Why should employees return to work when they can make more money on unemployment during the COVID-19 pandemic? Leaders, human resources, and employees have never had to work harder to keep engagement high and stay engaged themselves, and this is brain work.
Even before the pandemic more organizations were starting to realize the importance of creating a more humanistic workplace to support employees’ wellbeing so they could thrive personally and professionally. This humanism is about the development of the employee’s self-concept, aiding the employee in feeling good about him or herself, starting to gain an understanding of one’s strengths and weaknesses, and creating a belief in one’s ability to improve.
Developing this type of humanistic strategy to take care of your people is one thing, but during a global pandemic with so much uncertainty, it is even more important and much more challenging. Although the wellbeing industry has evolved from traditional views of wellness-focused only on cutting health costs, increasing physical activity, and encouraging proper nutrition, the focus has expanded into personal, professional, and even financial wellbeing.
Intuitively we know that it can be difficult to improve any part of wellbeing, but this gets exacerbated by the burden of financial stress looming over everyday activities. When employees are anxious about job security, being furloughed, mounting bills, and other financial burdens, their overall wellbeing slips – which can lead to other health problems and workplace performance issues.
The Relationship Between Financial Wellbeing and the Workplace
The relationship between financial wellbeing and the workplace is complex but real. According to SHRM, Eighty percent of employers report that financial stress is lowering their employees’ performance level, and it’s costing them nearly half a trillion dollars annually. Everything from the pandemic, to home loans to student debt, is stressing out America’s workforce, and many workers don’t feel prepared to fully address these problems. This relentless stress and anxiety not only casts a cloud over one’s self-confidence and mental health, but it also makes it challenging for one to allow their unique talents to shine through.
What Is The Answer, The Solution, The Remedy, The Strategy?
In addressing this problem, we must ask: what can leaders do, what can managers do, what can employees do? The first responsibility for an organization is to ensure that your company’s compensation packages are at or better than industry benchmarks, keeping pace with inflation and providing ample paths for upward mobility. In other words, prioritize your people and pay a livable wage at a minimum. Susan Morgan Bailey, Vice President of Culture and Wellbeing at March & McLennen Agency has become an authority on financial wellbeing in the workplace and recently published “Financial Well-Being: An Opportunity to Have Profound Impact With Solutions That Match Needs.” Her article highlights and makes it very clear that not focusing on financial wellbeing will hurt the company, the employee, and our society.
Susan dug in to “why” a company cares about someone’s personal financial wellbeing. Simply put, by not addressing employees’ financial concerns, productivity decreases, and cash is drained directly from the business because office morale is reduced, while absenteeism and turnover increase causing a significant distraction. To positively impact firm performance, it is critical that the company set its employees up for success in every aspect of their lives, and their finances are fundamental to this. Susan was able to get an insider view through her consulting and shared this account of one of the many employer stories she heard while connecting with a group of Human Resource leaders:
The HR Manager shared “that the average wage of the workers in their facilities was $13/h and that she knew through a variety of experiences that employees were cash strapped and hungry. Working within the space she could influence, the manager shared her current solution to the challenge—a couple of days a week, she purchases loaves of bread and peanut butter and jelly to makes sandwiches for employees to grab in the break room of the small automotive parts manufacturer that employs approximately 300 on multiple shifts. From there, the conversation evolved, and other attendees shared their experiences of low-wage workers struggling with basics such as reliable transportation and childcare.”
The field is increasingly recognizing the role that financial health plays in overall wellbeing. However, many companies don’t go beyond retirement preparation and student loan repayment programs—to strategies that include addressing the fundamentals of financial wellbeing, such as budgeting and saving, which a significant portion of the U.S. workforce struggles with. A recent government survey reported just two-fifths of non-retired adults believe their retirement savings are on track, and a quarter have no retirement savings or pension whatsoever. Four in ten adults, if faced with an unexpected expense of $400, would either not be able to cover it or would pay for it by selling something or borrowing money.[i] If the objective of organizational health and wellbeing strategies is to enable employees and their families to thrive, then addressing the complete reality of financial wellbeing from multiple angles is critical.
