Financial wellness is no longer a matter of just being a nice thing for employees or a way to help recruiting and retention, but an important tool for improving profits.
It’s clear that there’s demand from the workforce. A recent survey indicated only 42% of employees feel compensation has kept up with higher living expenses, compared with 52% a year earlier.
The same survey indicates that 19% of employees are looking for a new job primarily to improve their compensation.
With numbers like these, a strong financial wellness program can have a significant impact ultimately your bottom line.
Here’s three ways that financial wellness can improve the bottom line:
1. It drives down the cost of turnover: Losing employees is an expensive proposition: While estimates vary, it can cost more than $4,000 to replace an employee in terms of upfront “hard” costs, while in terms of other costs, the price can be in multiples of salary.1 In addition, organizations lose the institutional knowledge of an experienced worker, which drives up turnover costs higher through training and loss of productivity.
At the same time, 65% of workers have felt stressed regarding their finances due to the COVID-19 pandemic, leading to increased turnover and lower productivity.2 Among employees who feel financial worries have hurt their productivity, two-thirds are struggling to meet their household expenses. One-quarter have saved less than $1,000 for retirement; more than half plan to postpone their retirement.1
Given the high cost of employee turnover, it’s in employers’ best interest to improve employee financial wellbeing. Student loan debt management plans and financial coaching can help young employees’ stress of paying the bills; improved education on retirement planning will lessen workers’ fears of the future.
2. Financial wellness lowers stress and boosts morale. Financial wellness does far more than lower turnover: Almost half of financially stressed employees say money worries has had a negative impact on their mental health.
Given the connection between financial wellness and mental health,3 employers can consider offering financial coaching alongside mental health resources. Employees are likely to respond to one-on-one financial coaching via phone or video chat because of the personal and confidential nature of their financial issues.
