The High Cost Of Financial Stress: How Employers Can Empower Their People To Thrive

The role of employers in supporting employee financial well-being

By Neha Mirchandani, BrightPlan

Financial stress is a significant challenge for today's workforce, and it's only worsening as we continue to grapple with economic uncertainty. With ongoing high inflation and interest rates, a possible recession, and rampant market volatility, it's no wonder that employees and business leaders alike are feeling the pressure.

According to the BrightPlan 2023 Wellness Barometer Survey, 92% of employees are stressed about their finances. And leaders are by no means immune — 76% of the C-suite and human resources (HR) leaders report financial stress. The survey reveals what’s top of mind for employees, HR decisionmakers, and the C-Suite at U.S. companies with 1,000 or more employees - and how employers can best respond in the reality of the current market environment. Below is a summary of the key findings.

Current State of Financial Preparedness

The U.S. is facing a financial wellness crisis that continues to worsen. Only 18% of respondents surveyed have basic financial literacy. 85% have debt, and nearly half have more debt than they can manage. Additionally, 35% have no emergency savings, and over half are saving less than 10% of their income, or nothing at all, for retirement. 63% of Americans are living paycheck to paycheck, and even half of those earning more than $100,000 annually, are struggling to make ends meet.

Impact on Employees & Employers

This financial stress is taking a toll on workers' mental, social, and physical health. 64% of respondents say financial stress has worsened their relationships, and nearly three-quarters have missed out on opportunities to spend time with family, friends, and co-workers due to financial constraints. Additionally, 72% of respondents report that financial stress negatively impacts their mental health, and 60% say their physical health has suffered due to financial stress.

The impact of financial stress isn't just limited to employee well-being; it's also affecting their engagement and productivity at work. 50% of respondents reported reduced engagement, and 48% reported a decline in productivity due to financial stress. On average, workers are losing an entire day of productive work per week, costing U.S. employers potentially nearly $200 billion annually.*

Role of Employers

While workers are trying to take steps to improve their financial situation, with 80% cutting expenses and 81% improving their financial habits, business leaders recognize that employees cannot solve the problem alone. Nearly all HR leaders and C-suite executives surveyed believe that their companies should provide guidance and tools to help their employees improve their financial literacy, grow their wealth, and manage their money on a day-to-day basis. Yet, businesses are also faced with an uncertain future and are becoming more cost-conscious, with many investing in automation to drive efficiencies, cutting back on travel, closing brick-and-mortar locations, reducing or deferring bonuses, and laying off workers.

So, what can organizations and HR leaders do to help alleviate financial stress in the workplace while balancing costs? Here are four crucial steps:

1. Turn to data: To prioritize what matters most and better support their people, HR leaders need concrete evidence that reveals areas of opportunity. This means delving into comprehensive workforce analytics to uncover critical trends and challenges faced by employees. For instance, the data might reveal that a significant portion of the workforce is grappling with living paycheck to paycheck or burdened by student debt that exceeds the national average within a specific employee population.

Armed with this information, employers have the insights necessary to implement targeted practical solutions, such as personalized guidance and education related to budgeting and building emergency savings or student loan assistance programs that ultimately help reduce personal stress and improve employee well-being.

2. Address their top concerns. High inflation is a primary contributor to financial stress, with 96% of employees and leaders reporting it's impacting them. To help employees alleviate inflation-related concerns and stretch their paychecks, employers can offer creative solutions beyond just raising wages.

For example, some companies are increasing employer contributions to healthcare plans to combat rising premiums, offering additional insurance coverage, or providing subsidies for essential expenses like housing or transportation. This approach demonstrates a commitment to a culture of care and provides tangible relief to employees facing the brunt of economic uncertainty.

3. Upgrade financial wellness benefits: The survey reveals that 74% of employees are dissatisfied with their financial benefits. Employers can bridge this gap by investing in the areas employees need and want the most. With the unpredictable nature of the current economic climate, it's more important than ever that businesses invest in providing meaningful support and value to employees, offer benefits that matter most, and provide a safety net.

For example, by prioritizing emergency savings programs, debt management services, and homeownership assistance, employers can offer holistic and targeted financial benefits that extend beyond traditional retirement plans and meet employees where they are in their life journey.

4. Boost benefits optimization: Employers can leverage data to identify areas of low benefits utilization and develop initiatives to address these gaps, such as providing education tailored to their benefits program as well as access to financial planners trained in their company’s benefits package. A year-long communication strategy that extends beyond open enrollment season and meets employees where they are through the communication channel of their choice can also help yield positive results.

Ultimately, by utilizing data-driven strategies, employers can create a comprehensive benefits ecosystem that empowers employees to make informed decisions, resulting in increased engagement, higher enrollment rates, and improved utilization of financial benefits.

Financial stress has a significant impact on employees' well-being and productivity at work. Without access to the proper financial support, tools, and resources, the anxiety surrounding money can be overwhelming. Employers have a crucial role in helping their employees alleviate financial stress by offering the benefits their employees and families need and want the most and driving utilization of those benefits.

By taking these steps, employers can create a supportive and productive work environment, leading to happier and more engaged employees and a thriving business.

Would you like to comment?