Research Summary: The State of Employee Financial Wellness

Elevate the role of employee financial wellness to improve morale, relieve stress and raise productivity

           

According to data from a study released in May 2019 by Freedom Debt Relief, 80% of Americans said they have debt, and 45% have debt over $10,000.2 So, although the economy is in much better shape than it was a few years ago, many Americans are still suffering from stress tied to their finances. Against this broader economic backdrop, some employers are providing programs and launching initiatives designed to help improve the financial wellness of employees. To learn more about these programs, HR.com's HR Research Institute in partnership with Salary Finance, which partners with employers to offer financial wellness solutions, surveyed the HR community during the summer of 2019. 

Financial wellness programs are not usually one-size-fits-all benefit offerings. Instead, financial wellness generally encompasses multiple initiatives that could include financial education and coaching (e.g., budgeting and spending, emergency expenses), forms of financial assistance (e.g., student loan assistance, low-cost loans, early access to pay, disability programs, maternal and paternal paid leave), and long-term planning (e.g., life insurance, retirement savings, emergency savings). Whether or not an organization has financial wellness programs partially depends on how multi-benefit offerings are construed. Just over one in three (36%) are either implementing or planning to implement financial wellness programs.

More than half (58%) of HR professionals say their organizations help employees attain higher levels of financial wellness to at least a moderate extent. This indicates that even many of those that don’t believe they have a specific financial wellness initiative believe they are helping employees attain greater financial wellness, probably via various employee compensation and benefit plans.

Participants were asked about the HR priorities in their organization. Employee well-being is mentioned by 56%, which is second only to compensation and benefits, cited by 59%.

When asked in which areas employees are struggling most, the top two responses were finding an appropriate work-life balance (55%) and earning enough to pay bills or pay off debt (53%). These are the only two options more than half of the participants selected. A sizeable number of participants say there are two other struggles employees face: coping with stress at work (46%) and advancing their careers (45%).
 

Well over half of HR professionals (58%) say unexpected emergency expenses is one of the top drivers of financial stress among employees. Another 55% say running out of money before payday is a major driver of financial stress. Half say saving for retirement is a major source of financial stress for employees. Just about half (48% for each option) say dealing with credit card debt and child care expenses help drive employee financial stress.

The three most frequently cited reasons for focusing on employee financial wellness are more employee-focused than bottom-line focused.

Participants say the most significant driver leading organizations to focus on employee financial wellness is to improve employee mental health—65%. Participants say improving morale is another big driver (57%), and 55% say helping employees make decisions free from financial stressors is the third most significant driver of financial wellness programs. Participants cite positive business outcomes as the next two major drivers— improve retention (52%) and engage existing employees (50%).

To the extent participants offer financial wellness programs, HR professionals say they use email as the primary communication channel (cited by 57%). No other communication channel rises above 40% in use. Participants cite an employee portal or intranet 38% of the time. We believe, however, that it is going to be a challenge for organizations to make substantial progress on employee financial wellness issues without a more complete, comprehensive and multi-channel communication plan and processes.

The primary drivers for helping employees are aimed at improving the lives of employees. However, the primary reason for not doing more turns out to be budget constraints, with 45% of the participants citing that reason. 

While employee financial wellness programs are not widely adopted as a benefit offering, three of the four most frequently offered employee benefits contribute to employee financial wellness. A majority of organizations (76%) offer employees life insurance coverage. Two-thirds say their organization offers employer contributions to retirement plans. Employee assistance Plan (EAP) was the next most common benefit at 58%. The only other benefit program offered by more than half of the participants is disability insurance (55%).

More than four out of five (82%) say financial education is very important to a financial wellness strategy, and another 14% say it is somewhat important. As we have seen, financial concerns are among the most widely cited challenges that employees face, and most HR professionals view them as important. However, only 32% of organizations say they currently offer financial education resources to employees.

High financial wellness firms are more than ten times more likely than their low financial wellness counterparts to say they have an employee financial wellness initiative in place. In other words, the organizations that claim to be helping employees attain greater financial wellness are much more likely to have an initiative in place.

Three in four of HR professionals in low financial wellness firms say employees’ biggest source of financial stress is making money last from one payday to the next. Among high financial wellness firms, just 36% say employees in their organizations see this as a major source of financial stress.

The benefit offerings of high financial wellness firms tend to be considerably more robust than those of their low financial wellness firms in various areas. The contrast is especially stark in the area of financial counseling, offered by 61% of high financial wellness firms compared to just 13% of their low financial wellness counterparts.

To learn much more about the survey on The State of Employee Financial Wellness and to get 8 key insights and strategic takeaways, we invite you to read the complete report.