The covid pandemic brought a renewed focus on the physical and mental health of Australians. In the context of employers, this is producing more urgent calls for businesses to do more to assist their employees. Perhaps the most important factor affecting employee wellbeing is financial concerns, with one crisis (covid) bleeding into another crisis (inflation and cost of living pressures). These consecutive crises stretched budgets nationwide and placed pressure on the mental wellbeing of many. Stress due to personal financial concerns is the primary factor leading to reduced employee productivity. The obvious solution to mitigate this risk is to reexamine the financial wellness programs available to employees.
Reducing Stress through Financial Wellness Programs
While employee financial wellness programs do not offer a panacea against all ills, the presence of these programs can make a meaningful difference to employees. Financial literacy education and the provision of relevant tools can give a sense of control and direction to navigate the individual’s financial journey. Reducing financial stress is a win for the employee but also is a relatively cheap investment in the productivity and success of the business.
The Centre for Social Impact at the University of NSW has recently released its findings from the YFW User Insights 2021 study. YFW User Insights Report reveals that almost half of the population is currently experiencing some degree of financial uncertainty, with finances proving to be a significant source of stress for everyday Australians.
Financial wellness programs help employees enhance their ability to effectively manage their finances and alleviate financial concerns, fostering improved financial wellbeing. These programs are structured to educate employees on various aspects of financial management.
Reasons for Implementing Financial Wellness Programs in Organisations
Employers who prioritise enhancing their employees’ financial wellbeing, can directly influence employee engagement, productivity, and performance.
Inadequate preparation for immediate and future financial obligations can lead to heightened stress levels, consequently hindering workplace productivity. To address this issue, employers implement financial wellness programs to assist employees in managing their finances and reducing financial stressors.
Some reasons why employers provide financial wellness programs include:
1) Money matters affect physical and mental health
A new analysis conducted by The Australian National University (ANU) reveals that many Australians need help to make ends meet with their current income. According to the study, 25.1 per cent of Australians are finding it hard to get by, which is the highest percentage of financial stress since the onset of the COVID-19 pandemic. The study further indicates that the struggle is most intense among the lowest income bracket, with over 50 per cent of individuals in this category admitting to having financial difficulties.
According to the Workplace Financial Wellness Index, many individuals suffer from adverse impacts due to financial stress. More than two-thirds of respondents reported feeling fearful, anxious, or depressed due to money-related concerns. Over 60% indicated that their physical health gets impacted by financial stress. Additionally, three-quarters of those surveyed reported having disagreements about money with their partner or family. A staggering 90% of respondents said they avoid social functions to minimise spending. These findings highlight the importance of addressing financial wellness in the workplace.
2) Financial worries affecting work
According to the Gallagher Financial Confidence Report for 2020, many Australian employees are experiencing financial stress due to unexpected expenses, inadequate savings, and the increasing cost of living.
Financial stress significantly impacts employees’ overall satisfaction and engagement levels at work. Businesses also suffer as absenteeism increases; the number of sick days increases and presenteeism (where employees are present yet distracted and unproductive) increases. Ultimately, the personal financial stress faced by an employee is brought into the workplace, resulting in lost efficiency and productivity.
3) Lack of Financial wellbeing leading to increased attrition rate
A considerable portion of employees (29%) are looking for a new job. Of those, a majority (65%) are doing so mainly for financial reasons.
Interestingly, employers prioritising their employees’ financial well-being can attract many jobseekers. This is because 76% of employees who worry about their finances are more inclined towards such companies.
Employers can offer benefit programs that help employees manage their income effectively to show their commitment towards their employees’ financial well-being.
These programs benefit both employees and employers, as staff turnover comes with significant costs. According to the HR Industry Benchmark Study 2021 Australia and New Zealand, the average cost of finding and acquiring a new employee in Australia is approximately $23,000, including recruitment and training costs. However, the loss of institutional knowledge and experience places the real cost of employee turnover at a multiple of this figure.
Therefore, incorporating financial wellness into the workplace has real financial benefits for a business.
Financial Wellness Programs
Financial wellness programs aim to educate and provide tools to lessen the likelihood of financial stress of employees and guide them towards improved financial well-being. The financial wellness programs also help employers reduce the attrition rate, improve employee engagement and absenteeism and improve employee productivity.
Types of Financial Wellness Programs
- Onsite workshops : The most effective delivery method, free from distractions..
- Recurring coaching: Coaching allows for individual attention to be given to those who need it most.
- Webinars If your employees are not in an office environment or work from home, webinars are more suitable.