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Proving the business case for financial wellness programs

The business case for financial wellness programs

Proving the business case for financial wellness programs.

Financial wellness has been a buzz phrase in the workplace for a few years now – with good reason.

More and more data show how bad for productivity the problem of employee financial stress is.

In Australia, AMP’s 2020 Financial Wellness Report showed 1.8 million Australian workers suffering prolonged financial stress, costing $31 billion in lost productivity.

A survey by salary finance found American businesses are losing $500 billion per year due to employees’ personal financial stress.

Employers want to engage and retain productive employees – yet the day-to-day challenge of trying to pay bills and manage finances is leaving employees stressed and distracted at work, according to PwC.

That’s why blue-chip organisations seek to measure changes in financial stress, as PwC did recently, in its 2021 Employee Financial Wellness Survey of 1,600 full-time employed American adults.

It found that nearly two-thirds (63 per cent) of full-time employees said their financial stress has increased since the start of the pandemic.

Employees whose financial stress increased due to the pandemic were four times as likely to have experienced a decrease in overall household income and to find it difficult to meet household expenses on time each month.

They were twice as likely to have used short term credit in the last year, to have taken a loan or funds meant for their retirement and even to be considering postponing their retirement.

Of the employees who were more financially stressed, a high proportion (45 per cent) reported that their finances were a distraction at work, a majority (57 per cent) avoided medical treatment because of the cost and an overwhelming number (72 per cent) were interested in a company that cared more about their financial well-being than their current employer.

The United States is of course a different market, but the underlying principles apply to Australia: financial stress affects key metrics and it also worsened in the early stages of the pandemic.

In its 2021 Employee Financial Wellness Survey report, PwC outlined four steps it believes employers should take to strengthen workforce financial wellness.

They were:

  1. Make the business case for supporting employee financial health;
  2. Recognize what’s happening for employees at home;
  3. Leverage momentum to promote good financial habits, and
  4. Implement a technology solution paired with human interaction and guidance.

The second point – what’s happening at home – is a difficult balancing act. It is clearly private, but also incredibly insightful, information.

Insights can be gained without breaching any privacy, by gaining employee permission and buy-in to anonymized data collection. But the need to tread carefully and ethically on this point cannot be overstated.

Leveraging positive momentum – such as employees who have improved their own financial position – is important because it reinforces good behaviour and builds trust. Constructive, positive reinforcement feeds on itself, producing positive results – as good leaders know well.

In identifying that 87 per cent of employees want help with their finances, PwC confirms the principles underpinning the financial wellness movement.

This is a case-by-case, site-by-site problem – but in general, people want tools and online delivery is almost always seen as advantageous today, especially with work-from-home so widespread.

The first item in PwC’s list of four steps – Make the business case for supporting employee financial health – is what we’ll concentrate on here because it sets the groundwork for everything else that follows.

PwC makes an important point at the outset: understand what changes in financial stress might be doing to your workforce.

To do that you have to choose key metrics.

The three PwC suggests are ‘productivity, retention, and physical health’.

Others might include absence rate, job satisfaction, engagement, turnover, career path ratios and the impact of training.

There may be other metrics you find more useful or relevant to your business.

The Financial Stress Index (FSI) provides a tool to track changes in key metrics over time, to provide some insight into what is happening for employees in order to develop effective solutions.

Most significantly, the FSI tracked self-reported changes across a sliding scale of financial stress categories.

Specific and measurable key metrics included in the FSI include:

  • Productivity;
  • Absence; and
  • Physical health.

The FSI provides behavioural insights into financial stress that could contribute to changes in other metrics, such as:

  • Job satisfaction;
  • Career path ratios;
  • Engagement; and
  • And the impacts of training.

They also contained a rich data set that contained insight into what was happening at home for employees and indications of changes in employee mental health.

In March, comparative FSI insights as they applied to Australian survey respondents across three six-month periods were released.

Comparative data was collected on:

  • Effectiveness at work;
  • Time off work;
  • Days lost due to low productivity; and
  • Changes in physical illness symptoms.

