Learn how addressing the financial needs of your employees will give your company a leg up
When it comes to your Diversity, Equity, and Inclusion (DEI) strategy, you’ve likely prioritized tactics such as unconscious bias training, Employee Resource Groups, or hiring a Chief Diversity Officer. While these are fantastic first steps, there’s a missing piece in your strategy that most companies overlook—and that’s improving the financial well-being of your employees. In this post, we’ll explain what financial well-being is and how it fits into your organization’s DEI strategy.
While there are many ways to explain financial well-being, the Consumer Financial Protection Bureau created the first official definition, based on input from real consumers:“Financial well-being is defined as having financial security and financial freedom of choice, in the present and in the future.”As you can tell from this description, financial well-being is subjective and not necessarily correlated with objective financial measures. In other words, an employee who makes $60,000 a year and manages their money well can achieve financial well-being, while an employee who makes $100,000 a year but doesn’t know how to budget their money may not.While it’s clear that financial well-being is an essential consideration for your workforce, it may be less obvious why this has anything to do with your company’s DEI efforts. We’ll explain in the next section.
In the United States, we have a long-standing history of economic inequality. According to the Federal Reserve, People of Color have lower levels of wealth compared to White families.This results from many complex societal, governmental, and individual factors, such as a lack of access to inter-generational transfers, homeownership opportunities, tax-sheltered savings plans, and financial education among marginalized groups.
What this means in the workplace is that your employees of color are more likely to experience high levels of financial stress. Unaddressed, this stress can make it very challenging for them to reach a state of financial well-being. Take a look at these statistics to understand why:
Without intervention, the side effects of financial stress will only perpetuate the cycle. Thankfully, most employers have the unique opportunity to break the pattern of financial inequality for their employees.
One of the most effective ways to help your employees achieve financial well-being is by providing financial wellness benefits. This type of offering will help your employees understand their finances, take action, and create lasting behavior changes.For instance, Origin’s holistic financial wellness platform considers every aspect of a person's financial life—from personal goals to current savings. Using that information, employees receive personalized guidance that addresses where they’re currently at and where they want to be in the future.Here are some of the other advantages you’ll gain by offering comprehensive financial wellness benefits:
To attract top talent, companies have to address the wants and needs of their employees. And the data shows that financial support is in higher demand than ever before—in fact, nearly 60% of respondents feel it’s more critical now that employers offer financial wellness benefits due to the pandemic. So, if you want to stay competitive in the job market, show candidates that you’re invested in helping them achieve financial well-being.
As we mentioned before, financial stress leads to lost productivity and absenteeism, which costs employers an estimated $250 billion per year. But there’s a straightforward solution to save on these unnecessary costs—and that’s to help employees better manage their finances. There’s a reason why 53% of employees said they would feel less stressed about their overall financial situation if they had access to financial wellness benefits.
Half of the respondents in a recent survey said they would be more committed to staying at their job for a longer period of time if their employer offered financial wellness benefits. This is a clear case for supporting the financial needs of your employees. But if ignored, your employee retention rates may plummet—and this will cost you. Replacing workers requires one-half to two times the employee's annual salary.By supporting the financial well-being of your employees, you have the opportunity to help level the playing field and create a stronger foundation for all your other DEI efforts. If you want to learn more about the link between finances and DEI, download our eBook here.