Understanding financial health, as well as how you can better support this concept for your workers, provides a critical business advantage which facilitates long-term stability for your company as well as its people.
Investing in employee financial health is becoming a higher priority for modern businesses, as the implications to both individual and organizational performance are made increasingly clear. Understanding financial health, as well as how you can better support this concept for your workers, provides a critical business advantage which facilitates long-term stability for your company as well as its people. Let’s talk about it.
There are a number of complex metrics that can be accessed both by businesses as well as individuals to determine financial health. Most generally, however, financial health simply means long-term comfort and confidence in one’s personal finances. Money-related stress can have a detrimental effect on a person’s health and wellbeing more generally, but financial stability and comfort can help to mitigate some of these problems.
Financial health is therefore a combination of actual financial stability and a healthy mindset relating to one’s ability to manage and work with their money.
Employee financial health can impact the financial health of a company overall by supporting higher rates of productivity and professional performance. They are intrinsically linked, and while they are applied to very different entities, the two concepts are similarly defined.
Individual financial health means long-term financial stability, adequate savings, and the ability to easily address emergency expenditures without the accrual of unnecessary debt.
Business financial health means long-term financial stability and profitability, manageable debt, adequate liquid assets and emergency funding, and comfortable coverage of overhead including production costs, salary expenses, benefits, and so on.
The metrics you might use to measure business financial health vs. individual financial health may look different on paper, but the idea of financial health as monetary stability and security remains consistent.
Employee financial health has important implications both for the individual as well as the organization.
The ongoing economic hardship posed by the effects of the COVID-19 pandemic have exacerbated certain financial stressors which posed a problem long before the initial outbreak. 47% of employees surveyed feel they would not be able to afford basic costs of living if they suddenly found themselves unemployed, indicating difficulties related to saving and emergency funding. 45% also anticipate needing to access retirement funds well before retirement, further enforcing this concern.
And financial stress has a marked effect on employee performance and mental health. But organizations are in a position to improve employee financial wellness with supportive benefits, education, and a thriving wage. This both helps the individual’s financial confidence and security, and offers advantages to the business including:
At its most basic, financial health simply describes a state of financial stability and security. More specifically, this can mean:
Stress is one of the top mental health concerns facing the workforce today. And one of the top causes of stress is financial insecurity and instability.
It follows that improved financial health provides direct mitigation to the effects of stress on employee mental health and wellbeing, but financial health can provide support and alleviation to other aspects of mental health as well.
Many employees do not seek out support for problems relating to mental and emotional health – such as therapy, assessment, and medication – because they are unable to afford it, often despite health benefits provided by the employer. The cost of copay may often prove problematic.
So, supporting employee financial health empowers your workforce beyond their investments and savings account, and can give them the resources they need to address pressing health concerns and build better emotional lives for themselves and their families.
We mentioned earlier some of the business cases for supporting better financial health for your employees, as well as the implications it has for workforce mental health and wellness.
The effects of stress have a very real impact on both mental and physical health for individuals experiencing financial insecurity. This means higher rates of absenteeism and poorer performance, resulting in even higher stress for individuals who are left to pick up the slack.
Employee performance may also be affected when individuals lacking financial health are forced to take on extra work outside of your company and become exhausted and burnt out as a result.
Luckily, all of these effects – when they are a result of employee financial instability – can be reversed if an organization is able to provide supportive financial resources to their workers.
It is critical to first support a culture of transparency regarding finances and financial health. Even workers who are struggling may not seek out supportive resources because of the taboos relating to financial discussion.
This conversation may begin on the part of the company with explicit conversation regarding the employee’s benefits package, including all resources relating to financial health and management. Solicit managers to have one-on-one talks with their direct reports to make sure they understand how to access financial benefits when and if they need them.
Your company should also consider bringing on a financial wellness solution – like Origin – to help your workforce keep better track of their finances, manage their money, and understand how to make wise decisions around budgeting, spending, saving, and investing.
Of course, the most critical support you can provide is a thriving wage, and easy access to retirement options and shares.
Financial health looks different for each employee, depending on their life circumstances and financial responsibilities. The best way to get a precise idea of each employee’s financial health is with a financial wellness survey.
A well-designed survey allows you to gain both anecdotal and quantitative insight into employee financial wellbeing so you can offer better benefits that will have a greater impact on workforce financial wellness. Learn more about creating a financial wellness survey for your employees here: Origin Financial Wellness Survey.
Employee financial wellbeing provides benefits which extend far beyond the individual. It is in the organization’s best interest to invest in the financial health of its workforce, as the returns are absolutely palpable. Financially healthy employees are healthy employees in general, and healthy employees show up for work more often, and do a better job once they get there. This means better performance and profitability for the company overall.