Your marketing associate with her head down? She’s not looking at the analytics of your last email blast. She’s trying to figure out how to make her student loan payment, cover her share of the rent and pay more than the minimum on her credit card without asking Mom and Dad for a loan (again).
The junior developer you just hired? Even though you’re paying him $10,000 more than in his last job, he’s staring into space wondering if he’s ever going to be able to afford to buy a home. He keeps reading about how mortgage rates are at historic lows and now is the time to buy, but the $3,200 in his savings account puts a down payment way out of reach.
Your employees won’t tell you — it’s embarrassing — but they worry about money every day. And they’re not alone.
The true cost of employee financial stress
A 2019 PwC study found that 58% of employees are more stressed about their finances than any other issue, and 50% of those acknowledge that their finances have been a distraction at work. While you’re waiting for a project that was due yesterday, your employees may be thinking about cutting their 401(k) contributions to pay their day-to-day expenses.
With Millennials burdened by unprecedented amounts of student debt, Boomers caring for both aging parents and children increasingly at home, and two recessions wiping out big chunks of retirement savings, financial stress will only increase. It may seem mind-boggling that employees with six-figure incomes are struggling, but surveys show that 40% of employees making more than $100,000 per year are considered “financially unstable.”
American businesses are losing $500 billion per year due to employees’ personal financial stress, according to a recent survey by Salary Finance. That same survey showed that financially stressed employees lose nearly one month (23–31 days) of productive workdays per year and are more than twice as likely to seek a new job opportunity. The bottom line: lost productivity, turnover, and other factors directly related to poor financial wellness cost the average company between 11-14% of their total payroll expense every year.
From foosball tables to financial wellness
We get it. Pre-COVID you built a cool office with a foosball table, quiet rooms, and an envious array of snacks. Your PTO is generous. You shoulder the burden of the ever-rising costs of medical insurance because your employees are critical to the success of your company and you want them to know they’re valued. But financial worries are on their minds every day. And all the kombucha on tap won’t solve that.
Technology startups often anchor on the notion that “we can do better.” We form companies to bring innovative solutions to market that solve structural problems, and in doing so help people lead better lives. As the leaders of two technology companies, we see the financial stressors plaguing American workers. And now, it’s up to us to look inwards and say “we can do better.”
We can do better
So how do we do better? How do we evolve our benefits offerings to mitigate financial stress among our employees?
Introducing a financial wellness program is one. It should be rooted in the foundational principles of financial literacy, coaching, and if needed, personalized planning. Fortunately, there is a new wave of providers partnering with employers to address various elements of this challenge. Employers should look for partners who are independent, qualified (look for the CFP designation), and both scalable (can all employees be reached if necessary) and personalized (do they distinguish between the needs of an entry-level employee from those of tenured managers?).
Forbes calls these programs “the must-have employee benefit,” and as a recruiting and retention tool they send a powerful message about how a company values its employees. So why hasn’t a financial wellness program moved from a nice-to-have employee benefit to a must-have employee benefit? Forbes says employers are waiting for an “aha moment.” But COVID has given us that moment if there ever was one. It is now up to us to lead the way and show what revolutionary benefits can actually do. After all, we can do better.
Originally published on BenefitPro.com. (Note that a free account is required to view the full article.)