Hi,

can you believe we're halfway through September? It feels like my vacation was ages ago! On the positive side: conference season is starting. Let's meet!

• On October 3, join this Visier webinar "Beyond Compliance". We'll discuss your people analytics approach for Pay Transparency in Europe.
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I usually don't duplicate articles in newsletters. But this time I'm making an exception. Because financial wellness is an important future of work topic. It should be shared with everyone, not just the readers of my payroll newsletter. Hope you enjoy reading it, and apologies if you've received it twice!

A change in perspective

If you'd asked me five years ago whether employers should help employees manage their finances, my answer would have been a resounding no. As a people leader, I considered an employee's financial matters as private, something employers should steer clear of. Even when I was faced with situations like wage garnishments, the topic remained confidential and off-limits. It was only when it got out of hand (garnishment after garnishment), that my HR team would get involved.

But the pandemic shifted our perspectives on work-life boundaries, including mine. We got glimpses into each other's personal lives through video calls. Conversations about employee well-being – including mental health – became the norm. Which made me wonder: Does this openness include financial health as well?

Because the reality is that financial stress can be all-consuming. When employees worry about paying their bills, it leaves little mental energy to focus on work. Just as mental health support can help people move forward, can financial support achieve the same? Despite the potential benefits, many companies are hesitant to make this step. Is it still taboo? Or are we slowly adopting a more holistic view of employee wellness that includes their financial situation?

Back in August, I shared a short post about this dilemma. And many people chimed in with comments – my thanks to all of you. Your input has sharpened my thinking and helped me write this article. I’ll look at pros and cons, give some suggestions on how to test the waters and what kind of solutions might be helpful. And keep reading, because your employees are more interested in financial wellness than you think!

Why should employers become involved?

With a little help of my readers, I collected several reasons why employers should consider helping their employees with financial management. Let’s start with the potential for increased productivity. When employees are constantly worried about making ends meet, they can’t focus fully on their work. PWC found they are also less engaged. An employee struggling with credit card debt might be distracted during important meetings or miss deadlines due to stress. By offering financial counseling or debt management programs, employers can help alleviate these distractions, leading to a more focused and productive workforce.

Financial stress often comes with physical symptoms or mental health issues, leading to increased sick days. By addressing financial stress, employers can reduce absenteeism. A company that offers resources like budgeting tools or access to financial advisors may see fewer stress-related absences, resulting in a more consistent and reliable workforce.

Many employees, regardless of their level of education, lack basic financial literacy. And don't assume this only concerns employees on the lower end of the earning scale: money worries are not limited to people with low incomes. Workplace financial education programs can fill a crucial gap left by the educational system. By providing this knowledge, employers can empower their staff to make better financial decisions, which can have far-reaching effects on their lives. For example, a young employee who attends a company workshop and learns about compound interest might start saving for retirement earlier, setting themselves up for a more secure financial future.

Programs like these can also promote social mobility. Take an employee from a low-income background who learns, through their company's financial education program, how to build credit and save (or invest) wisely. This knowledge could be transformative, potentially breaking cycles of financial instability across generations.

Financial support also demonstrates a commitment to employee well-being, which can enhance company culture. Imagine a workplace where employees feel supported not just in their professional growth, but also in their personal financial journey. This holistic approach can foster a more positive and supportive work environment, leading to increased job satisfaction and engagement.

Financial wellness programs can also boost employee retention and loyalty. You could consider offering a matched savings program or financial planning workshops. Employees are likely to view these benefits as valuable additions to their compensation package, making them less likely to leave for another job. This can result in reduced turnover costs and a more experienced, stable workforce.

But is it smart to get involved?

While there are benefits of employer support for employee finances, there are also important drawbacks and considerations you should keep in mind. Privacy concerns top the list for many employees. It was also the reason why I did not get involved when I was a people manager. Financial matters are deeply personal, and workers might feel uncomfortable when their employer has insight into their financial situation. It was clear to me that an employee struggling with debt could fear my judgment or feel insecure about their job if I, as their manager, would reach out to discuss their financial difficulties. Another reason why I held back.

