Roshni Chowdhry | Originally published on June 7, 2019 by HR Technologist
Right now, the U.S. economy is almost at full employment. Unfortunately, as the economy hits its stride, Americans’ financial health hasn’t followed suit. Forty percent of Americans can’t cover a $400 emergencyand 80 percent of workers still live paycheck to paycheck.
Financially anxious workers could mean trouble for a business. Research shows that financial stress actually decreases employee productivity, which, in turn, costs businesses money.
That’s bad news in any economy. It’s even worse in a recession – and some economists predict that the next one might happen soon. So what can you do now, while times are good, to ensure your employees are performing at the top of their game (and therefore your business as a whole is as well)?
Make sure they’re protected from a financial shock so their stress doesn’t become your company’s loss. Here, we’ll explore why financial pressure can be destructive in the workplace, and how financially healthy employees can boost a company’s bottom line.
Even if your employees haven’t voiced their financial concerns, those concerns may still exist and have more of an impact than you realize. Almost half of all workers are financially stressed and they bring that tension to their job. One in three employees report that monetary stressors are a distraction at work. Employees who are worried about money also miss work three times as often as non-financially stressed employees.
Beyond attendance issues, workers who have money troubles are more likely to be dissatisfied, which makes them more likely to leave their jobs. Replacing employees can cost up to 200 percent of an annual salary – not the kind of unexpected cost a business wants during a recession.
As we’ve mentioned, companies that consider their employees’ financial health can boost productivity and morale. Both of these aspects are part of engagement, the emotional connection an employee feels toward their job.
Companies with highly engaged workers report almost five times the revenue growth of their counterparts, according to a study by Kenan-Flagler Business School. The study also notes that businesses with highly engaged workers report lower turnover. Profitability and performance were both key to how (and which) companies survived the Great Recession that lasted from 2007 to 2009. So if you want to keep your company strong, even through an economic slump, investing in employee financial health might be the way to go.
Though job growth slowed early this year, the number of openings still exceeds the number of job seekers. Because Americans currently have their pick of any number of jobs, employers need to stand out. Given that a high percentage of workers (especially younger people) are worried about their finances, offering a comprehensive financial health program that extends beyond a 401(k) can make your job offer more attractive.
According to SHRM, three-fifths of HR professionals say financial benefits will become more important for recruiting highly skilled employees. Offering financial wellness benefits would also place you on the right side of benefits history with companies like Aetna and Suntrust, who are already using incentivized financial programs to help employees learn money management skills.
Congress is also considering ways to make it easier for companies to offer rainy day savings as a benefit with its Strengthening Financial Security Through Short-Term Savings Accounts Act of 2018. Introduced in July 2018, this proposed bill would allow employers to enroll employees in short-term savings programs that automatically contribute a portion of their paychecks into a company-matched savings account that’s available to them at any time. Outside public policy, private companies are already offering similar solutions for employers to help workers build their financial nest eggs.
Most importantly, companies that look out for their employees’ finances will have an easier time attracting talent that will stick with them even in a tighter economy.
Even though, as previously stated, the economy is robust right now, recessions are part of the business cycle and experts say there might be one sooner rather than later. Taking an active interest in supporting your employees’ financial health could prevent money woes from becoming a distraction down the line and hurting your company. In short, your employees’ money is your business.