Blog: Here's how employees can reduce their financial stress

Employee Relations

Here's how employees can reduce their financial stress

Here are some of the steps that employers can take to better manage their employees' financial wellbeing.
Here's how employees can reduce their financial stress

Enhance employees productivity by reducing their financial stress

More often than not, a happy employee is a productive employee, and those who tend to have financial worries may find themselves lacking in work engagement. Furthermore, Financial insecurity is one of the most significant stressors in the modern age. Job performance, efficiency and productivity are often interlinked with the financial wellbeing of an employee. Rising financial worries contribute to high employee stress levels and poor health, and it is a vicious cycle that needs a systemic solution at the organisational level. 

Financial wellbeing is associated with job satisfaction and increased productivity, as indicated in a 2020 PwC survey which showed that employees enduring financial stress are less productive and are in worse financial shape than other employees. The very same survey found that nearly 38% of employees are already in a fragile financial state and unprepared for short-term cash needs, lacking the ability to absorb even a minor shock. Considering that many employees lack the ability to absorb even a minor financial shock, companies across the board should take steps to make employees' financial wellbeing a core component of their overall wellbeing strategy and employee value proposition. 

Organisations across all industry segments need to evaluate how their employee's financial wellbeing affects their bottom line. Keeping this in mind, companies need to adopt a holistic approach that addresses issues of financial wellbeing, engagement, absence cluster, physical and mental health. Here are some of the steps that employers can take to better manage their employees' financial wellbeing.

Install a framework to monitor and manage employee financial stress

Consult trained and accredited professionals to institute a framework that will help identify the various circumstances that are causing difficulties to your employees regarding their finances. The pain points identified through such a framework will facilitate informed decisions to mitigate financial stress amongst your employees. The framework will give you data points for improvement and policymaking. Furthermore, employees will gain insight into how they manage their town finances and what they can do to better their situation. 

Quick and early access to earned wages

Running out of money before the next paycheck can be scary, and many employees often report this situation. This can occur to any salaried employee for reasons like debt, an emergency or an unplanned expense. This occurs more often than one can imagine and can even lead to expensive payday loans that worsen the situation further. With the cost of living increasing at a steady rate, salary running out before the month's end will keep adding to employees' financial stress. Technology presents an opportunity for employers to address this issue without straining their own financial resources. Employers can use the help of technology-based companies that provide advance salary solutions. These advance salary solutions can help companies alleviate their employees' financial worries by providing them early access to their earnings & help you create a financial care framework.

Make financial and retirement security a priority

Many employees at various organisations report being stressed about their income after retirement, and many complain about the stress induced by this financial insecurity. Employers can mitigate this situation by implementing a basic retirement plan & actively encouraging employees to save for retirement while taking benefits of their retirement plan's tax benefits and the respective contributions by the employers. Employer-based retirement benefits is a significant step forward towards employee financial wellbeing. 

Financial management for personal finances

Subsiding travel, employee lunches, work from home expenses, etc., may seem trivial on the surface, but it can prove the difference between stress and happiness for those employees who have to weigh every luxury with the bills they have to pay. Further, you can introduce financial management workshops in your organisation to help your employees understand their financial state and better manage the Four Pillars of Personal Finance: assets, debts, income, and expenses. This won't just help boost productivity, morale and talent retention but will also make a significant difference to your employees' mental health and wellbeing.

Hire a personal finance advisor 

A personal financial advisor is a qualified professional who gives financial advice and recommendations to people as per their specific needs. Personal financial advisors have the expertise and experience to deliver solutions tailored to your employees' needs, help them avoid risky investments and mitigate risk. They can also help your employees to chart a sound financial plan for their future aligned with their ambitions. Instituting such a position in your company can alleviate your workforce's financial pressures and help improve employee engagement. 

As an employer, identifying and mitigating issues that create a drag on productivity is paramount. Companies need to play a more active role in their employees' health and retirement as well as in their personal finances. Mechanisms to address their diverse needs is the need of the hour. If you take care of your employees in their difficulties, they will ensure that they take care of your business and goals in return in a much more productive manner.

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Topics: Employee Relations, #GuestArticle, #EXChecklist

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