Liability issues present another significant challenge. If you as employer provide financial advice that leads to negative outcomes, you could potentially face legal repercussions. Imagine a scenario where an employer recommends a particular investment strategy in their financial wellness program, and employees who follow this advice suffer substantial losses. This could not only lead to legal challenges but also damage the trust between employees and the company.

You should also consider resource & time allocation. Implementing comprehensive financial wellness programs requires time, money, and effort. For some companies, especially smaller businesses or startups, these resources might be better directed towards other business activities or benefits that employees prioritize more highly.

And you run the risk that these initiatives will be perceived as paternalistic or overstepping boundaries. Some employees might view financial wellness programs as the company trying to exert too much control over their personal lives. For instance, when a company starts offering budgeting apps that track employee spending, they might feel this is an invasion of their privacy, even if the intention is to help.

Equity considerations are crucial as well. Financial wellness programs must be carefully designed to ensure they don't inadvertently favor certain groups of employees over others. For example, a program focused on home ownership might alienate or be less useful to employees who rent or live in high-cost areas where home ownership is less attainable. Similar for programs that offer investment advice when your employees are living paycheck to paycheck.

And as a final point, I want to stress that financial wellness programs should not be seen as a substitute for fair compensation. There's a risk that some companies might use these programs as a way to distract from issues like low wages or lack of raises. Employees will rightfully question why their employer is offering financial planning advice and not addressing the basic issues like living wages or pay equity. Which goes to say: think carefully about the timing of your financial wellness initiative!

How can you strike the right balance?

Employees are more interested in these services than you think! According to a WTW survey, 66% of employees ranked financial well-being as the area where they want the most support from their employers over the next three years. But only 23% employers ranked financial well-being as a top priority for that period. A study by Alight found a similar gap between what employees want and what employers think they want. This gap provides a great opportunity for employers looking to create a great place to work!

Alight: Employer vs Employee needs

You should approach financial wellness initiatives with sensitivity, transparency, and a genuine commitment to employee well-being. Many readers who left comments on my post stressed that the key to a successful implementation lies in finding the right balance between offering support and respecting personal boundaries. And they shared some approaches you can consider:

1. Survey employees: Directly ask employees about their interest in and preferences for financial wellness support.
2. Focus on education: Provide financial literacy courses and resources as part of broader employee development programs.
3. Leverage existing benefits: Many Employee Assistance Programs (EAPs) already include financial counseling services. Ensure employees are aware of and can easily access these resources.
4. Provide tools and resources: Offer access to budgeting tools, financial planning resources, and educational materials. Stress that these are external and optional and employee data will never be shared with the employer.
5. Partner with professionals: Offer access to professional financial advisors rather than having the company directly involved in employees' financial decisions.
6. Address fair compensation: Ensure that financial wellness programs are paired with fair and equitable pay practices.

What tools are available?

The threshold for adoption is obviously a lot lower when you rely on external tools without any company involvement (other than paying for the subscription). The recent focus on financial wellness leads to more choice: several young companies have come to the market offering new solutions that are built on the latest technologies. Employees can use these tools without the employer being aware of who signed up or how they use them.

I am going to leave you with a list of suggestions that give you a broad overview of what's possible. Up to you to make a selection and determine the perfect fit!

1. Financial education platforms: Many L&D systems now include modules for financial education, offering employees access to courses, webinars, and resources on topics like budgeting, saving, and investing.
2. Automated savings programs: Some payroll systems allow employees to automatically divert a portion of their paycheck into savings or investment accounts.
3. Earned wage access: A solution that allows employees to access a portion of their earned wages before payday, reducing reliance on high-interest payday loans.
4. Personalized financial dashboards: Apps to provide employees with personalized dashboards, giving them a clear view of their income, expenses, and financial goals. Often include options to automatically move money to e.g. savings and investment accounts.
5. Integration with financial wellness apps: Many HR systems now integrate with third-party financial wellness apps, providing employees with comprehensive tools for budgeting, debt management, and financial planning.

By leveraging these technological solutions employers can provide valuable financial support to their employees while maintaining appropriate boundaries and respecting individual privacy. These platforms not only make it easier for companies to offer financial wellness programs but also make it more convenient and engaging for employees to participate in them. And if you need some names, you know where to find me!

Do you offer a financial wellness solution? How is it working out?

Have a great day, Anita

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