All the above data was collected within the context of levels of financial stress.

You can find out more about the FSI here.

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Mindfulness practice reduces time off work for anxiety sufferers

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Mindfulness practice reduces time off work for anxiety sufferers.

Working with someone who is extremely anxious isn’t always fun, but it’s worth remembering stress hits everyone, including us. Anxiety disorders are by some measures the most common mental health issues in the western world, even more common than depression.

Previously research has shown sufferers of anxiety – which could be defined as continuous feelings of stress or worry – typically take more sick days at work and use more mental health services than average workers.

But mental health problems are so common they are basically unavoidable in the workplace, affecting at least 45 percent of all Australians in their lifetimes and possibly more, according to charity Sane Australia. Undetected mental health issues can also be triggered by major life events and financial stress events.

Hence the move to expand corporate wellness programs beyond physical health, and embed mental health programs and tools in them. Mindfulness is one such promising tool.

Mindfulness has been shown in many studies to positively affect symptoms of depression, insomnia and anxiety but now there is proof of improvements that could directly benefit employers: rates of absenteeism in anxiety sufferers fell after establishing a meditation practice.

A team of seven researchers, led by Dr. Elizabeth Hoge, associate professor of psychiatry at Georgetown University Medical Center, split a 57 subjects diagnosed with Generalised Anxiety Disorder into two groups, with half doing eight weeks of “attention control” training while the others did MBSR (mindfulness-based stress reduction) training.

Those that did the mindfulness cut their time absent from work by nearly two-thirds, while the control group actually increased the amount of time they took off work.

The measurement scrutinised in Hoges’ latest research paper – called Effects of mindfulness meditation on occupational functioning and health care utilization in individuals with anxiety – was “partial days missed” and not full days. Why?

“This may be the most sensitive measure of how anxiety disorders impact work performance, as employees … may come late to work, or leave early depending on their mental state,” her report said.

For those who continued practicing mindfulness in their own time, the reduction in absenteeism continued and there was a similar decrease in visits to mental health professionals.

The report concluded: “Mindfulness meditation training may improve occupational functioning and decrease healthcare utilization in adults with GAD.”

Hoge recently published research from a similar experiment which found a group which had undergone mindfulness training “felt” less stressed and had lower levels of the stress hormone ACTH in their blood than people who did stress management training.

If you need to speak to someone about your anxiety call Beyond Blue 1300 22 4636 or Sane 1800 18 7263.

Beyond Blue
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The staggering costs of personal financial stress at work

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The staggering costs of personal financial stress at work.

For a while we’ve known that financial stress has an impact on our productivity at work. But how much worse financially sick staff fare compared to their financially healthy colleagues will come as a shock.

It’s clear absenteeism and presenteeism is rife amongst employees feeling financially stressed.

American employees under financial stress were nearly five times as likely to be distracted at work as those without money worries (48% v 10%) according to PricewaterhouseCoopers’ (PwC) 2017 Employee Financial Wellness Survey of 1,600 fulltime employees.

Spending hours dealing with personal financial issues during work hours was a very common occurrence, with nearly one in three employees affected in this way. Just under half (49%) of millennials (aged 21 to 35) spent 3 hours or more in work time each week sorting out their money own problems, while the figure was 46% for Generation Xers (36 to 56 years old).

The problem was bigger for staff self-reporting financial stress: they were nearly twice as likely to spend three hours a week sorting out their money issues at work as those not under financial stress.

This group was also more than four times as likely to have trouble keeping up with credit card payments and twice as likely to take a day off work to sort out a personal financial crisis.

Twelve per cent of all employees self-reported “missing work occasionally” because of their personal money woes. The major issues affected by financial stress was health (cited by 28% of respondents) although it wasn’t defined as mental or physical; relationships (23%) and productivity (22%).

Overall, “more than half (53%) of employees report that they are stressed dealing with their financial situation and nearly half (47%) say that their stress level related to financial issues has increased over the last 12 months,” the report found.

