The Economic Imperative For Providing Financial Wellness Benefits

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In recent years, US employers have experienced a significant shift in their attitudes towards employee financial wellness. Today, 62% of employers feel that they are extremely responsible for employee financial wellness. In 2013, that number was only 13%, and 41% of employers felt they were somewhat responsible for their employees' financial health; by 2022, that figure had skyrocketed to an astonishing 97%.

This tremendous shift in business attitudes toward financial wellness has a credible foundation. The leading US employers like Walmart, Costco, Whole Foods, and many others have already seen measurable improvements in their recruitment, retention, and engagement metrics by making financial wellness a big part of their workplace culture. 

Here are three ways that organizations benefit from financial wellness programs in the workplace:
 

1. Loyalty: Employees feel the employer ‘genuinely’ cares and understands their needs and priorities. 
2. Recruitment: With plenty of gig and freelance opportunities, employer sponsored financial wellness benefits help a candidate choose one employer over another.
3. Retention: Quitting a job becomes that much harder when financial wellness benefits are offered.

It is not surprising that there is a higher ROI when employees feel their employer cares about them. People react most favorably when they feel that their employer has their back. With over 100 million Americans living paycheck to paycheck, a company that offers financial wellness benefits and isn't afraid to talk about financial difficulties tends to win over the respect and admiration of its staff. 

A recent Bank of America study shows that employees respond positively when they believe their employer genuinely cares about their financial wellness. As a result, businesses can see a return on investment of up to 50% in productivity, 43% in reduced stress, 41% in improved morale, and 36% increase in innovation.

When a business can provide genuine and demonstrable advantages, recruitment becomes considerably easier. For someone who has been out of work for a few weeks and doesn't have a financial cushion, a financial wellness benefit like access to wages they have already earned or Earned Wage Access (EWA) can be a no-brainer. It is the most effective method of avoiding a debt spiral with expensive alternative financial goods. 

As a result, it should come as no surprise that businesses across the United States are adopting financial wellness perks as a best practice to offer during recruitment. Originally offered by huge corporations such as Walmart, EWA is now accessible to millions of businesses that form the backbone of the American economy

The most significant dividends from financial wellness programs are seen in employee retention. The cost of replacing an employee is significant - up to nine weeks' salary plus the cost of background checks, training, and so on. In contrast, increasing employee retention can result in significant savings, averaging around $5000 per employee. For a 10,000-person organization, a 1% improvement in average turnover of 30% could be worth up to $150,000.
 
Financial wellness benefits are no longer an optional perk for employers but a crucial part of enhancing workplace wellbeing. By prioritizing financial wellness, businesses can improve their topline and bottom-line while providing meaningful support to their employees. These benefits are one of the most effective ways for a business to demonstrate that they genuinely care about their employees, making it a critical part of their employee retention and recruitment strategies.

Safwan Shah is the CEO of Payactiv.