Let’s cut to the chase. Financial stress hurts your employees and that hurts your business. Dig into related loss of productivity, presenteeism, higher medical insurance claims, and suddenly the impact on your company’s bottom line gets very real.
So, what’s an employer to do? Is employee financial stress even your problem? Is your company’s profitability your problem? You’re tracking with me, aren’t you?
Financial stress isn’t a new concept. Employees around the globe have been struggling with this for years. In 2017, one study found that only 35 percent of employees in the U.S. expressed feeling satisfied with their current financial situation, which was a drop from 48 percent in 2014. That’s a double-digit drop in just 3 years. It’s not just young employees either. The number of bankruptcies filed by baby boomers has tripled since 1991. Strategic organizations are waking up to the need for financial wellness tools to maintain and improve employee health and work productivity.
Financial stress can have a serious impact on your employees’ health.
When money is keeping your employees up at night, it can take a major toll on their health. Financial stress has been linked to the following physical health conditions:
Another scary fact – a 2018 survey found that 8,000 Americans who suffered a “negative wealth shock,” defined as losing at least 75 percent of their wealth in two years, have a 50 percent increased risk of dying in the following two decades. The Great Recession not only resulted in employees losing their financial footing, it took a heavy toll on their physical and mental health.
The more employees suffer from financial stress, so will work productivity.
When you’re experiencing money troubles, it’s difficult to think about much else. How many times have seen employees stepping into the hallway to take a call? How many have needed to leave work during their shift to pay basic utilities to keep their power on that day? A recent PwC study found that 43 percent of employees feel distracted by their finances to the point where they spend three hours or more at work thinking about or dealing with those issues. Along with distraction, financial stress leads to a rise in absenteeism. In fact, employees with the highest levels of debt are twice as likely to miss work.
Fortunately, there are ways employers can address financial stress.
The first step is identifying how prevalent the problem is at your organization. Start looking for clues. Get your hands on your HR data. Are you getting feedback from your managers that they’re fielding an uptick in debt collector calls? Are you seeing a spike in wage garnishments? Has there been an increase in 401(k) loans and withdrawals?
If you’re seeing the symptoms, use your HR data to help employees find a cure. Begin taking a holistic approach to health and wellness by treating the whole employee. More employers are taking a complete look at their employees’ wellness in regard to their financial, mental and emotional health, rather than just focusing on their physical health. There are several reputable vendors in the financial wellness space. Look for a partner that is able to offer intuitive financial education for your employees. Consider adding a low cost loan option to your employee benefit program utilizing a socially responsible source such as Kashable to cover unexpected expenses.
Take a hard look at the healthcare benefits your organization offers. Do they ensure your organization is providing employees with access to quality care at low healthcare costs. The PwC study found that 22 percent of employees stated “lower healthcare costs” would help them achieve their future financial goals. It is imperative that we take the initiative to educate our employees how to gain maximum benefit from their healthcare benefits. Recently I had a conversation with an individual struggling under the high-deductible plan her employer had put in place to lower premiums. She had no idea that participating in the plan qualified her for an HSA. She was missing out on the triple tax benefit of an HSA while struggling with how to best utilize her new plan and not add to her financial burden.
I know, lowering healthcare costs for employees sounds like an impossible task if you’ve been dealing with premium hikes, year after year. We’re seeing many mid-size employers opting for a modern health plan management approach to self-funded benefits to drive down cost while maintaining quality benefits. This includes things such as partnering with a people-friendly reference-based pricing vendor that reaches out directly to providers and negotiate fair-market reimbursement using Medicare as a reference-point. They prevent employers from paying inflated claims that are commonplace with traditional carrier plans. The people-friendly part is key. They differentiate themselves by providing employees with education and the support they need to help them deal with things like balance billing issues.
If you think you’re stressed out trying to lower your company’s benefit costs, imagine the stress your employees are feeling trying to live those benefits. As HR business leaders, we need to find the right balance for both the company and the employees. When more than one in five employees express a willingness to forgo future pay increases for better healthcare benefits, they’re sending us a message. We need to listen.
As innovative companies embrace the holistic approach to health and wellness, they’ll begin to provide benefits that address their employees’ financial wellness needs. In HR we want the win-win solutions. There are so many options to provide our employees significant relief in the financial wellness space. Why would we put it off any longer?
You can find more tips and resources on how to lower healthcare costs for your employees and your organization at GameChangerHR.com.