Financial wellbeing has been put in the spotlight by the pandemic, as employees all over the world have been subject to sudden financial turbulence, often beyond their control. This is redefining the employer/employee relationship, to the point where financial wellbeing is becoming a more prominent part of the corporate agenda.
In this edition of the Payday Podcast, we spoke to Felicia Cheek, Director of HCM Product Strategy for Oracle. She discusses the concerns of the modern workforce, how they vary between generations, how financial stress impacts productivity, and how payroll and HR can help relieve some of this stress.
Why financial wellbeing matters
Felicia highlights research that has found that 78% of American workers are living paycheck to paycheck, that most of them have little or no savings, and that 29% of American families experience food insecurity. This level of financial precariousness - even in an economy as developed as the United States’ - demonstrates why financial wellbeing support can make such a big difference to so many people.
But as Felicia mentions, there are knock-on effects for businesses too: “Most organizations will find that workers are stressed because of their financial wellbeing. This results in increased absenteeism, poor customer service and decreased productivity. This adds to why organizations are really looking at financial wellness and how they can help their employees.
Financial wellness for all
Because smaller financial impacts tend to affect their lives more, there’s a perception that financial wellness support is only something that is needed by employees at the lower-paid end of the labor force. But the truth is that financial shocks can happen to anyone, and so businesses need to ensure that everyone within their workforce knows they can reach out for help if they feel they need it.
“Companies tend to look at financial wellness as a need of lower-paid employees,” she explains. “The first thing you have to do to really have a comprehensive plan is to look at it as something that any of your employees - regardless of where they are on your payroll - would take advantage of. It could be a financial crisis or a medical situation: there are all kinds of things that would lead an employee to a financial wellness program.”
Who sets the pay date?
One area in which the employer/employee relationship is being defined is in paydays, and specifically who decides when pay is received. Historically, this has been unilaterally decided by the employer, who will pay their full workforce on fixed dates, typically every week or every month. But as employees demand (and in many cases, need) more flexibility, Felicia is finding that this is starting to change.
“The trend will be different in different countries, and obviously we have to consider the legislative impact, but we’re starting to see more and more organizations adopt things like Earned Wage Access,” she says. “There are certain criteria around that but it does provide a little bit more flexibility. There are also things starting to emerge around payments, such as instant pay and digital wallets.”
Change driven by youth
Felicia has found that financial priorities vary substantially depending on their age and experience, and their views about financial wellbeing are similarly varied as a result. She emphasizes that younger employees are those who want more flexibility and more help around their finances, in no small part because they have been the hardest hit by the pandemic.
“We are, for the first time, working with five generations in the workforce,” she explains. “A lot of the things we are seeing in the workforce, things like flexible work times that have come about during the pandemic, are being driven by millennials and Generation Z. These two generations - and Generation Z in particular - are interested in financial education, but are more concerned about their short-term finances.”
The role of payroll
The expertise and information that typically sits within a payroll organization or department can be hugely valuable in connecting employees to payroll better. Felicia explains that driving a good understanding of payroll right from the initial onboarding process can help employees feel more comfortable about their finances.
“Payroll has an opportunity to really be a star. It’s payroll’s responsibility to make sure employees know how and when they’re paid, to help them understand their payslips, and that they know how to use tools like Earned Wage Access. I know there are a lot of payroll organizations that are not as involved in the onboarding process as they want to be - this is the time to really push for that. It’s time for payroll to step up and make sure employees are well-informed, and take every opportunity to educate them to use tools and techniques, so they know where they are at all points in their lifecycle.”
Felicia Cheek, Director of HCM Product Strategy | Oracle
Listen to the full payday podcast here and get more detailed insights from Felicia Cheek on the most critical considerations for employers around employee financial wellbeing.