The importance of employee financial wellbeing programs
In the wake of the COVID-19 pandemic, employee wellbeing has been brought into sharp focus for businesses and organizations all over the world. The pandemic took its toll on employees physically, mentally, and for many, financially too.
Recent research by Close Brothers has found that 42% of employees say they’ve lost sleep because of money worries, and 36% say that these concerns got worse during the pandemic.
To respond to these issues, some companies have explored and adopted employee financial wellness programs to give their workforces the support they really need.
In this blog, we’ll answer a few key questions: what does employee financial wellness mean? How do corporate financial wellbeing programs work in practice? And how do they benefit both employees and employers alike?
What is financial wellness?
Financial wellness or financial wellbeing is a term that covers every aspect of a person’s financial health, and is one of the many influences upon a person’s overall physical and mental wellbeing.
What are financial wellbeing programs?
Financial wellbeing programs, meanwhile, are solutions that help organizations deal with employees’ personal financial issues in a discrete way. Many people feel embarrassed talking about money issues, especially with their employer, and this often prevents them from seeking help. To address this, a number of financial wellness programs are actually run by a third party, thereby adding a level of anonymity to the process and keeping the embarrassment to a minimum.
Corporate financial wellness programs don’t stop at providing third-party support services though. There’s a number of different initiatives and tools which businesses can deploy internally to support their employees’ financial health.
Which tools can be used in financial wellness programs?
There is a wide selection of technologies and solutions available to businesses who want to actively promote financial wellbeing across their workforces. Three types, in particular, stand out:
Earned Wage Access (EWA)
Earned Wage Access or on-demand pay solutions allow employees to take a more flexible approach to when and how much they’re paid. Through a web-based portal or a mobile app like CloudPay NOW, employees can accrue wages day-by-day or shift by shift, in a similar way to how they accrue paid leave, and then access the platform and withdraw some or all of their earnings at any time.
This gives them more freedom around their personal finances, and makes them better able to deal with unforeseen bills without resorting to debt or credit cards.
Financial education
In most businesses, financial literacy varies substantially between employees, and some will need help in understanding how to make the most of the money they earn.
Technology can be used to better inform employees about their financial options, help them make more sense of pay and retirement statements, and also to provide individual coaching, counselling sessions, workshops and guidance around financial aid. This education can be particularly powerful when applied in conjunction with an EWA program.
Direct financial support
In many countries, graduates start work with significant amounts of debt which, combined with entry-level wages, can make financial considerations extremely tight for their first few years of work.
Some tools enable employers to make student loan payments on behalf of their employees, and manage the whole process, including any impact on the employee’s tax contributions. Other ways of providing direct support include matching retirement contributions, helping with savings for the college education of employees’ children, or supporting various types of personal insurance policies.
How does financial wellness help employees and employers?
Financial wellness programs are a win-win solution for employees and employers alike. From an employee’s perspective:
- Better overall health: a reduction in stress means employees feel physically and mentally healthier, helping them eat better, sleep better and feel more positive day-to-day
- Employee loyalty: employees who feel better supported by their employers will feel happier in their jobs and will be more likely to stay with an organization for longer
- Support employees’ personal lives: solutions like EWA make it easier for employees to handle unexpected financial events (such as a car breakdown or urgent home repairs) without having to turn to credit cards, loans or other types of debt
Meanwhile, employers will quickly start to see benefits within their office environments and on their bottom lines once their financial wellbeing programs are up and running:
- Greater productivity: happier workers are more motivated workers and therefore more productive workers, helping businesses get more done every day
- Reduced absenteeism: better employee health reduces the likelihood that they need to take unexpected time off (for example, to visit the doctor), further boosting productivity and minimizing disruption
- Cost savings: both of the above points have knock-on cost implications, as more employees working harder more of the time can generate savings or increased revenue that can be put to good use in other areas and for other initiatives.
In summary
Financial wellness can often be overlooked, but the benefits of employee financial wellness programs for both employers and employees are clear. There’s never been a better time to explore all the technology available to make it happen, and evolve your business into one that really does have its workforce’s interests at heart.
CloudPay NOW is ideal for businesses exploring the brave new world of financial wellness, and how it can integrate with their wider business operations. Learn more about what we do and how we do it here.