In 2018, a study by BMO Financial Group revealed that 40% of Canadians were “dipping into their retirement funds far too often” to pay for living expenses to make ends meet.
And while more Canadians are now contributing to an RRSP account, most have trouble estimating how much money they need to retire comfortably and may be experiencing financial worries about the future—and the present.
The COVID-19 pandemic continues to impact businesses and individuals. With cost-cutting measures and layoffs still taking place, your people may be stressed about their financial security.
When it comes to the subject of health and wellness, employee financial health tends to fly under the radar. Despite lingering in the shadows, financial security is crucial to wellbeing. Money is one of the main sources of stress; struggling to pay the bills and take care of our family’s needs negatively impacts physical and mental health, our livelihood, and our workplace productivity.
In an interview with the American Psychological Association, Dr. Linda Gallo, a professor of psychology at San Diego State University, reminds us that “the toll of stress on the body accumulates and can contribute to chronic physical conditions, such as heart disease, diabetes and other illnesses. And in addition, some conditions can be made worse by stress. For example, stress can exacerbate autoimmune conditions like rheumatoid arthritis. And yeah, something else that people may not be aware of is that chronic stress can also affect our immune system in a way that makes us more vulnerable to acute viral illnesses like colds and the flu.”
In the workplace, stress about financial issues can affect how much your employees engage with tasks at hand. Financial stress often increases absenteeism or presenteeism.
Related reading: Handling Presenteeism in the Workplace
As a human resources manager, you understand the importance of financial wellness in the workplace and how educating employees on financial literacy helps them gain financial health plus reduce stress associated with money concerns. It also helps your bottom line by having employees who are engaged with the work and who feel supported by your organization.
It’s a numbers game—with room for improvement
How stressed are Canadian employees when it comes to finances? In a word, very.
Employee financial health might not be the first thing that comes to mind when discussing workplace benefits, but it’s a significant and important trend championed by forward-thinking people managers committed to supporting employees. It’s top of mind for us at Rise, both personally and professionally.
Related reading: Financial Wellness at Work: Supporting Employees
This snapshot of key points illustrates the ramifications of the poor financial health of today’s workforce:
- Slim emergency savings: A recent survey found 23% of respondents identified themselves as struggling financially, with 78% of this group living paycheque to paycheque.
- Emotional impact: The 2017/2018 Global Benefits Attitudes Survey reports almost one-third of workers (30%) believe their financial concerns are negatively affecting their lives.
- Frequent illness: In a recent PwC study, one quarter of employees say health problems are due to financial worries.
- Disengagement: The 2016 Sun Life Canadian Health Index found that 29% of Canadians are distracted at work due to their financial situations. And the 2017 Global Benefits Attitudes Survey uncovered that 43% of struggling employees admit that “money concerns [are] keeping them from doing their best at work”.
- Retirement on hold: PwC research shows 54% of employees who are stressed about their finances plan to postpone retirement.
Can you create a plan that mirrors and supports your talent pool?
Poor employee financial health not only negatively impacts employees themselves but is also a drain on employers, prompting a solid business case for actively helping employees become more financially secure through financial education.
But where to begin?
When it comes to financial wellness, Millennials, Generation X, Baby Boomers, and pre-retirees each have their own particular commitments, opportunities and challenges.
Regardless of your organization’s demographics, it is essential to consider the following points to ensure a solid and effective outcome for any employee financial wellness programs that are part of your employee health and wellness offerings:
- Privacy: personal financial information must be handled with the highest levels of accuracy and security.
- Prioritization: Engage your employees to find out current and future financial vulnerabilities with an eye to their different demographics to gain an understanding of both short term and long term goals.
- Inclusiveness: Work with your employees to identify and prioritize the causes of financial stress. This first step is essential for HR leaders to create personalized wellness programs that reflect individuals’ varying needs.
- Transparency: Like every aspect of your employee wellness offerings, the financial component should be open, relevant, offer best practices and provide an engagement channel for questions and concerns.
- Tools and technology: The popularity of the internet and smartphones has unleashed a plethora of personal finance resources. Work with your employees to provide the right mix of traditional and digital information sources.
As President of Rise People, I’m passionate about the health and wellness of Canadians in the workplace and am keen to bring attention to the serious issue of employee financial health and its impact on overall wellness.
I’d like to share the following ebook as a guide to understanding the role financial health plays in your employees’ lives and how to best support their wellness goals: Employee Financial Wellness: The New Health Frontier