Most CFOs expect to enact a hiring freeze soon or already have one in place as they anticipate a recession. As a result, many employees are now stressed about their own financial wellness. This article will discuss how implementing earned wage access can help employers boost employee morale during hiring freezes, promote financial wellness, and retain valuable talent during a recession.
As employers and company leaders, we are facing unique financial challenges. We have all seen the headlines — recession, inflation, etc. The near-term outlook for hiring and growth isn’t great. In fact, a recent survey shows that 83% of CFOs already have hiring freezes in place or expect to enact one soon.
All the uncertainty we feel as leaders is also felt by our employees. They are stressed about their own financial wellness. According to a recent study by the Pew Research Center, roughly one in four U.S. parents say they have struggled to afford food or housing in the past year. Similarly, 24% say they have struggled to pay for the healthcare their family needed, and 20% of those who needed childcare say they haven’t always had enough money to pay for it. It’s clear that financial stability is an issue and, more likely than not, is affecting your employees and their work.
So, the question then becomes, what role can you play as an employer to mitigate the stress of your employees and grow your company when are you in the midst of widespread financial uncertainty?
Prioritizing financial wellness
Oftentimes, employee morale can be strengthened through financial wellness. And while financial wellness can mean different things to people depending on their own experiences, the Consumer Financial Protection Bureau defines financial well-being as a state of being where the consumer has:
- Control over day-to-day, month-to-month finances
- The capacity to absorb a financial shock
- Reachable financial goals
- The financial freedom to make the choices that allow one to enjoy life
Pay close attention to several words in the definition above — control, capacity, and freedom. This is where earned wage access comes in. Earned wage access is an empowering evolution in payroll that allows your employees to access wages they have already earned on their own time, when it’s convenient for them, through something like a desktop dashboard or a smartphone app.
It used to be that employees got paid every week or after every shift, and they were expected to manage their money accordingly. But as companies got larger and technology evolved, this changed. Because running payroll can be complex, expensive, and heavily reliant on resources, it made more sense for companies to pay their employees according to a schedule that was more convenient for the company than for employees (i.e. bi-weekly or monthly). Earned wage access gives some control back to employees over when they can access their wages.
How does financial wellness contribute to increased morale and retaining employees?
Having control and transparency over pay is a great way to empower your employees, mitigate their personal stress, and allow them to be more productive at work — which is a win for your company as well. According to a PwC employee wellness survey, their employees were 7x more likely to miss work due to the mental health impacts of financial stress. That leaves the potential for a lot of lost productivity.
Offering earned wage access as a benefit can also fit into your company’s strategy for recruiting and retaining employees. Traditional benefits (excluding healthcare) have a 12% adoption rate, on average. When looking at earned wage access, the average adoption is around 50%, with some industries averaging up to 90%. This shows just how impactful and empowering this benefit can be for employees, and it shows that pay is the one benefit people really need from their employer — after all, it’s why they go to work. These high adoption figures suggest earned wage access has a role to play in both keeping your people from the competition and attracting them to your company. For some, just having this benefit may be more attractive than a slight pay increase somewhere else.
It helps that earned wage access platforms can be integrated without a lot of additional work or changes to your existing process. A solution like myFlexPay, for example, lets employees request money with no changes to a company’s cash flow or payroll schedule.
As you work through 2023 and begin recession planning for employees, consider making a shift in your payroll processes to include earned wage access as a great way to improve employee morale and retain your workforce.
Written by Courtny Cloeter.
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