By
Pooja Patil
As remote work becomes more prevalent, the line between professional and personal life has become increasingly blurred. This has prompted HR leaders to prioritize employees' well-being and mental health, recognizing the importance of cultivating a healthy work-life balance. Fostering employee well-being is, therefore, essential for promoting workplace resilience.
68% of HR leaders say employee well-being and mental health are their top priorities.
This priority is understandable, given that the corporate well-being industry in the United States is currently valued at $20.4 billion and is expected to reach $87.4 billion by 2026. In addition, a survey found that 80% of employers believe that financial stress negatively impacts their employees' performance, costing around $500 billion annually.
The modern workforce faces numerous stressors, and many employees feel ill-equipped to effectively manage these challenges. When stress and anxiety arise, employees may struggle to showcase their skills and talents. In such a climate, it falls to managers to prioritize the well-being of their team members. This begins with ensuring that compensation packages are competitive, offering clear opportunities for career advancement, and keeping pace with inflation. However, HR leaders should also consider providing free financial coaching as an employee benefit, regardless of pay level. Financial wellness has emerged as the most frequently requested benefit among
employees, and offering such services can deliver tangible value. Employers should understand the crucial role of financial well-being and payroll and explore ways that payroll can promote financial wellness throughout the organization.
What is financial well-being?
Financial well-being pertains to achieving a state of financial security and control, not only in the present but also in the future. It brings a sense of reassurance that one can manage their living expenses and cope with unforeseen emergencies, as well as the liberty to make choices without constantly worrying about finances.
Financial well-being is not solely determined by an individual's financial status but also by an employer's commitment to their workforce and the prioritization of their needs. Employers serve as the primary source of income for their employees, making them a critical factor in promoting financial well-being. As such, it is essential for employers to take an active role in supporting their employees' financial health by providing benefits and resources that go beyond salary or wages. By recognizing the importance of financial wellness and taking action to promote it, employers can improve the overall well-being and satisfaction of their workforce. Nevertheless, the reality is:
Only 11% of employers with health and well-being strategies actually focus on financial well-being.
Numerous companies have adopted a carrot-and-stick model that provides short-term solutions to their employees' financial difficulties rather than supporting the establishment and growth of long-term assets. However, such an approach is insufficient and fails to address the root causes of financial stress. It also neglects the importance of cultivating employee loyalty and retention by satisfying their needs beyond mere compensation.
72% of employees say they would be attracted to another company that cares about financial well-being.
The economic impact of the pandemic has highlighted the importance of financial stability for today's workforce. With rising levels of household debt, employees are increasingly turning to their employers for support through expanded financial wellness initiatives and comprehensive benefits packages. Workers may be more likely to seek employment elsewhere when such aid is unavailable, potentially even turning to the gig economy.
Also Read: Employee Engagement Starts with Accurate Payroll Outsourcing
Why is financial well-being important?
Financial wellness is a critical factor in promoting employee retention and engagement, and it can also attract top talent that can help ensure the company's long-term viability and growth. In addition, by offering comprehensive financial wellness programs and benefits, organizations can create a more stable and satisfied workforce better equipped to weather unexpected challenges.
84% of employers say financial well-being can aid in reducing employee attrition. While 81% say, financial wellness tools help attract higher-quality employees.
Employers must work together with their workforce to understand their needs, identify the areas of support, and develop appropriate solutions while aligning with the organizational revenue goals. Ensuring financial stability and showing appreciation are crucial for employee satisfaction, and organizations that prioritize financial wellness can reap greater benefits from their human capital investments.
It has been proven that organizations providing financial coaching, loan repayment programs, immediate credit, cashback, allowances, incentives, employee discounts, and other perks are more likely to attract enthusiastic and skilled workers who are committed to the growth and advancement of the company. In addition, employees appreciate employers who promote their financial welfare by offering tailored coaching and plans aimed at assisting them with purchasing a home, finishing their education, starting a family, or managing child care and education. In return, employees demonstrate their appreciation through increased productivity and profitability.
The general consensus is that employees tend to prefer working in an environment where their contributions are valued. In addition, companies that provide adequate financial wellness benefits, including wealth creation schemes, healthcare coverage, retirement benefits, and travel expense coverage, create a sense of appreciation and loyalty among their workforce, encouraging them to remain committed to the organization's goals.
