Employee Engagement

The Business Case for a Financially Resilient Workforce

Learn how to build a lasting financial wellness program.

Although financial challenges may result from turbulent market conditions, they can arise anytime. In fact, many Americans face frequent financial strain. Rising inflation, costly home and health insurance, student loan debt, and expenses associated with childcare and elder care can all take a toll on Americans’ financial well-being. Those experiencing financial hardship may also struggle to put aside emergency savings, making it more difficult to readily bounce back from even a modest financial shock.

 

Beyond experiencing personal stress, individuals with low financial resilience often bring those worries into the workplace. This can impact U.S. businesses in significant ways.

 

Understanding the Business Cost of Low Resilience

Financial challenges have a way of pervading people’s lives. For instance, employees under financial strain may have difficulty sleeping or be more prone to anxiety, a combination that can lead to physical and mental health issues—resulting in higher absenteeism and health care costs.

 

These worries may also affect their job satisfaction, making them more prone to look for a higher-paying job. With the cost of recruiting a replacement, plus the time spent training and educating a new employee, the expenses caused by high turnover can add up.

 

At the same time, employees with low financial resilience may find themselves more distracted at work. Beyond reducing employee productivity, this can raise the risk of workplace accidents. Put another way: Worrying about money means an employee may be unable to perform at their highest potential. And that has consequences for employers.

Building a Financially Resilient Workforce

Highlighting the costs of low resilience is a critical first step in building and sustaining the business case for a financially resilient workforce. However, to mitigate low financial resilience, employers also need to understand the challenges their employees face and design a program that helps alleviate them. To do this, employers can incorporate the following best practices into their programs:

 

  1. Diagnose and Design

    Understanding the financial needs of employees using HR data and survey tools can help an employer translate those needs into actionable decisions about where to invest in programs. For example, tracking turnover rates could help employers assess if resignation trends may be linked to employee financial stress, potentially underscoring the need for additional employee education. Similarly, reviewing retirement plan participation rates can identify specific employee populations with low enrollment and allow follow up through an engagement survey to uncover the reasons behind those trends. If those are due to financial pressures such as student loan debt or caregiving expenses, employers can respond by enhancing support in those areas.

  2. Leverage Financial Coaching as a Pillar of Resilience

    Employees’ needs change over the course of their lives, as their family, finances and challenges evolve. As a result, they can often benefit from a flexible and responsive coaching program that helps address and meet their shifting financial needs. In practice, the success of a coaching program may be increased when integrated with a communication strategy that builds awareness and engagement, particularly at key moments such as new hire orientation, or when the employer knows that the employee has entered a new life stage (e.g., when they’re having a baby).

  3. Support Mental Well-Being

    How people think about money can play a big role in how they approach financial challenges. This means principles such as mindfulness, goal-setting and self-growth may help to build financial resilience. If an employee feels overwhelmed, having resources (including Financial Advisors) to help them make more balanced and realistic decisions can potentially keep the challenges in perspective, alleviate their stress and build their resilience.

  4. Don’t Forget About Measuring Impact

    Having a measurement framework with key success indicators can help employers understand whether interventions are having the desired impact. Employers do not have to reinvent the wheel here. They can leverage the same HR data sets and proven survey tools mentioned above to capture trends and track progress over time.

Financial resilience does not happen overnight. Individuals will need time to engage with any new program, build their capacity and ultimately improve their financial wellness. But with consistent communication and encouragement from you and other workplace leaders, you can build a lasting program that helps improve people’s financial lives—and that can help lower your costs and boost your organization’s performance.

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