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Employee financial wellbeing has become more vital than ever.
Unleash Your Employees We spoke to several HR experts to find out everything businesses need to know when improving employee financial wellbeing in the modern workplace
In the past year, many people have experienced financial hardship due to the economic challenges of the coronavirus pandemic. And as a result, employee financial wellbeing has become more vital than ever.
By offering financial wellbeing initiatives to help employees better manage and improve their finances, businesses can boost productivity in the workplace, enhance the employee experience, accelerate staff engagement, increase employee retention, and so much more.
We spoke to several HR experts to find out everything businesses need to know when improving employee financial wellbeing in the modern workplace, whether it’s the data and technology required, the opportunities, or the challenges.
Organizations are increasingly recognizing the importance of employee financial wellbeing and taking various steps to address this issue, according to Carolina Valencia, vice president in the Gartner HR practice.
She tells UNLEASH: “According to Gartner research, 85% of organizations are providing employees with at least one financial wellbeing offering, with one out of four organizations providing new financial wellbeing offering in response to the COVID-19 pandemic.
“The range of offerings varies significantly, with the most common four being: financial insurance, tuition reimbursement, financial planning tools and lastly, financial education classes, offered respectively by 79%, 70%, 64%, and 60% of organizations.”
[Read more: 5 FinTechs looking to disrupt payroll]
Jonathan Roberts, an analyst at Forrester, explains that businesses are promoting employee financial wellbeing in many different ways. He says: “Some are trying to build equity into their compensation, promotions, bonus, and merit increase strategies.
“Many are supplementing compensation with features like stock options and profit-sharing. Some are offering benefits outside of direct compensation like first time homebuyer programs, investment classes, and wealth management seminars to focus on things like planning, saving, and retirement.”
Resident Hotels, a chain of hotels in London and Liverpool, is one of many businesses looking to improve employee financial wellbeing.
Head of HR Jennifer Watts says: “As a business, Resident Hotels appreciates that financial stress is the number one contributor to poor mental health and that personal finance issues can be the cause of significant employee stress – and its impact shouldn’t be underestimated. Sleepless nights, loss of focus, strained interactions to name a few. Resident Hotels knew they wanted to establish a financial wellbeing solution that specifically addressed this.”
Data tools can be incredibly powerful when it comes to creating and enforcing an employee financial wellbeing strategy. Valencia says: “Typically, organizations gather employee preferences via surveys. However, leading organizations also conduct conjoint analysis to get a better sense of employees’ needs and wants. During the pandemic, given preferences were changing rapidly, most organizations turned to quick pulse surveys to better understand what was critical to support their employees.”
Roberts recommends that businesses utilize different listening tools to make all their wellness decisions. “Pulse surveys, listening platforms, and thought sourcing software are all utilized to both ask direct questions to the workforce, gauging employee needs for specific types of wellness offerings, and get a sense of employee sentiment more broadly,” he explains.
He says businesses can also leverage workforce data to identify the need for specific employee financial wellbeing offerings, such as estate planning for older employees or first-time home buying for younger employees. “This still needs to be validated by the workforce,” stresses Roberts.
At the start of the pandemic, Resident Hotels distributed a team-wide survey to determine the support its employees required. Watts explains: “This survey went out at the beginning of April 2020, and from this, they were able to target particular mental health concerns, such as employee financial wellbeing.”
Roberts believes that the best tools can integrate with and pull together current benefits. He gives the example of Brightplan, a platform that combines financial education, financial planning, financial management, and more.
“Important things to consider when attempting to improve financial wellness with tech is visibility, usability, and integration,” continues Roberts. “Many employees do not know what benefits are available to them, how to find/access them, and when they do, they are not integrated properly. Usability is just as important as the benefits themselves.”
