Why You Should Focus on Financial Well-being in the Workplace
Normally we interpret wellness as a focus on cutting health costs, increase in physical activity and proper nutrition. Financial Well-being keeps stress free and impacts physically and emotionally, keeping other health problem at bay and increases productivity.
Traditional views of wellness focus on cutting health costs, increasing physical activity and proper nutrition. But tracking steps, joining an exercise class and eating healthy lunches are just part of holistic well-being. When I say well-being, I'm referring to physical, but also emotional, work and financial well-being. We include financial well-being because we know it has a major impact on stress. Today, more employers are focusing on employees' overall well-being - including financial well-being.
As we all know, it can be difficult to improve any part of well-being when there's the burden of financial stress looming over everyday activities. When your employees are anxious about bills and other financial burdens, their overall well-being slips - which can lead to other health problems and workplace performance issues. Let's take a look at the relationship between financial well-being and the workplace.
Here are a few reasons why financial well-being is a critical part of employee well-being:
Finances are a major stressor
Work isn't the only thing stressing employees out - money can be a huge source of anxiety. A 2017 PwC survey showed that employees experiencing financial stress are less productive and in worse financial shape than other employees. In fact, 35 percent of working adults in the U.S. cited health issues caused by financial stress and 48 percent of respondents said they're distracted by finances at work. For some, money can be a constant source of stress.
A 2015 report conducted by the American Psychological Association (APA) found that 72 percent of adults feel stressed about money at least some of the time and 22 percent experience extreme financial stress. When it's extreme, health suffers. Some respondents said they thought about skipping (or actually did skip) doctor visits because of financial concerns.
The same APA study found that those in lower-income households with extreme financial stress are more likely to engage in unhealthy behaviors to manage that stress. Think watching TV for hours, ice cream binging and drinking one too many to manage stress. We know that chronic stress is unhealthy on its own, but financial stress multiplies the impact. With money on the mind, people may avoid health investments just to save.
This doesn't mean you should ignore your finances and push your worries aside when you tackle them head on and take control of your bills or debt, you're more likely to reduce your financial stress. Start by making a plan.
Managing finances takes time
Managing finances isn't just stressful, it's time-consuming. But how you manage and spend your money can have a direct impact on your life. Without control of financial health, employees bring their worries into the workplace. In fact, 50 percent of those surveyed by PwC said they spend three or more hours at work each week dealing with financial matters. Some employees even miss work due to money woes, according to a SHRM survey in June 2014.
Among HR professionals surveyed, 37 percent indicated that employees had missed work because of a financial emergency. And another study published by Rand in 2015 found lack of sleep, financial concerns and taking care of family members are negatively associated with productivity. Stress is distracting - and when employees worry about their financial well-being, they lose focus and are less productive in the office.
Employers need to take a broader approach to financial well-being with a program that not only supports employees' financial issues with awareness but actually helps employees set aside time to make a budget and manage their debt.
Employees want support
Employees feel the burden of all this stress, and they want their employers to help support financial well-being. A great example is the financial well-being program at San Antonio-based USAA - designed to assist employees with getting control of the full scope of their finances. The program included activities focused on setting a personal budget, handling regular and unexpected financial challenges, establishing a will and retirement planning.
Although the SHRM study found 81 percent of HR professionals said they provide retirement planning to their employees, a majority don't provide credit score monitoring or financial literacy training. But employees, especially those just out of college, want financial planning benefits.
In a 2015 survey of employees - published by Quantum Workplace and Limeade - almost 40 percent of employees under the age of 25 said they wanted their employer to provide these benefits. Employees who feel stress from money issues are looking for help to improve their financial well-being.
Financial well-being improves engagement
In our study, 71 percent of employees surveyed said they want standard cost-of-living raises - but only 31 percent of employers provide them as financial benefits. I'm a big fan of both market and merit-based pay, but employers should be aware of cost-of-living realities, especially for lower-paid employees. Cost-of-living adjustments account for increased living expenses due to inflation. They may alleviate stress and allow for more focus at work.
When you give employees a wage increase, they're 15 percent more engaged, on average. Providing financial benefits also shows employees that the organization cares about them as individuals, inspiring loyalty, and motivation. When employees feel their employers care about their health and well-being, they're 38 percent more engaged. Investing in financial well-being boosts the overall well-being of employees, increasing their health, productivity, and engagement. It belongs in the workplace.
About the Author
Henry Albrecht is the founder & CEO of Limeade, an employee engagement company that builds great places to work by improving well-being and strengthening workplace culture. Connect with Henry and the Limeade team on Twitter, Facebook and LinkedIn.