The burden of financial stress on employees has risen to new heights in 2023. As wage growth struggles to keep up with the rising cost of living, credit card debt is at record highs, and economic uncertainties persist, the toll on employee well-being is palpable. And now, more than ever, employees are looking to their employers for help.
The recent findings from the 2023 Employee Financial Wellness Survey conducted by PwC shed light on the challenges faced by both employees and employers. Financial stress ranks among the top concerns for employees across income brackets, impacting various facets of their lives, from mental and physical health to relationships and productivity at work. Here are some of the key findings from PwC’s survey that highlight the extent of financial stress in the workplace:
60% of full-time employees are stressed about their finances, even higher than during the height of the pandemic.
Among employees earning $100,000 or more per year, 47% experience financial stress.
44% of employees report struggling to make credit card payments
28% of employees are running out of money between paychecks, including 15% of those earning $100,000 or more per year
This financial stress impacts the performance of employees by distracting them from their day-to-day responsibilities. It also impacts employee morale and satisfaction, and there are tangible implications for employee retention:
Only 54% of financially stressed employees feel a promising future at their employer, compared to 69% of non-stressed employees.
Financially stressed employees are twice as likely to be actively seeking a new job (36% vs. 18%).
Lower engagement metrics among financially stressed employees compared to non-stressed counterparts:
Feeling of belonging at the company: 63% vs. 77%
Alignment of values with the company: 60% vs. 73%
Feeling energized at work: 50% vs. 68%
Likelihood to recommend the company as a great place to work: 59% vs. 72%
Pride in working for the company: 67% vs. 77%
However, there is a silver lining. Given the widespread financial stress in today’s workplace, now more than ever employees are seeking financial help from their employers.
The majority of employees (68%) are utilizing financial wellness services provided by their employers, up from 51% in 2012.
The stigma around seeking financial help is diminishing, with only 33% finding it embarrassing compared to 42% in 2019.
This trend presents an opportunity for employers who can provide resources and benefits. Employers can play a pivotal role in alleviating employee financial stress by investing in comprehensive benefits packages for their employees, and the impact extends beyond individual well-being. Financially stable employees are more engaged, productive, and likely to remain loyal to their employers. Thus, investing in comprehensive benefits not only supports the workforce but also contributes to organizational resilience in uncertain economic times by improving employee retention.
So, if you’re an employer, where should you start? Employees report that the most common source of financial stress, outside of the rising cost of living in general, is student loan debt, and the resumption of student loan payments after several years of forbearance. It should therefore come as no surprise that the inclusion of student loan repayment benefits in employers' offerings has steadily gained traction in recent years. Amidst the financial strain, assisting in repaying student loans can significantly alleviate the burden on employees, especially younger professionals who often grapple with substantial student debt. By incorporating this benefit, employers not only ease the financial strain but also demonstrate a genuine commitment to the financial well-being of their workforce.
In addition to a student loan repayment benefit, the principles outlined below should be considered by employers striving to ease the financial stress on their workforce.
1. Financial Wellness Resources
Implementing comprehensive financial wellness programs is crucial. These should encompass one-on-one coaching, workshops, webinars, and online tools. Such resources assist employees in managing immediate financial concerns, fostering stability that enables them to focus on long-term financial goals.
2. Personalized Benefits
Customizing benefits to suit diverse employee needs and career stages is pivotal. Recognizing the unique financial challenges faced by different demographics within the workforce allows for tailored solutions that resonate deeply with employees.
3. Fostering Trust and Accessibility
Employers must prioritize trustworthiness and objectivity in the financial resources they provide. Access to guidance untethered from product sales or vested interests empowers employees to seek assistance without the stigma associated with financial help.
4. Highlighting Total Rewards
Presenting the complete spectrum of benefits available can help employees perceive their value in the context of their financial requirements. This approach is particularly pertinent in industries with higher turnover rates, where highlighting benefits' relevance can enhance appreciation and utilization.
5. Engagement and Support
Engaging employees through affinity groups and comfortable communication channels further enhances the effectiveness of financial wellness initiatives. Creating a supportive environment where seeking financial guidance is encouraged can substantially benefit overall employee well-being.
As employers navigate the challenges posed by today's economic uncertainty, prioritizing employee financial wellness in benefits packages emerges as a strategic imperative. By embracing these solutions and committing to comprehensive support, employers can serve as beacons of stability and empowerment for their workforce, fostering a culture where employees thrive both professionally and personally.