Watts explains that Resident Hotels has been working with employee financial health solution Hastee to support its staff during the coronavirus pandemic. She says: “For Resident Hotels, this collaboration allows team members to access a proportion of their worked salary in advance of payday but also provides financial education — for example, budgeting and saving advice — for those that need it
“In order to mitigate any concerns about providing this access to pay, Hastee has various velocity indicators to ensure over-usage is flagged. In this event, Hastee would get in touch with the user and direct them towards its financial education tools as well as towards money charities and helplines as needed. Engagement in the platform has so far been extremely good, with sign-up levels at the expected Hastee standard over a two-month period.”
Taking steps to improve employee financial wellbeing presents many different opportunities for businesses. Valencia says: “The extensive focus on wellbeing today creates unique momentum for organizations to really understand what it is that employees need. One trend that we are seeing in our research is that it is less about ‘what’ you offer employees but more about how it makes them feel.
“For example, employees who are struggling financially might be living paycheck-to-paycheck and what they really want is to feel like the organization will be there to take care of them. In that situation, a better option to consider, rather than pay advances, is the option of paying employees more frequently. If employees receive a paycheck once a week, instead of once every 2 weeks or once a month, it might be enough for them to feel like the organization understands their needs and takes care of them.”
Roberts explains that focusing on employee financial wellbeing offers equity opportunities. “From a DEI standpoint, a focus on financial wellness presents an opportunity to assess and improve equitable practices pertaining to compensation, performance management, salary increases, bonuses, and raises,” he says.
“Organizations can study their own workforce data and compensation trends and see who is advancing monetarily and uncover potential biases and inequitable practices. These kinds of studies will oftentimes shine a light on informal paths to career advancement and performance management that favor certain kinds of employees over others.”
Addressing financial wellbeing in the workplace can also help businesses improve overall employee engagement and experience, according to Roberts. He says: “It is reported that employees who are stressed due to personal financial issues spend upwards of three hours a week trying to find solutions (on company time) and score lower in employee engagement and employee experience.”
Although businesses can realize lots of exciting opportunities by improving employee financial wellbeing, they may also come across challenges. Valencia explains that one common barrier is a limited budget. “In the pandemic, despite the tough economic situation, we have seen organizations get creative with their resources and partnerships to offer new benefits with very little or no additional budget,” she says.
Another significant challenge is the fact that not all employees require the same support, argues Valencia. She explains: “The employee population is diverse. Organizations need to truly look at what percentage of the organization is struggling – in this case financially – to see what they need and how to support them while maintaining the positive momentum for those who are doing well.”
She warns that employees don’t always recognize the different offerings available to them, too. Valencia adds: “This is both because they are not always aware of what is available to them and/or because they are unaware of their own needs until it is too late.”
Roberts believes that some financial wellbeing solutions are not comprehensive enough due to the different financial offerings that employees need in a lifetime. He gives examples such as the basic budgeting and loan debt management that employees would require when they start their careers, as well as estate planning and retirement considerations when employees come to the end of their careers.
He adds: “A full and robust spectrum of services is required to support a modern workforce. This sometimes leads to patchy solutions that are either incomplete or focused on one type of employee.”
There are also challenges around integration and usability, according to Roberts. “Many employees cite ‘ease-of-use’ and ‘effectiveness of integration’ as the primary reasons that they engage or disengage with employee benefits offerings. I have observed that the workforces that feel most supported by these types of offerings are also the instances where the tools are easy to access and use, and a part of the existing benefits landscape.”
Mason Beard, chief strategy officer at Immediate, says businesses must break the misconception that only hourly employees need on-demand access to their earned wages. He says: “It’s a false assumption to think that just because a worker is salaried, or just because they make six figures, that they don’t need any financial wellness tools. You don’t know if their partner has been furloughed, if they’re caring for a sick parent, or facing an unexpected medical bill.”
In a time when so many people are struggling with their finances, it’s paramount that businesses do all they can to improve employee financial wellbeing. Luckily, there are lots of data and technical tools that make this possible.
But at the same time, businesses need to be prepared to overcome different challenges when implementing an employee financial wellbeing strategy.
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