.
The company’s overall performance reflects its employees’ well-being. Metrics like output per hour can give insights into employee engagement and well-being.
Let us look at a few real-life scenarios to understand successful financial transformation programs that have positively impacted the well-being of employees.
Take Tanium, a cybersecurity leader. The company held ‘financial wellness weeks’, with expert-led sessions on money management topics. It boosted employee health, increased work output, and improved job happiness.
Similarly, financial giant FinServe saw the link between money stress and employee well-being. The company introduced workshops on budgeting, retirement planning, and managing debt. They also partnered with financial experts for personal employee consultations. The outcome? Employees felt more financially secure, enjoyed their jobs, and worked more effectively.
Many studies show that helping employees with financial stress leads to a happier and more efficient team. Forward-thinking companies are creating financial wellness programs and seeing real benefits in worker happiness and business success. For companies wanting a positive work environment, supporting employees’ financial knowledge isn’t just about doing the right thing but is also great for business. A well-rounded future of work includes strong financial health.
