Financially Ailing Workforce Is A CEO Problem. How They Can Champion a Cure

Chief executives and other senior level business decision-makers aren’t really all that different from the people who keep their companies running efficiently day-in and day-out.

They, too, were kept awake in the night during the pandemic, and with many of the same worries – but different.  A big one? Their ability to navigate all the uncertainty to meet their strategic goals like making quality products, keeping profitability buoyed and building shareholder value. It’s no surprise that the best outcomes can be compromised when employees are working under serious financial stress.

It didn’t take a pandemic to make the point, but it did bring it home. A Harvard Business School spot check of ten CEOs from around the globe found employee well-being was a top shared worry as they ranked their workers’ stress levels at 9.1 on a 10 point scale. While a Conference Board survey found 53% of corporate leaders expressed concern over their employees’ emotional well-being, 33% also pointed to their financial stress.

The link between business performance and employees who are financially pressured is well documented. It’s something hard to leave at home. According to a John Hancock study, some 20% of Americans worry about money at work at least once a week; nearly half spend time on their finances when they should be working.

Employers are, as a result, rethinking their benefits strategies and the role financial wellness solutions need to play going forward. Especially after the shared pain of 2020, an increasing number – 66%, versus only 13% in 2013 – feel responsible to help relieve the stress.

No doubt that business leaders are leading the charge given the cost of inaction. Start with lost productivity related to financial worries, pegged by the Hancock study at 47 hours per employee annually. It goes beyond productivity, though. Americans are unable to save – for a medical emergency or retirement.

The retirement issue alone has long-term ramifications for an organization, making timely retirement an integral component of every financial wellness initiative. When older employees can’t afford to retire, the pay differential between old and new job market entrants is one cost, but so are healthcare and workers’ compensation liabilities. And the business pays, too, in lost opportunity costs when budgets can’t accommodate the next generations of workers. One estimate pegs the cost of one employee delaying retirement by a single year at $50,000.

The financial health of employees poses a shared risk. It gives corporate leadership an important role to play in championing the value of a meaningful financial wellness program that is optimized as much as possible to meet individual needs of employees. Beyond merely supporting the initiative, chief executives should also have an influence in the strategy as it develops given the ultimate impact on corporate performance.

Here’s how to proceed:

1. The team behind the initiative counts.
   The usual wall between employee benefits/human resources and retirement services needs to be torn down given in order to drive the best financial wellness solutions. A joint task force will encourage thinking about a wellness program that responds to the interconnected nature of financial stress causes and cures.
2. Hone insights into specific financial pain points.
   It’s easy to make assumptions. For example, it’s a given that in a large workforce population of younger millennials, a certain percentage will be saddled with college loan debt. But the deeper and more expansive the dive into the employee base, the better the insights gained. Then, the better and more directed to individual needs the financial wellness strategy becomes. A more expansive knowledge can be gained through analysis of employee data, like the extent of use of current benefits. Employee surveys enhance the perspective. Persona analysis is an invaluable tool, too, in providing a deeply detailed profile of employee groups than more typical generational segmentation. The financial wellness team can chose persona parameters relevant to its organization for better insights.
   It should go without saying, but the financial impact of the pandemic on employees is key to  factor into the program design. Many millennials and Generation X workers – over half, according to one survey – used their retirement funds for non-retirement expenses. Solutions should be offered that address the need to replenish those accounts, but also counter what led to the need to borrow to begin with – whether student loan burdens or credit card debt.
3. Look at what solutions you’ve got as well as what you need.
   A lot may be hidden in plain sight anyway. Your employee assistance program (EAP) may well include financial counseling services in its lineup, something 79% of participants in one employee survey said they would appreciatefor retirement planning alone. Your menu of voluntary benefits is likely to include other overlooked services, like legal benefits. And audit can reveal a wealth of them that can easily be repackaged and promoted under the financial wellness plan. Others, according to your needs assessment, can be added with little or no cost to the employer. Offering paycheck advances and/or early wage access, for example, helps workers avoid costly payday loans. The offering of such benefits alone is valued because it offers access they probably didn’t have before.
4. Promote the initiative generally, and call out its features.
   What can make or break any employee benefits program is the extent of the communications that play up the need and their value. The more tailored the messaging is to specific employee groups, the more traction the program will get. This means communications need to be clear, straightforward and fairly simply written, but they need to be driven out consistently through channels that will give them maximum exposure and buy-in. An all-hands webinar (eventually we’ll get back to face-to-face meetings) may work for some employee groups, but others will pay more attention to a text campaign. An engagement strategy should also be incorporated into the communications plan for the wellness program, with incentives offered (remember that these don’t need to break the bank) to help boost awareness and enrollment.

Employees who are in financial distress are less able, over the long term, to achieve their own work-life goals and are a drag on employers’ ability to meet business goals and objectives. It’s an issue that senior executives have a responsibility to address. The buck, after all, stops stops at the top.

Written by Daniel Bryant.