Helping your employees achieve financial fitness
Like many employers in the wake of the recession, Ruth T. Jones observed that some of her workers were struggling to make ends meet.
“Whether the hardships were the result of an unexpected medical emergency or loss of income for a spouse, we noticed that several employees were struggling financially to care for their families,” said Jones, executive director of the YWCA South Hampton Roads.
So, nearly three years ago, the local YWCA began offering financial-wellness services to its staff of 60. In doing so, the nonprofit joined a small but growing number of businesses and organizations that have invested in their employees’ financial fitness.
Why do they care? Certainly, plenty of employers – such as the YWCA – are genuinely concerned about their team’s overall well-being. But, combined with that, they also know financially stressed employees ultimately bring those problems to work with them. And that can hinder the company’s productivity and growth, said Judith Cohart, president of the Personal Finance Employee Education Foundation, an Alexandria-based nonprofit focused on financial education in the workplace.
“It can affect absenteeism; it affects something called ‘presenteeism,’ where people are at work but they’re not concentrating on their work because they’re worried about handling their finances,” she said. “It can affect turnover. They’re not putting money into their 401(k) … ”
In cases of presenteeism, financial stress is a more likely culprit than physical illness or depression and anxiety, according to “Financial Literacy and Workplace Outcomes,” a new report from PFEEF. Released in January, the report estimated that presenteeism costs employers about $180 billion in productivity losses.
PFEEF and other groups offer a variety of tips for employers, including:
• Provide articles and other resources about budgeting, reducing debt, having a savings plan and managing spending.
• Encourage employees to take PFEEF’s Personal Financial Wellness assessment to gauge their own situations.
• Host “lunch and learn” financial seminars with an expert speaker. This is one of the most common components of workplace financial programs, according to “Financial Education Initiatives in the Workplace,” a 2012 survey by the Society for Human Resource Management.
• Focus on specific challenges, such as retirement planning or emergency savings. Both are key areas of vulnerability for financially stressed employees, according to a 2011 Financial Finesse report.
• Don’t single out individual employees.
• Include a financial-wellness packet at new-hire orientations.
Not surprisingly, employee programs that provide financial education are slowly but surely mimicking the success of workplace programs that promote health and fitness.
“I think financial wellness goes kind of hand-in-hand with health wellness programs,” said David Kilby, president of FinFit, a Virginia Beach company that offers “financial fitness coaching.” “Employers are recognizing that, just as health wellness demonstrated real value to their organizations over time by investing in quality programs, financial wellness is going to do the same thing.”
FinFit, whose clients include the local YWCA, offers a two-pronged approach to employee financial wellness: solutions and education. After assessing the individual financial situations of a company’s employees, FinFit offers them solutions such as debt negotiation, credit counseling and short-term, payroll-deduction loans. It also provides an array of educational tools, from “baby budgets” for expectant parents to retirement planning.
The services are confidential; FinFit does not share an employee’s personal information with the employer. The program is free to employers . The company makes money from the services and loans sold to employees.
Jones said FinFit has improved morale, productivity and self-sufficiency among YWCA participants.
“A key aspect of our mission at the YWCA is to promote dignity for all human beings,” she said. “Providing an opportunity for our employees to access the resources they need in a discreet and confidential manner helps them feel that sense of dignity that we work toward for others. Ultimately, maintaining that dignity helps with employee morale and productivity.”
Whether it’s called financial wellness, literacy, fitness or education, the concept is proving successful. When businesses offer such programs, employees are more apt to participate in savings plans and contribute to 401(k)s, according to “Weighing the Effects of Financial Education in the Workplace,” a 2009 study by the Federal Reserve Bank of Kansas City. They also lower their risk of wage garnishments, which can be costly to employers.
The study concluded that workplace financial education can have a net positive impact on a company’s bottom line.
“It’s a win-win,” said Cohart of PFEEF. “It helps the employee because they get their finances in better shape and are able to save for retirement. … And it’s a win for the employer because the employer then has a more productive employee who’s not absent as much or doesn’t have the other issues I've described."