by Roxanna Coldiron
In recent years, wellness programs have become an important benefit for employers to offer their employees. Health care costs for employers continue to rise as Americans suffer from both age-related and chronic diseases, and society has also become more health conscious with a push toward healthy eating and exercise. Reducing the cost of health care required a focus on prevention: lowering risk of diseases and health-related issues due to high blood pressure, heart disease and obesity. Employers took note and now approximately half of U.S. employers offer wellness programs as part of their benefits packages, according to the 2013 RAND Health “Workplace Wellness Programs Study” from the U.S. Department of Labor and the U.S. Department of Health and Human Services.
One aspect of wellness tends to be overlooked by wellness initiatives and that is providing an additional focus on financial wellness. According to a 2012 Society for Human Resource Management survey, 61 percent of human resources professionals reported causing some impact on employee work performance as the result of financial stress. Worrying about money can have a major effect on your employees, causing them to be absent from work or decreasing their focus and their productivity while at work.
Financial stress can have a direct impact on employer health care costs. According to Ron Z. Goetzel, Xiaofei Pei, et al. for Health Affairs 31 (2012) report “Ten Modifiable Health Risk Factors Are Linked To More Than One-Fifth of Employer-Employee Health Care Spending,” stressed out employees cost $413 more per year in health care costs than employees that were not at high risk for stress. Financial stress can cause headaches, stomachaches, fatigue, insomnia and more –all of which can lower your employee’s ability to function in life and at work. You can save an estimated $413 per employee by helping your employees lower their stress levels, including stress caused by financial concerns.
Think about this scenario. You hired a 24-year-old employee who holds a master’s and a bachelor’s degree, recently relocated from another state and just got married. Your new employee has a student loan debt of nearly $55,000 and additional monthly bills that average over $2,000/month. Sometimes that means one bill goes unpaid until the next month, and the financial worry continues to escalate. Over time, your employee’s performance begins to drop and so does the amount of money you’d have been able to make when you first hired that employee, who used to have a stellar performance track record. Money weighs heavily on your new employee’s mind. That employee isn’t alone.
In 2014, 70 percent of Pennsylvania college seniors graduated with an average student loan debt of $33,264 before entering the workforce. More students are leaving college with higher levels of debt than ever before. The average student loan burden reaches between $28,000 and $35,000 per borrower nationwide. Recently graduated lawyers and doctors have student loan debt that can reach as high as $100,000 or more. Entry-level employees might also have to deal with rising rent and transportation costs in some states, while others might have life changes such as marriage and children that can put a strain on already tight finances.
And it isn’t just your younger employees who worry about their finances. Older Americans are choosing to work longer and retire later because of financial concerns. According to Gallup, this trend could be related to fears of not being able to survive on their retirement income (although many older Americans choose to work longer because they want to and not because it’s a necessity). Financial worry can affect any of your employees and being able to help them to overcome their fears and plan for the future can go a long way in ensuring the happiness of your employees and the productivity of your company.
Still, what is financial wellness and why should you include it in your wellness plan? Financial wellness refers to a sense of comfort in one’s ability to meet financial obligations and handle emergencies that might arise. It relates to an awareness of how to manage one’s money to achieve desired outcomes, like a new car or that Caribbean cruise you’ve always wanted to take.
For your employees, financial wellness means that they can come to work and not worry about how they’ll keep their bills paid or how they’ll save for retirement. In the February 2016 “The Value of Employees’ Financial Wellness” report from Prudential and CFO Research Services, 82 percent of finance executives believed that financial security among their employees would benefit their companies and 78 percent agreed that employers should consider providing financial wellness benefits to their employees during working years. If your people are your greatest resource, then your investment in their well-being will have a positive impact on your company’s growth.
Through coaching and online tools that allow employees to track their expenses and spending habits, your employees can take control of their finances. In a 2015 American Psychological Association (APA) survey, nearly one in five Americans had considered skipping or completely forgoed doctor appointments because of financial concerns and 72 percent of Americans said they’d felt stressed about money at least once during that month. Employees worrying about money are more likely to call off from work or to work on their personal financial matters while at work, cutting into their work time and affecting their concentration.
Providing employees with more options to get control of their finances can also lower the level of stress in the workplace. For example, employees who know that they can trade-in vacation days for cash or get student loan repayment assistance will have fewer financial stressors in their lives. Through a combination of 1-on-1 coaching, personal financial management and financial wellness incentives, you can help to improve your employees’ experience at work and off the clock. This will benefit your company in fewer absences and sick days and better productivity from your team, and that is why you need to incorporate financial wellness into your overall wellness initiatives.