These issues are also clearly getting worse for the two generations who dominate the workforce – Generation X and Millennials – and quickly. The report showed all the above issues had gotten worse in 2017 compared with 2016, for example, in 2017 there was a 9% rise on 2016 numbers in Gen Xers self-reporting their productivity was affected at work (23%).

The survey also asked respondents across the three main generational groups at work to define the meaning of “financial wellness”. To do this they were given several options and asked to pick the phrase that most closely matched their idea of “financial wellness.”

The option “not being stressed about my finances” was one of the most-cited definitions, especially by millennials who nominated lack of money stress ahead of “being debt free”.

This arguably means millennials especially saw worrying less as a defining characteristic of wellness, suggesting interventions including mindfulness – moment-by-moment awareness – could have use in improving employee financial wellness.

Each generation rated “not being stressed about my finances” as a bigger contributor to financial wellness than being able to meet day-to-day (or month) living expenses and being able to retire when they were ready.

It’s no wonder millennials felt so much stress financial worries; the report showed a big jump in the percentage of 21-to-35 year olds who carry balances (stay in debt) on their credit cards (a huge 70%, up from 53% in 2016).

Comparative data showed that is nearly a 100% rise from 2013 in Millennials locked into debt on their cards.

The proportion of millennials struggling to meet minimum monthly repayments has also skyrocketed in recent years, up to 39% in 2017 from 23% in 2013.

Sixty-three per cent of Generation Xers carried a credit card balance.

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Employees want help with their financial stress

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Employees want help with their financial stress.

Does it strike you as strange that the biggest stressor we face isn’t talked about in plans offered to help with our stress?

In recent years employers have recognised the personal stresses experienced by staff can affect productivity and the bottom line, due partly to the sheer amount of our lives we spend at work and no doubt partly due to increased workloads.

In response, workplace ‘wellness’ programs are everywhere these days, especially in large companies – acknowledging the impact of unhappy staff on the bottom line.

Now there’s evidence from the United States that workplace wellness programs might be missing the mark but not addressing one of the biggest causes of issues in the personal lives of workers – their personal finances.

A new online survey of 511 American employees, done in mid-April by Four Seasons Financial Education, found people wanted financial stress addressed in their corporate wellness plan but 70 per cent of those whose company did offer something said assistance on personal finances was not included.
It’s not just in the US that this mismatch is happening.

Financial wellness is not commonly an element in corporate wellness programs in Australian workplaces either.

Corporate wellness programs have longed focused largely on physical wellbeing, so they offer health checks, fitness classes, nutrition, massage and team bonding. Few look at mental health, although mental health problems are experienced by a huge number of people.

According to the Australian Psychological Society, 26 per cent of Australians report having “moderate to extremely severe depression symptoms”.

Metlife Australia’s 2016 Employee Benefits Trends study showed the top three concerns employees had were related to mental health: work-life balance, depression and anxiety, and stress.

“Only a small proportion of employers recognise work-life balance, depression and stress as important health issues for staff,” the report found.

According to AMP’s Financial Wellness Report, based on interviews with 2000 employees in 2016, 24 per cent of employees feel financial stress. While there is no suggestion personal finance issues create mental health issues for everyone, there is undoubtedly a correlation.

While some new generation wellness programs branch into stress testing, yoga and meditation as a way of combating stress, few acknowledge the importance of improving mental health or drill down to examine the leading causes of stress for workers.

The Australian Psychological Society’s 2015 Stress and wellbeing report, which came from online interviews with 1731 Australians, found : “[Personal] financial issues are rated as the top cause of stress over the five years, while also of concern is the increase in the number of people turning to gambling to manage stress (now one in five).”

Furthermore, the report concluded: “31% of employees say they have taken unexpected time off to deal with a financial issue and 41% admit being distracted at work because of financial worries.” The study surveyed 300 managers and 500 fulltime employees.

One of the report’s four calls to action was “Win minds and hearts by encouraging emotional and financial wellness.”

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Employees want mental health at work taken seriously

Australian employees want mental health at work taken seriously

Employees want mental health at work taken seriously.

Australian employers don’t understand their employees’ major life concerns, according to a study of 500 workers and 300 bosses released in November 2016.

