Revisiting Financial Wellness Amid the Pandemic
The coronavirus pandemic has led to one of the most financially challenging times for workers across the world. The extensive COVID-19 restrictions devastated the global economy, plunging it into record low levels. The unemployment rate in the US peaked at an unprecedented level not seen in over 70 years, with nearly 10 million fewer people in paid employment as of November 2020.
Employees were faced with job losses, furloughs, and pay cuts that pushed them into what could be described as the worst financial distress. More than 84 percent of Americans report feeling stressed about their finances as a result of the COVID-19 outbreak, with about 20 percent saying that they had received financial assistance from a charity or community support center due to the outbreak.
With financial stress being one of the most common drivers of workplace stress and burnout, the economic implications of the pandemic could also hurt employee health and wellbeing.
An employee who is struggling to make ends meet during this health crisis or worried about losing their job is more likely to avoid medical treatment for cost concerns. Also, such employees are less likely to put in their best at work and are more likely to take more sick days off and report unplanned absences.
Admittedly, these reveal the striking correlation between an employee’s financial health and a company’s productivity therefore, business owners may need to revisit financial wellness in the post-COVID-19 workplace.
Improve Financial Literacy
One of the primary causes of financial stress that business leaders and HR managers need to address is a lack of financial literacy.
Before now, financial wellness programs focused mainly on contributions to a 401(k) plan and other compensations, and employees were left to figure out basic financial decisions by themselves.
A 2019 Charles Schwab survey found that more than 70 percent of thousands of employees who participated said they had no written financial plan. Their reasons included not having enough time to make one and not having a financial advisor to help create the plan.
Following the financial downtick induced by the health crisis, workers, now more than ever, are in strong need of tools and resources to improve their financial health and make smarter financial decisions - and they are looking to their employers to provide them with these resources.
In the Post-pandemic workplace, employers need to provide financial literacy programs using several approaches, including self-service applications, e-learning options, or access to webinars and interactive tutorials with experts to provide personalized training on financial management.
You can also leverage digital resources to improve your financial wellness initiatives. Some mobile apps have built-in financial tools to help people develop financial plans, create budgets, and analyze their 401(k) savings. You may also engage financial vendors that provide personalized financial advice and employee assistance programs that educate on financial management. The National Endowment for Financial Education (NEFE), for instance, offers a free online program called “Smart about Money” that empowers people with basic knowledge about financial planning and management.
Conduct a Needs Assessment
Providing an effective financial literacy program that will benefit workers requires a personalized approach. Having a baseline understanding of your employee population and their individual needs is a good starting point. Ask focused questions such as: what are their most pressing needs? What are their priorities? If you have an older employee population, how are they saving for a child’s education or assisting with healthcare expenses for an aged parent? If your workforce consists mostly of millennials, they may prioritize student loan debt or paid time off more than saving for retirement.
The needs assessment should also include evaluating an employer’s perception about tax laws and regulations, a competitor’s benefits offerings, and existing federal and state laws about employee compensations and benefits.
This preliminary needs assessment lays the foundation for a successful financial wellness initiative. This assessment will help you determine which benefits will be most useful for helping your workers achieve their most important financial goals.
The data collected from this evaluation could also help employees identify lapses in their financial benefits packages and make the needed adjustments. If a benefit plan exists, you may also need to conduct a utilization review of each benefit offering to determine how well and frequently employees use it.
Once you have completed the needs assessment and gap analysis, you can then formulate a new benefits plan, weighing the cost of providing the prioritized benefits against your budget. At this point, you may need to answer critical questions, such as: how much will the prioritized benefits cost the company? do we have the resources to administer them? Do our employees need to contribute? can we eliminate underused or undervalued benefits? Do we need a broker or third-party organization to administer some plans?
Periodic Evaluation of Benefit Effectiveness
It is not enough to provide your workers with resources and tools for financial wellness or design a new benefit plan based on your needs assessment, you also need to regularly assess the benefit plan program to see if it’s working at all.
Changes in the economy, business climate, and workforce population can alter benefit plans, so it is important for you to periodically check if these benefit offerings are meeting your employees’ needs and the organization’s objectives. Create metrics to assess employee’s financial wellness per time and design an individualized recommendation based on your findings.
You may also consider using external bench-marking data to measure the effectiveness of your financial wellness programs and benefits plan or consider conducting a needs assessment periodically.
Help your Employees Improve their Financial Health
The coronavirus pandemic has plunged the world into an unparalleled financial crisis. Employees report feeling more stressed about their finances now more than ever. Therefore, business leaders now more than ever have to up their financial wellness plan to better equip workers with resources and tools to improve their financial wellbeing and, in turn, productivity.