How To Support Your Employees With Financial Stress In 2021

Specific actions to consider

Financial Wellness Programs are on the rise and for good reason. Over the years, corporate wellness programs have focused on nutrition, exercise, stress-management reduction, resilience education, weight-loss programs, productivity, meditation, and building healthy relationships. 

Sadly, many of these programs neglected to provide employees the resources, education and forum to understand the link between their emotional decisions and their ability to have a healthy relationship with money.

According to “PwC’s 9th annual Employee Financial Wellness Survey Covid-19 Update, PwC US, 2020”, 54 percent of the 1,683 full-time employed adults surveyed stated that financial or money matters caused them the most stress versus 11 percent who considered health concerns most stressful, 12 percent who stressed most about their relationships, and 18 percent were most stressed about their jobs. Over 50 percent of the stress coming from money is being overlooked in wellness programming and, in fact, is the key driver that needs immediate focus before we see a sharp increase of employees collapsing around the world.

We applaud and continue to encourage employers who are taking on the responsibility to review their wellness programs with a more holistic lens to include financial wellness. As we see record unemployment numbers around the world, uncertainty with job security, pay cuts, and overtime as well as bonuses at a standstill, money concerns are causing profound stress for your employees at every level, and, make no mistake, those in senior-level positions making more money are not necessarily in a better financial situation.

The topic of money has long been considered taboo and often goes undiscussed in most social circles, especially in the office. We have a chance to shift this topic from taboo to mainstream and make an immediate impact. Are you in?

Worries are not checked at the door, which means employees are very likely to spend their working hours on personal finances. A recent client disclosed that he spent on average one hour a day last year worrying or dealing with personal finances. This is approximately 30 days of lost productivity for that individual. Imagine the loss across your population.

According to a nationwide survey conducted pre-pandemic, Bankrate found that “nearly one in three U.S. families (or 32 percent) decided not to seek medical care in the past 12 months because of cost”. One year later it would be assumed this number is much greater. Avoidance of addressing minor health issues; attending vision checks, annual exams and doctor visits; taking prescribed medications; or delaying vaccinations all have the potential of becoming major health issues that would demand higher costs to treat, and additional sick leave costs to  support.

Debt can actually be the cause of illness, especially stress and depression. Per the Consumer Debt Study in 2019, “the average American has $90,460 in debt,” which includes consumer debt products such as credit cards, personal loans, mortgages and student debt. According to a recent article in Inc. magazine, “One study found that individuals with depression and anxiety were three times more likely to be in debt. Other studies have even found a link between debt and suicide.” So, when you begin to hear employees complaining about migraines, stomach issues, heart problems, sleeping issues, anxiety - take note and act fast.

The ripple effect of employees with financial stress may surface as “snappy” or “short” behaviors, or may lead to someone being on “high alert” or feeling scrutinized. When chronic stress becomes a norm, the limbic system can take over leading to what is commonly known as “fight, flight, freeze.” According to a 2020 Salary Finance case study, 26 percent of employees who were worried about money were also 6.5 times more likely to have troubled relationships with their colleagues.

Drastic times lead to drastic measures to save cash flow, leading some companies to pause or stop their employee matching contributions, and at the same time, employees may pause or reduce their investments or prematurely dip directly into their retirement funds. According to a Kiplinger Personal Finance and Personal Capital’s November survey, “nearly 60 percent of older American workers withdrew or borrowed money from an IRA or 401(k) during the pandemic, and nearly two-thirds used those retirement savings to cover basic living expenses compared to 30 percent pre-Covid.”

How companies manage and lead through the Covid-19 crisis could have a positive or negative impact on both consumer and employer branding. In a recent SHRM article, Lori Sylvia, the founder of Rally Recruitment Marketing, says, "Regardless of what your EVP states on paper, how your company is treating its employees, customers and community during this critical time is defining what your employer brand really represents.” In short, increasing long-lasting credibility, loyalty, and gaining a more appreciative workforce by giving the gift of greater financial resiliency and engagement will go a long way to retain your current talent as well as attract and recruit future talent.

Here are 5 F’s to get you started:

1. Fund programming to educate employees through a series of Financial Wellness workshops where they can develop awareness around the critical relationship between their emotions and financial decisions, while also gaining tools, techniques, and objective advice to plan for long-term financial success. Your Financial Therapist Series may be a perfect starting point.

2. Fuel the conversations around this “taboo topic” by setting up safe forums for employees at similar life stages (e.g. first job, mid-career, ready for retirement) to discuss, debate, ask questions, share openly about the topic of money and have a place to celebrate milestones. A facilitated conversation is recommended to ensure a safe space where all voices are heard and supported.

3. Formulate a plan as part of your future HR practice. The plan should provide HR
Business Partners+ with the knowledge to respond to specific challenges that employees may face in order to provide an array of resources to meet individual needs.
These might include, but are not limited to, financial coaching, debt consolidation, financial literacy, access to budgeting tools, and clear communication around the company’s specific retirement and pension plan loan and withdrawal provisions.

4. Find a way to extend support to families of employees to alleviate home-related stress as financial stress is often a shared topic between employees and their immediate and extended family. Y our employee could suddenly become the sole earner in a household overnight, which presents a multitude of additional stress for a family that may have previously had dual income. 

The Census survey completed in October 2020 found that “close to half of all households in the United States experienced at least some loss of employment income since March 2020, yielding the greatest amount of unemployment since the Great Depression.” In addition, lifestyle shifts may demand direct or indirect family support in these areas: moving in with a partner, buying a first home, having children, divorce, college planning, adult children moving in, caring for elder parents, or death of a loved one. Developing a way for employees and their families to achieve financial peace of mind will mutually benefit both their bottom line and yours.

5. Forward Your Thinking by proactively linking conversations between the selection of benefits and how a person makes financial decisions based on their emotions. For example, plans are not picked by someone’s rank in the company, but rather, their internal values and relationship with money in general. Some may go with the most expensive plans even though they may be fine with the basic ones, and some may go with the least expensive plan, yet their needs require more coverage.

Understanding the emotional attachment to the money that is being spent will help validate whether the plans people choose are the right ones for them in their stage of life.

Now is the time to create bite-sized and super-sized financial wellness goals. As we move away from a year that shook the world financially and embrace a new year filled with possibilities that include normalizing the woes and moving them to wins.