Given the profound effect of financial problems on mental health, companies offering individualized financial coaching services alongside mental health resources can boost motivation, productivity, attendance, and overall engagement, thereby positively impacting the bottom line.
The Role of Payroll
While it's positive to see companies expanding their financial wellness benefits to include alternative options such as automatic student loan payments and direct personal investment tools, such programs must prioritize enhancing employees' financial literacy to be truly effective. Without adequate financial education and guidance, employees may struggle to make informed decisions that align with their financial goals. Therefore, companies should focus on offering comprehensive financial education and resources that enable their workforce to make informed financial decisions and take control of their financial future.
Improving financial literacy is critical for employees seeking greater control over their finances. The payslip serves as a starting point for every worker, and payroll processing can play a crucial role in positively impacting their financial well-being. Even without introducing new benefits, employers can take simple steps through their payroll processing to assist workers in gaining a better understanding of their financial situation and available choices. For example, providing clear and concise pay stubs that break down deductions and taxes can help employees understand their take-home pay and make more informed financial decisions. In addition, by prioritizing financial literacy and education, employers can help their workforce build long-term financial stability and security.
Ways payroll processing can help promote financial well-being
Help employees understand their payslip
Payslips are critical to employees, but unfortunately, only a small percentage take the time to review them or understand their contents. In addition to providing information on total income and taxes, payslips offer insight into how earnings are distributed, even before they are received. Employees must understand the various deductions, rates, and calculations, as this knowledge can help them control their finances better. By monitoring regular contributions to a pension scheme, employees can alleviate concerns about retirement plans or make informed decisions about other investments. Furthermore, scrutinizing the deductions listed on their payslips can help employees identify services they were previously unaware of, such as monthly physiotherapy coverage through health insurance. Payroll processing professionals are a valuable resource for employees seeking to enhance their financial literacy, as they have the expertise to interpret payslip information and answer questions about deductions.
Encourage engagement with existing supports
Many employees may be eligible for financial benefits from their employer, such as consultations with financial advisors, investment app trials, or government schemes for meal vouchers or childcare. However, some employees may not be aware of these opportunities. Payroll processing can help by reminding employees of these benefits through their monthly or semi-monthly payslips or through other means such as email or a public messaging board on payday. Employers can also use the blank spaces on payslips to draw attention to available benefits and share resources for saving, investing, budgeting, and debt management. Additionally, organizing educational sessions for staff to understand mandatory deductions and social contributions and utilizing those funds can also effectively promote financial literacy and engagement with existing benefits.
Obtain employee feedback
To determine the most effective strategies for promoting financial wellness among employees, companies should directly ask their workforce for input. By obtaining employee feedback, employers can learn about the financial tools and benefits that are most relevant and appreciated. This approach shows employees that their contributions are valued and the company is committed to supporting them. One effective way to gather feedback is to provide suggestion boxes in common areas or a dedicated section on payslips where employees can give feedback on existing financial benefits or recommend new resources. Employers could also distribute feedback forms, surveys, and payslips to gather opinions and suggestions. Even if initial participation rates are low, these initiatives gently remind employees to consider their financial health and explore available options.
Conclusion
While employers cannot entirely address their employees' financial challenges, they can take proactive measures to encourage them to manage their financial well-being. Global payroll processing teams, with their comprehensive understanding of employee salaries, benefits, and deductions, play a vital role in assisting their colleagues. Employers who invest in understanding and supporting their employees' financial wellness, whether through company initiatives or public resources, are likely to benefit from their investment in the long run. By doing so, they can foster a loyal and satisfied workforce, ultimately enhancing the organization's reputation and financial stability.
If you're unsure of how to create a strategy to promote the financial well-being of your employees, outsourcing your payroll could be a viable option. By partnering with Exela HR Solutions, a market leader in HR and payroll outsourcing, you can benefit from our best-in-class solutions to meet your HR needs. In addition, our team of experts can assist you in creating a comprehensive plan to support your employees' financial well-being. Contact Exela HR Solutions today to start the conversation and take the first step towards a more financially healthy workforce.
DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.