Worksite Financial Education
Overview:
Employee “Financial Distress” comes in many forms: Stress and dissatisfaction about personal finances, stress of living paycheck-to-paycheck, stress about retirement, lack of confidence about ability to manage personal finances and, as health and stress about personal finances are related- stress related to Health Care costs and bills.
Employee Financial Illiteracy DOES Impact Employers
Dozens of studies have overwhelmingly proved that money and financial woes can take a severe toll on employees. When asked what kept them awake at night, 38% of employees said they are concerned about being able to pay for basic necessities in retirement, according to a survey by The Principal Financial Group. Nearly half are anxious about enjoying the same quality of life they now have.
Researchers found that 1 in 4 Workers in America (approximately 30 Million Workers) are seriously financially distressed. Researchers have also found that seriously financially distressed employees cause direct and indirect negative impacts on Employers.
The reason is that many workers who struggle with money matters are less productive at their place of employment because of their financial distress. Depending upon their place of employment, 30% to 80% of financially distressed workers spend time at work worrying about personal finances and dealing with financial issues instead of working.
Financially distressed employees are dissatisfied with their financial situation and worry about money, debt and bills. They usually are insecure about their personal finances for retirement. They worry about having enough money to live on once they retire. Often, they lack confidence about their abilities to manage personal finances. Many do not even have hope that they might one day be able to catch up financially. People at all income levels in society experience distress about financial matters.
Negative Impacts on Health
A large proportion of those who are financially distressed, 40% to 50%, report that their health is directly impacted negatively by their financial worries and problems. Health problems caused by financial distress cost employers big money.
Employers can lose from $450 to $2,100 per financially distressed employee in terms of higher Health Care costs, absenteeism and lower productivity.
Decreased Employee Productivity
In a USA Today article titled: "Workers' financial stress may hurt productivity" by Stephanie Armour on September 5, 2007, she reports that the financial stress piling up on employees due to an increase in home foreclosures and defaults on credit cards is having an impact on the workplace, draining employee productivity.
Worksite Financial Education
Employers are becoming more aware of the need for financial education and the negative impact financial stress has on the employee and the business.
Worried that unenlightened employees are harming their financial lives and not making the most of their benefits, some employers are taking bold new strides to educate their workers about retirement planning and personal finance, introducing new programs that they hope will be enough to inform and motivate their workforce.
Companies providing financial education show results that included:
- Improved workplace productivity
- Improved employee morale and company loyalty
- Reduction in absenteeism
- Reduced turnover rates
- Lowered workplace distractions
- Reduced “operational risks” across the company
Financial education programs have the effect of contributing hundreds of thousands of dollars each year to the company’s bottom line. The ROI generally has a return of 3:1.
Why Should Employers Sponsor Worksite Financial Education Programs?
Major employee-assistance counselors serving Fortune 500 companies are reporting a surge in calls from employees worried about mortgages and finances. Ceridian, a Minneapolis- based provider of employee counseling services, typically gets several hundred calls a month from employees seeking financial counseling. From June to July, it saw a 50% increase in calls for financial advice.
Employee productivity increases: Many employees feel that financial concerns not only cause them stress, but also affect their productivity on the job. When employees have been educated and have their finances under better control, they may need to take less time during working hours to handle financial crises. When stress is reduced, sickness and absenteeism often fall. Employees also feel better about themselves and do a better job for the employer.
Employees will better understand– and appreciate– their employer provided benefits: Many employees do not understand their complete benefits package. When they learn more about their benefits they often appreciate their employer more. You gain a huge advantage when companies understand how their benefits package could be included in the overall education process. It’s important that they know you will support and encourage employees to use the benefits available for retirement savings and risk management.
Employee retention rates increase: When employees understand and appreciate the benefits package offered by their employer (which can range up to 35% of employee compensation costs), they are more likely to remain with that employer.
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Types of Worksite Financial Education
Complete Financial Management Workshop
This program addresses real-life concerns and provides tools which will last a lifetime. Participants will develop healthy approaches to their personal finances and retirement planning. With the knowledge they gain, they will become more confident making financial decisions to pursue their family’s overall financial goals and help improve their financial futures.
Topics explored are those suggested by the Certified Financial Planners Board:
- Risk Management
- Cash Management
- Investment Concepts
- Tax Management
- Retirement Planning
- Estate Conservation
Lunch ‘n Learn Programs
Each of the more extensive workshops can be broken into a series of lunch ’n learns or as stand-alone topics. We customize the educational programs to match your employee needs.
Other Tools Made Available:
- Regular onsite financial planning appointments with employees
- Valuable, yet generic financial tools and newsletters from website can be linked into your company resources
- Annual schedule of a combination of series with single topic lunch ‘n learns
- Webinar trainings and company intranet workshops delivered to employees off site
- Ability to travel to company trainings in order to incorporate Financial Education during break-out sessions or main conference presentations
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Conclusion
In their financial education programs, employers should emphasize basic personal finance issues, like budgeting and debt management- not just about retirement. In addition, employers should encourage workers to bring their spouses, or other people closely involved with the household finances, to all of the financial education meetings because that will improve their motivation to save.
These findings should motivate employers to offer employees access to resources, counseling and advice to decrease their stress about money matters and improve their financial lives.
Employees are scared. They really need their hand held in a way, where the employer is saying “We genuinely care about you”.
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