OVER THE LAST DECADE, there has been a steady increase in business leaders investing in wellness programs that are designed to improve workplace well-being. Yet, many of these programs are not targeting one of the biggest sources of employee stress: personal finance.
Beyond the impact on mental well-being, an AOL Health Poll indicated that financial stress has a significant impact on the physical health of employees and on workplace productivity.
It also has been linked to anxiety, insomnia, stomach ulcers and muscle tension. Accordingly, employers are beginning to see the manifestations of personal stress on an employee’s attendance and productivity in the workplace.
For the large number of employees who are saddled with student loans, personal finance is a huge concern.
A Pew Research Center study shows that 37 percent of U.S. households headed by adults younger than 40 have student loan debt and 70 percent of recent Minnesota and Wisconsin college graduates have student loan debt, according to ValuePenguin. That’s a huge population of employees who are feeling the crunch — and taking that stress to work every day. Fortunately, there are a number of actions employers can take to relieve some of financial stress hitting their employees – especially those with student debt.
Invest in a financial wellness program
As with health-related wellness, there is no “one size fits all” approach to financial well-being. Employees are at different places on the financial wellness spectrum and have varying preferences for accessing services they may need. A successful financial wellness program will include both educational information as well as resources. The educational component should cover the various aspects of an employee’s financial life, such as debt management, college education funding, mortgages, credit management, retirement planning and budgeting — just to name a few. Available tools and resources should encourage people to take some sort of action. They may include a financial wellness assessment (similar to a health risk assessment) which outlines the bigger picture of an individual’s financial situation, and access to financial consultants or financial planners to identify and guide employees through the first steps in the process.
The following are a few best practices that I would recommend to those considering implementing a financial wellness program for their employees:
- Education and awareness alone will not lead to behavior change, but are a necessary component of the program.
- Offer a variety of resources, from debt management, budgeting, educational resource planning, to retirement planning services.
- Service modalities should vary — in-person, online, telephonic, or self-service. Financial coaching (regardless of delivery method) can be helpful as it offers additional motivational support and accountability.
- Employers need to be committed to the program. Simply announcing it and indicating where to go for information will not produce positive results. The program needs to be continually promoted and barriers to accessing it need to be removed or limited.
- Communicate benefits in their language
Helping employees to understand financial benefits offered through the company and empowering their financial literacy can reduce some of this dollar-sign stress, and should be among the top priorities of business leaders.
Help employees learn about their benefits through tactics other than forms, slides and word documents. Opt for visuals — videos, infographics or even games — to help employees truly understand their options. Explaining each term and not assuming employees have a strong base for financial literacy is key to ensuring young employees start their career with a strong understanding, and helps all employees make sure they are choosing the right options.
Explore student loan repayment assistance
There are a couple options for employers when it comes to repayment assistance. Employers can help pay the employee’s loan directly, setting caps for total loan assistance at amounts such as $5,000 or $10,000, or making repayment contingent upon continued employment. Employers can also connect employees with organizations that can help refinance student loans at more favorable interest rates.
Employers should note that there is currently no wage or employment tax exclusion for employer-provided student loan repayment assistance. Consulting with a financial adviser regarding the best offerings — for both the employee and employers — will save time and money.
Additional strategies
In addition to student loan repayment assistance, employers are looking at other ways to help shore up their employees’ financial wellness. For example, many employers are utilizing 401(k) automatic enrollment as a way to nudge employees into saving for retirement, and automatic increases as a way to continue nudging them along. Employers are also offering benefits that can ease the financial burden faced by younger employees (who are more likely to have student loan debt), such as paid parental leave, wellness programs that reward healthy behaviors, and contributions to health savings accounts, health reimbursement accounts and/or flexible spending accounts.
The benefits of financially literate employees directly correlate to productivity and the company’s overall bottom line.
Less-distracted employees drive productivity, so helping them to understand their finances and manage large payments like student loans is a critical investment in the company’s ability to operate and compete down the line. Empowering employees to make their own lives better is not only a differentiator for recruiting and retaining top talent, it helps ensure that current employees are brand advocates, creating a mutual stake in the future of the company.