Wealth & Health
Susan Bailey also unpacked what role a lack of wealth plays in health. Chronic stress impacts physical, social, mental, and emotional health and Americans commonly rank worry over money as the top source of stress. Low wages have been found to predict a higher prevalence of obesity, which is in turn linked to absenteeism and presenteeism.[ii] The scarcity of financial resources significantly impacts cognitive functioning and problem-solving ability because more planning is necessary to determine how to allocate limited funds among necessities.[ii] Preoccupation with financial issues on top of the mental stress and challenges an individual might face navigating public assistance systems, understanding available resources, securing reliable transportation, or childcare may lead those eligible for services to forego or miss out on them altogether.
The case for expanding the focus of wellbeing strategies to include financial health (not just livable wages and 401K, but also solutions for childcare, eldercare, PTO, transportation, flexible schedules, and free financial counseling), is growing strong as a brighter light begins to shine on the impact employee financial security has on individual and organizational health.
Back to the Basics
However, it is important for organizations to start with the basics. Psychologist Abraham Maslow hypothesized human thriving is dependent on the fulfillment of basic needs—food, water, shelter, and rest. Only when those needs are satisfied can individuals have the desire or capacity to direct attention toward higher-order needs.[iii] The ability to purchase food, afford housing, and have time off from work to rest all contribute to the fulfillment of basic needs. Comprehensive financial wellbeing initiatives (not just an app) in the workplace can play a significant role in addressing basic needs and helping employees start to create a solid financial foundation so they and the organization can thrive.
(Image: Psychology Today)
In addition to starting with the basics, it is also critical to understand that financial wellbeing can mean different things to different people. With that in mind, the Consumer Financial Protection Bureau (CFPB) conducted research which led to defining financial wellbeing as a state of being wherein a person:
- Has control over day-to-day, month-to-month finances;
- Has the capacity to absorb a financial shock;
- Is on track to meet financial goals; and
- Has the financial freedom to make the choices that allow him or her to enjoy life. [iv]
For example, as younger workers join the workforce, they often talk about college-debt and how that impedes their ability to save for retirement and many are grateful for the expanded focus of financial wellbeing to include programs to help them with loan repayment along with retirement preparation. Income constrained employees that live paycheck-to-paycheck reveal they are just 1 small shock (an unexpected bill or illness) away from crisis. Many organizational health and wellbeing strategies aim to offer an environment and resources that nurture employees and empower them to work with a high level of energy, focus, and engagement. However, this is often a challenging goal if employees are using all their energy on making ends meet and fulfilling basic needs for themselves and their families.
You Are Not Alone
Many organizations are starting to focus on this connection between wealth and health.
Over the past three years, Transamerica has prioritized the importance of Wealth & Health not only for its internal employees but also began a public campaign for clients and the general public around this important integration. They partnered with the American Heart Association to provide articles, videos, calculators, and other tools to help individuals create new healthy habits to live a long, healthy life. The most important thing to understand about financial wellbeing is that it is more than just dollars and cents (and 401K investments).
If you are reading this as an individual, a leader of an organization, or human resource manager it is important to:
- Explore what resources are available to you
- Create a resource center that is easy to understand and use
- Share success stories and your personal story with others
- Create a forum of information sharing
- Build a short- & long-term strategy
There is strength in social connection, and although sharing your story may not be easy sometimes, we learn the most from our own mistakes and others’ mistakes but this is how we learn and become stronger together. It is essential to realize that financial wellbeing is a significant concern for all of us especially with the increased stress onset by COVID-19. Employee financial wellbeing must become a part of workplace wellbeing, starting with management. If not, the impacts may be drastic, both in terms of employee morale, retention, and even company results.
