Article: Should HR managers worry about employees' financial health?

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Should HR managers worry about employees' financial health?

Services to improve the financial health of employees is an inexpensive and attractive tool to reduce absenteeism and increase productivity
 

A financially secure employee is more engaged and less stressed at work

 

Financial security is key in the present times. A financially secure employee is more engaged and less stressed at work. An employee, who is not stressed with financial liability will not be absent from work to sort out his or her personal financial matters. Employees’ work life is busy and often cuts into their personal time. As a result, they do not have time to take care of their personal financial matters. Thus, it is the employers’ obligation to facilitate the financial well-being of its employees. Raising financial awareness at the workplace is a low cost and highly effective way to help employees achieve financial security, and also allows the company to attract and retain satisfied stress-free and hence more productive employees.

Most Indian companies have taken limited efforts to educate their employees in making better financial decisions. On the one hand, HR departments recognize that a healthy workforce is a productive workforce, and offer group health benefits and education to their employees. On the other hand, HR departments often underestimate that a financially healthy workforce is equally important. This is a missed opportunity because providing services to improve the financial health of employees is an inexpensive and attractive tool to impact the bottom line of the company by reducing absenteeism and increasing productivity.

So far, the effort of Indian companies towards promoting the financial health of their employees is often nothing more a random seminar on finance every few months. This approach is incomplete and lacks the context within which employees think about their financial matters. Companies must provide comprehensive services that can improve the financial awareness of its employees, across the different income grades and across different personal finance needs.

The following are seven simple low-cost activities that we propose companies could do holistically in order to assist their employees in their personal finance matters and towards their long-term wealth creation.

ESOP Education: Just offering an ESOP is not sufficient. Employees must learn to value their stock options. Understand how these plans function and recognize the long-term wealth creation through options. Otherwise ESOP’s will continue to be a high cost (for the employer) but undervalued (by the employee) tool.

Financial Literacy Seminars: Most employees feel handicapped and lost when it comes to their personal financial decisions. They need help when they take important financial decisions such as investing for retirement, buying a house, taking a home loan and buying adequate insurance. It’s in the employers’ interests to ensure that the employees are using their salary towards making wise personal finance choices. Otherwise, employees will forever feel financially insecure and ask for salary hikes because they might be living beyond their means.

Debt Advisory: Many employees fall into the debt trap by overspending on their credit cards. They then stay absent themselves from work because of the stress and t trauma that comes from dealing with debt collection agencies as well as other legal issues. The employer must help employees understand the perils of living on borrowed money in order to have a stress free work force.

Tax Advice and Filing: Most employees do not understand the tax laws, and frankly this is not an area of their expertise. Corporates must invite tax experts who can provide ongoing tax advice to employees, file tax returns at a subsidized rate for the employees, as well as obtain PAN cards. These are very low cost but highly valued perquisites and also free up valuable employee time.

Pension Advisory: Employees spend the bulk of their income earning years serving a corporate. The corporate must ensure that such employees have a secure retirement ahead. In the very least employees must get the right training so that they become familiar with what retirement means from a loss of income perspective and recognize the need to plan for that early on in their careers.

Pooling of Demand: If a group of employees, facilitated by the employer, pools its demand for a certain product, it is very likely that it can get a group discount. This is commonly done when groups of employees buy into a group housing project, but can also be used to pool demand for car purchases, health insurance, tax filing etc.

Financial Advisory Help Desks: Financial advisors can be stationed on-site at the corporate premises offering employees easy and convenient access to financial advice as needed. This is usually available at no charge to the corporate by financial advisory companies.
 

Topics: #TotalRewards, Compensation & Benefits, Employee Engagement

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