Why Employee Financial Well-Being Is Essential To A Successful Business?

It's no secret that employee financial well-being is good for businesses. After all, any business would strive to have a healthy and engaged workforce. But there's more to it: employee financial wellness also means lower healthcare costs, higher productivity, reduced absenteeism, lower employee turnover, and a significant reduction in tax burdens. In other words, it translates into increased business growth, stronger employee retention, and improved employee satisfaction.

Although certain businesses face more financial challenges than others, having employees with sound financial backgrounds and reduced tax burdens create a positive impact on businesses in many ways.

Employee financial well-being is essential to a successful business

There is an undeniable link between employee financial well-being and organizational success. Research shows that employees with good financial health are more engaged, productive, and innovative.

The Global Financial Literacy Excellence Center's research shows that financial stress can cause reduced job performance and absenteeism, leading to increased turnover, lower productivity and higher healthcare costs. In fact, a 2013 study of over 2,000 U.S. workers found that 44 percent experienced workplace stress from financial concerns.

It's not surprising then that the World Economic Forum identified income volatility as the greatest risk facing the global economy in 2014. Income volatility was the top risk for both developed and developing markets.

Given these risks to organizations around the globe, it's important to understand how employee financial health impacts business success at every level—from recruiting and retaining talent to innovating for growth—and what you can do about it. 

A few benefits of employee financial wellness to a successful business:

‍

1. Motivate Your Staff to Work Harder

2. Improve Productivity and Efficiency

3. Reduce Absenteeism and Turnover

4. Enhance Employee Retention

‍

An employee's financial wellness helps in attracting and retaining talent, reducing tax burdens, and allocating savings.

We all know that employee financial wellness is important, but many employers still struggle to prioritize it. Financial wellness programs can help your company attract and retain talent, reduce tax burdens, and allocate savings. Yet, financial well-being is often pushed to the bottom of the list of priorities.

Treating your employees with respect -- financially speaking -- gives them a sense of trust in the organization, which in turn leads to an overall sense of pride and loyalty that will keep them around longer.

There are many ways to implement a financial wellness program. A few examples include:

• Paid time off for professional development - Employee financial education is essential to the growth and success of your business. It fosters a sense of understanding among your employees about their own finances, as well as their role within the organization. When your employees feel supported by their employer, they are more likely to feel valued as an employee and work harder toward the success of the business.

• Employee discounts on products or services - Offering employees reduced costs on some services or products can be a great way to show employees you value them as individuals and appreciate their commitment to your business. This also helps lower tax burdens for both parties by increasing income thresholds for potential taxation.

• Financial aid - If you have funds set aside

‍

In today's challenging economy, employee financial well-being is more important than ever. In fact, it affects not only your employee retention, but also your business growth, stronger employee satisfaction and productivity.

Treating your employees to financial wellness programs will help you:

‍

1. Bring out the best in them:
   Healthy employees are more likely to value their job and be willing to go the extra mile. Also, they feel better about themselves and are less likely to quit their jobs.

2. Improve your business performance:
   Companies that offer a healthy workplace experience enjoy increased business growth, stronger employee retention and improved employee satisfaction levels. This ultimately leads to higher profits and competitive advantage over other businesses in the same industry.

3. Attract a more productive team:
   When you treat your employees right financially and give them the opportunity to improve their wellness through credit counseling, debt management or education courses, they will work harder for you, which translates into increased business growth and profitability.

4. Inspire higher morale and productivity among your employees:
   Studies have shown that companies with strong financial wellness programs have a lower turnover rate, which translates into more productive employees who can make better Investment decisions and deliver better results for your business.

According to the Society of Human Resource Management's (SHRM) 2017 Employee Benefits survey, 80% of organizations offer some sort of financial benefit or incentive to their employees. While this statistic is encouraging, it also shows that many companies aren't providing employees with the resources they need to reach their full potential in life and at work.

Conclusion

Thankfully, there are many things that employers can do to proactively encourage a healthy financial state for their team. For example, communicating with your employees about the basics of working for a living is a smart move. It can also be helpful to provide some wealth-related education opportunities for employees, as well as incentives (like matching contributions to 401ks) that encourage good financial behaviors in the workplace. Profit sharing and other perks are powerful motivators as well, especially when they’re tied to long-term performance.

It has been said that a happy employee is a good employee. If that’s true, then it’s easy to see how financial well-being could have a direct effect on the productivity of employees. It may not be as straightforward as a relationship some would like, but there is certainly cause for employers to consider the relationship between financial wellbeing and productivity.

Bonus

Our "Financial Wisdom Demystified" simulation program helps employees to develop sound financial decision-making skills. Explore Financial decision making using simulation!