Insurance company Metlife’s  Employee Benefit Trends Study found that Australian bosses dramatically underestimated the importance of staff concerns about mental health issues. Depression, anxiety, stress and work-life balance while overestimating fears about physical health.

Financial stress played a big part in employees’ worries. A huge 41 per cent of employees admitted being distracted at work because of financial worries, while 31 per cent admitted having taken time off work to deal with “a financial issue”.

“This highlights a need for employers to step in with professional support and education to help boost their staff’s financial literacy, giving them peace of mind about their future security,” the report concluded.

The top five financial worries for staff were: job security, and not having enough money to live comfortably in retirement (both 55 per cent).

Having more time with my family, and financial security for my family if I’m not able to work (both 53 per cent); being able to cover medical expenses from a major illness (52 per cent).

Employers were asked what they believed their employees’ major health fears were and 88 per cent thought medical problems would top the list, with emotional problems identified by 69 per cent of employers.

Only six per cent of business managers nominated depression and anxiety as an issue, while 11 per cent identified stress and nine per cent believed work-life balance was a big issue.

Employee’s actual health concerns were the other way around however: 84 per cent mentioned emotional wellbeing, and 70 per cent named medical issues.

Depression, anxiety and stress were much bigger issues for employees than managers realised: 38 per cent of staff mentioned work/life balance, nearly a third (32 per cent) said depression and anxiety were major concerns and 29 per cent nominated stress.

The study conclusions included the claim employers could “win hearts and minds by encouraging emotional and financial wellness”.

Employers could “enhance employees’ ability to take control of their financial wellness by offering professional support and education”.

Metlife’s research also found employees were prepared to split the cost of customised benefits programs, including: medical or health insurance, flexible work arrangements, income protection, employee awards and incentives, and health and wellness programs.

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Single Women Leading Men in US Home Ownership

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Single Women Leading Men in US Home Ownership.

The latest research into women’s struggles with money, Mary Pilon of Bloomberg notes, can make for dreary news.

“Women earn less than their male counterparts, pay harsher workplace penalties for pursuing parenthood, struggle more with debt, and save less for retirement,” Pilon wrote of the situation in the United States, although she could easily have been writing about Australia.

Crucially, women also lose years from their careers by raising children, they do mountains of unpaid (and often unappreciated) domestic work and to top it all off – when facing financial stress – often give birth to under-weight babies.

Many also still face nagging historical stereotypes that women can’t manage money – despite evidence showing women shoulder more financial decision-making and responsibility in families, marriages and relationships than ever before. Sound like a recipe for financial stress?

Forget ‘dreary’ – the news about women and money can be downright depressing.

But according to new research from the National Association of Realtors, single women in the US are leaving single men in the dust for home ownership compared to single men.

The NAR says 17 per cent of American homebuyers are single women compared to single men, who make up just 7 per cent of the market.

Pilon spoke to “30-something” Michelle Jackson who bought a one bedroom apartment in Denver in 2007 which she plans to renovate and is even considering buying a second property.

“I’m so happy,” Jackson said. “It’s completely changed how I feel connected to the place where I’m living. It’s one of the best things I’ve ever done.”

Jackson’s motivation could easily echo the story of many Australian women: “I wanted to have my own place,” she said.

“A lot of people in my circle of friends were women purchasing their homes when they got married, but I still felt like I wanted to build my own wealth and buy.

“If and when I met someone, it’s something that just added to what I bring to the relationship. It didn’t make sense to wait.”

In Australia single men still lead single women when it comes to applications for mortgage finance, according to Aussie Home Loan data reported by domain.com.au in 2016, but the gap is closing. Aussie Home Loans data said 12.34 of mortgage applicants were single men and 11.22 were single women.

Swinburne University social researcher Andrea Sharam said historical discrimination against Australian women in the loan approval process was shifting.

“It’s appalling to suggest women are more financially illiterate than men,” Sharam told domain.com.au.

“I think younger women in particularly are now thinking about housing as something they do as a part of their life plan … it doesn’t matter if they get a partner or not.”