Financial Wellness: A Path to Improved Employee Performance, Health and Savings

Today, nearly 6 in 10 employees (59%) worry about their future financial state. This deteriorating financial well-being is also having a negative effect on employees’ productivity, engagement, and health.

Financial instability is one of the primary causes of employee stress, and many studies indicate there is a definitive link between financial anxiety and workplace performance.

Financial Issues and Employee Stress

 

In 2015, the American Psychological Association released a study titled, “Stress in America, Paying with our Health,” which revealed that approximately 72% of adults reported that their finances are a major factor of stress. The study elaborates that in some situations, those same Americans will ignore their healthcare concerns to focus on their financial needs.

This is a sobering statement considering the current economic circumstances of the average American worker.

According to a recent CNBC survey, eight in ten Americans are in debt and 68% of them attribute that debt to loans and credit cards.  Also, nearly 6 in 10 employees (59%) (click here) worry about their financial futures, and this deteriorating financial well-being is having a negative effect on employees’ productivity, engagement and health.  This appears to be supported by an Independent Foundation of Employee Benefits Plans (IFEBP) poll in which four out of five employers reported that their employees’ personal financial issues are impacting their job performance – resulting in absenteeism, inability to focus at work, and tardiness. A study from PwC shows that in the average workplace, general financial stress affects roughly 54% of workers, and an additional 10% revealed that they were specifically affected by student loans. In basic terms, 64% of any given workforce may feel that their finances negatively impact work performance.

Finally, a recent ADP post discusses how financial pressure causes increased absenteeism, loss in productivity, and higher healthcare costs. Moreover, a third of U.S. workers (34%) now believe their current financial concerns are negatively affecting their lives, compared with just 21% two years ago. About 30% of the employees surveyed identified themselves as “struggling” (defined as “those most worried about their short- and long-term finances”).

Consequences of Stress to Health

Among these struggling employees:

  • 30% described their health as “poor”
  • 31% said money concerns were keeping them from doing their best at work
  • 37% reported high-stress levels
  • 33% reported above-average stress levels
  • 29% reported full engagement at work

Non-Struggling employees:

  • 35% Reported no money worries and good health
  • 55% reported very good health
  • 5% reported high-stress levels

According to a recent IFEBP survey, four out of five employers report that their employees’ personal financial issues are impacting their job performance – resulting in things like the inability to focus at work, absenteeism and tardiness. This study from PWC shows that in the average workplace, general financial stress affects roughly 54% of workers and an additional 10% revealed that they were affected by student loans, specifically. This, in turn, means that 64% of a given workforce finds that their professional tasks are affected by their finances.

What Can Be Done?

More employers are striving to implement wellness programs in the workplace. In fact, according to the annual Employer-Sponsored Health and Well-Being Survey, 84% of 141 large- and mid-sized companies now offer some form of financial wellness program – up 76% from one year ago.  However, the key isn’t just accessibility; employers must also offer ongoing support – especially in regards to managing their money, so workers do not feel isolated or overwhelmed due to financial pressure.

Similarly, according to Deloitte Insights, wellness benefits are particularly important to younger employees. “Millennials, who now make up more than half of the workforce in many countries, spend almost twice as much on ‘self-care’ as baby boomers do. This has fed the growth of consumer apps for mindfulness, cognitive-behavioral therapy, and online personal and professional coaching, all of which are also available as employer programs.”

What’s more, Deloitte reports that employee well-being has emerged as a strategic priority among firms, and notes that two-thirds of organizations now consider wellness programs a critical part of their employment brand and culture. (Read this report.)

The Results of Employee Wellness Programs

Many employers have gained measurable results from their wellness initiatives. As an International Foundation of Employee Benefit Plan report points out, estimates for ROI on wellness programs could be as high as $3 for every $1 spent – and the savings could be even greater with more sophisticated, data-driven applications.

With the largest actuarial healthcare database available, HealthyCapital has developed a hybrid program with a holistic approach that attends to individual worker’s physical and financial well-being.  The unique application utilizes healthcare cost data to motivate workers to adopt healthier behaviors, reduce healthcare costs, and save more money, which should reduce financial stress and create a happier, healthier, more productive workforce.

This methodology could be especially advantageous for self-insured firms.  Conservative estimates indicate a company with 1,000 employees that adopts the HealthyCapital approach could save over $2.5 million annually in health-related expenditures.

Ultimately, employers offering financial wellness programs can not only improve their bottom line, but also help their employees become more contented and less stressed – a win/win for everyone involved.

 

Conclusion

When considering the issue of stress in the workplace, it’s important to consider both health and financial issues. Financial wellness programs have the ability to give the employees a raise without any dollars lost out of the employers pocket. In fact, the employer can make money off of the program. Employers offering financial wellness programs can improve their bottom line by helping employees reduce stress – a win-win for everyone. Thus a company’s big picture efforts to improve performance, employee health and help employees save more; comes down to both sides living healthier and wealthier lives.