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.

Financial stress: 9 out of 10 suffering

Using mindfulness

Financial stress: 9 out of 10 suffering.

We asked you, our Financial Mindfulness Facebook family – across Australia, the United States and the United Kingdom – to take part in a survey about financial stress in your life. The results are in.

Financial stress, which comes with a strong set of beliefs, is a huge factor in your lives. Monthly bills – such as credit cards and other regular payments – disorganisation, income and unexpected expenses are the major causes of your financial stress.

Constantly stressed about money

One of the most striking findings of our July 2017 survey was that an extraordinary 94 per cent of respondents experienced financial stress – defined as “feeling discomfort and/or worry about making financial decisions” – at least “fairly often”.

A surprising 35 per cent experienced this kind of financial stress “all the time”, while just over a quarter were affected “very often”.

We also asked you a series of questions that haven’t been widely posed to the public before about financial stress. Your answers showed the seriousness of people’s struggles around money.

Why does financial stress hurt our concentration?

Because other studies have showed that financial stress can cause issues with concentration in our daily lives, we asked exactly what about your financial worries affects your concentration.

“I can’t stop thinking about debt and [my] financial struggle,” was a typical response we received to one of the questions we posed. “Thinking several things at once and always having the uncertainties and insecurities present in [my] mind. Focus is clouded with fear,” said another woman.

Similarly, this: “I cannot concentrate since money is always on my mind. Worrying about how to pay all the bills and keep the kids fed make it difficult to focus.”

Another wrote of the damage that a lack of knowledge was having for her and her partner: “Just being disorganized, my boyfriend and I have no control over our finances and we do not know where to start. We are trying to [get help] but we’re still not dedicated to [the] advice.”

Why do we deliberately avoid thinking about the problem?

We know financial stress comes with self-defeating beliefs. Our survey showed the fears behind these beliefs.

“If I think about it too much I panic,” was a typical response, while another admitted suffering from “head in the sand syndrome”.

Responses to this question revealed some real emotional distress when dealing with money: actually facing their financial problems was “too overwhelming”, “exhausting”, “too embarrassing”, “too stressful”, “I want it to go away”, “seems impossible, “it scares me and hurts”.

That makes a response like the following totally understandable: “I run away from things I don’t know how to handle.” This response seemed a bit more worrying: “It’s good to avoid thinking about it because the more you think about it, you give the problem more energy.”

From so much worry, it’s a short step to this: “It makes me depressed and not want to do anything or see any people.”

We asked about mindfulness too: what do people think it is? Interesting the least popular choice was “meditation”. The most popular was “being more aware”, followed by “making conscious decisions more often.”

How would a life without financial stress look?

We also asked exactly how people would even know if their financial had reduced, a reasonable question given the pervasiveness and complexity of the problem.

Easily the most popular option was “I would not worry about money as often”, which got more than twice the votes that “I would feel calmer making financial decisions” then “I would pay bills and meet my repayments without a problem”.

Way down the list was “I would have more money”, suggesting absence of financial stress is not about wealth.

You want to try to solve financial stress with mindfulness

Happily for us, a huge majority of respondents would try our program – which is a personalised financial stress reduction program, delivered by an app.

An overwhelming 86 per cent said they would trial a free app or web-based platform that combined financial education, mindfulness sessions and goal-setting in an attempt to reduce their financial stress.

Employees want help with their financial stress

financialmindfulness blue Background color

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.”

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.