Invest in your Employees’ Financial Wellness or Risk Losing Out
Traditionally most organizations focus on employees’ physical or mental wellness- important pillars which keep the morale and engagement of employees up.
However, in the event an employee runs into a financial challenge, is this a personal issue that the employer should not interfere?
Let us draw on some numbers. An Employee Financial Wellness Survey conducted in 2020 showed that money matters came at the top as a contributing stress factor, versus other aspects like their jobs, relationships, and health concerns. Also based on a Forbes magazine article, a stressed-out employee is more likely to be distracted at work, thus affecting their job performance, productivity, and engagement levels. Stress also adversely impacts employees’ emotional and physical states, which all give rise to absenteeism, All these translate to greater costs to employers.
Hence forth wellness comprises of multiple pillars- physical, mental and financial and each as important as the other and isn’t to be addressed in isolation and has huge consequences if not nip in the bud. It has come to a point we could no longer sweep financial stress under the carpet but rather addressed it with a 360-degree approach.
Employers have started picking up this notion notedly in recent years and curated financial wellness programs as part of their employees’ benefits package.
What Is Employee Financial Wellness?
Employee financial wellness refers to programs that help employees eliminate financial stress, achieving financial security and goals, and plan for retirement. It comprises of four key elements:
Having control over day-to-day finances
The ability to weather a financial emergency
Getting and staying on track to reach financial goals
Having the security and freedom to live the life you want
In the shorter run, it refers to an individual's ability to manage their money effectively, reduce financial stress, and maintain a sense of financial security in the face of challenges such as rising cost of living. Like other wellness programs, financial wellness has positive effects on individual employees and the business as a whole.
Now let’s look at 5 main financial benefits most sought after by Employees
1. Retirement planning options
In Singapore, all local employees would automatically be enrolled into the Central Provident Fund Scheme- an automatic payroll deduction of 20% accompanied with Employer’s contribution of 17% which makes up quite a hefty sum deposited into the employee’s CPF account every month. This makes it easier for employees to save and works to provide housing, investment, insurance, medical needs and basic living needs when they retire.
2. Health Insurance safety net
Thankfully in Singapore, MNCs and many local companies offer health insurance as a major throw-in for their employees. Some even go to the length of providing life and disability insurance. As we all know medical bills could choke up excessively should one fall ill or had an accident and be hospitalised, it is certainly comforting to know that employers are helping to cover a major part of their medical bills or share the burden in the event of an unfortunate health incident.
This benefit doesn’t present a huge cost for employers, so many companies already make this a default in their financial wellness benefits. But if you don’t, it’s worth chipping in the budget considering how critical it is to employees.
3. Financial reimbursements
It all adds up to the employee’s peace of mind. Perks like expense reimbursement would run popular with some. For employees whose spouses and themselves are both working parents leaving no one to take care of their children at home- a childcare support fund could be a life saver.
As Industrial 4.0 catches on, synonymous with IOT, Artificial Intelligence and the like, to survive in the work field without becoming redundant, it is all about upskilling, reskilling and cross-skilling! Calling employers if you are genuinely interested in cultivating a relevant and competent workforce that comes as much a win for you, then you should be devising a professional development benefit to increase your chances of staying at the forefront of your industry.
Transport and cellphone expense reimbursement are normally given for those who take on roles of account managers or sales representatives. These expenses could come up excessive as meeting and servicing clients form a major part of their jobs, though it was reduced during the pandemic when professionals took their business to the digital stage. Essentially, it is most reasonable for employees to enjoy such benefits even with employees who aren’t assuming such roles but do need to commute every now and then.
Who wouldn’t wish for a glistening set of teeth and good-looking smiles? An average person should schedule at least 6 months once to visit your dentist and employees would be most appreciative if employers provide reimbursement for their dental care.
4. Financial planning and coaching
Many employees do not have the financial literacy, resources and tools to plan ahead for their retirement. This is when the expertise of financial consultants could help employees have a clearer visualisation on the income and retirement savings needed to live the golden years they aspire. Consider partnering with these financial experts to come down to hold education talks on budgeting, best practices to save and what to invest based on their risk profile. Engage financial counselors who could help counsel and advise your employees in managing and paying off debts.
5. Emergency funds Access
Based on an OCBC statistic, it is alarming that half of Singaporeans do not have savings to tie through beyond 3 months. This could have worsened by the pandemic and a large percentage barely even save each month. Thankfully employers are starting to pick up this sentiment and recognise they have to do more to strengthen the financial resiliency to keep employees at their best.
One such measure is payroll advancement which works great however there may be some kind of financial agreement to be entered and technically these are short-term loan. The downside- it adds on to the burden of HR function if approved (as it is still subjected to assessment) and risk should it not be repaid or in the case of an abscondment. Nonetheless, the merit is it is non interest-bearing so they are less risky than actual loans because employees would have worked for the money in the next couple of months.
More in recent years, due to the increasing demands and expectations towards workplace financial well-being, have fueled the rise of a fintech solution across the region- Earned Wage Access. Running along the same vein as a salary loan, it flexibly allows employees to choose when they to get paid within a pay cycle instead of receiving their salary traditionally during payday. This can be very empowering in situations when employees are tight on their cashflows due to uncertainties or to take advantage of a time-sensitive financial opportunity! All they need is ready access to the money they technically already earned daily- wherever, whenever. The continued usage of Earned Wage Access has shown an improvement in savings and literacy over time, which leads to quality advancement of employees’ lives. Such positive effects couldn’t be more welcomed by employers as they reap the all-out benefits of implementing a simple yet low-cost program like Earned Wage Access. Here in FriYAY our friendly folks are more than happy to take you through the journey of recreating salaries being paid should you wish to get started!
Lastly, financial stress is on the rise for employees everywhere, Sure employers provide flexi benefits, childcare benefits alongside other cool benefits, everything seems perfect, but it is hard to know what’s really going on in employees’ financial lives day to day. And would this financial baggage be carried to work? That is not to say a yes and a no-go!
Conventionally, helping employees manage their personal finances wasn’t regarded as an employer’s responsibility. But when you consider how the effects of financial stress can spill over into the workplace—in the form of distraction, reduced productivity and the effect of physical and mental health— it’s easy to understand why supporting employees in managing their finances makes good business sense.
Footnote
https://www.obsidianhr.com/5-financial-wellness-benefits-employees-want-most/ Dec, 9 2021