Today, more and more organizations are taking conscious steps to improve the well-being of their workforce. They've come to understand that this is crucial to helping employees be productive, engaged, happy, and satisfied. While most organizations focus on physical and mental well-being, one aspect that they tend to miss is financial well-being. But, what is financial well-being, and why does it matter to employers? Most importantly, what can organizations do to improve the financial well-being of their employees? In this blog post, we are answering all of these questions.
What is financial well-being?
Financial well-being is about having complete control and responsibility over daily expenses, debts, and savings. There is a greater sense of security, confidence, and mental peace when you have enough money to live the way you want, pay for emergency expenses during uncertain times, and comfortably take care of your financial needs post-retirement. It's not about how much money you have; rather, it's about how responsibly you manage your finances to be financially stable, resilient, and secure.
Why is employee financial well-being essential?
Here are four reasons why every organization should prioritize the financial well-being of their employees:
Keeps stress at bay
Facing challenges associated with money management is one of the major causes of stress for employees. In a study by Money and Mental Health Institute, about 86% of the respondents stated that their financial status hurt their mental health. By helping your employees achieve financial stability, you can truly keep stress at bay and improve their overall well-being.
Makes employees feel supported
When you take steps in the positive direction to relieve employee stress, your employees will feel more supported. This builds a healthier relationship between your employees and your organization, and as a result, engagement levels will skyrocket.
Helps employees stay productive
Any stress or fear caused by financial instability often takes the employee's mind off their work, and this greatly affects the quality of output. According to a PwC survey, 76% of respondents agree that financial worries affect their productivity at work. When you help your employees maintain their financial health, they'll have a clearer state of mind and be more productive.
Improves employee retention rate
Increased focus on well-being initiatives is one of the major workplace aspects that motivates the current generation of workers to stay at their organization. When you show care about employee financial well-being, your employees will become more loyal to your organization.
How can you support your workforce's financial wellness?
Here's what you can do to improve the financial well-being of your employees:
Organize sessions that improve financial awareness
According to the India Brand Equity Foundation, about 76% of adults are yet to improve their understanding of basic financial concepts. That's why it's essential to bring financial awareness to your employees. This often involves conducting regular sessions and training programs related to investments, savings, tax management, and debt management. Educate employees about different policies and schemes that can help them improve their financial planning, explain the tax structures that apply to the region from where your employees are working, and connect them with mentors who can help them set better short-term and long-term financial goals.
Strengthen your benefits program
If you don't have a comprehensive benefits program for your employees, now is the time to start planning for one. Consider including plans that are financially beneficial to employees. For instance, a quality medical insurance program can take some of the pressure off employees when it comes to health expenses. You might also offer a competitive retirement benefits plan. A student loan repayment program is another benefit that you can consider based on employee needs.
Develop an emergency loan program
Implement a loan program that provides immediate funds to employees with emergency financial needs due to a health issue, death of a close family member, or unexpected household expenses. Decide on who is eligible for the loan program, how and when they must repay the loan, the maximum number of loans an employee can take, and the maximum amount that you'll be able to offer. Develop a committee comprising your HR and finance teams to review employee applications Be sure to inform all employees about the program and how they can make use of it.
Reevaluate your compensation practices
Competitive pay is one of the first aspects that make employees feel financially secure. Reevaluate your compensation package from time to time, keeping in mind your region's economy and the essential expenses that employees often face. Have open conversations with your employees to understand the expectations that they have around their pay. Consider the demands of specific roles before finalizing employee pay.
Ensuring employees are financially stable and secure
Financial security lowers stress levels and enables employees to bring their best to work. By introducing empathetic initiatives related to finance management, you'll help your employees avoid money-related stress.
Also Read: Everything you need to know about compensation and benefits