April is National Financial Literacy Month. I'm a chief financial officer, so financial literacy is something that is near and dear to my heart. It partially defines who I am and my professional success in life. It also is something that came easy to me. Numbers were a way to make decisions, fact-check a concept, and tell a story at work or in my personal life. Unfortunately, this is not the case for most people.
Negative Effects of Financial Stress
Financial stress, many times due to a lack of financial literacy, is currently affecting millions of people at home and at work. According to a SHRM study, 83 percent of HR professionals reported that personal financial challenges had a large impact or some impact on overall employee performance. A study conducted by PricewaterhouseCoopers found that almost half of employees who are worried about their financial health are less productive at work, spending at least three hours each week dealing with personal financial issues.
In effective organizations, the HR and finance departments work closely together to try and create opportunities with the organization's assets—its employees as well as its investments. I believe that HR professionals, especially SHRM-SCP and SHRM-CP credential-holders, are in a position to partner with finance professionals to have a direct impact on improving financial literacy among employees at every organizational level.
SHRM Certification Encompasses Financial Concept
Financial literacy concepts are found throughout the SHRM Body of Competency and Knowledge. Business Acumen, for instance, requires the ability to prepare a cost analysis model, manage a budget and calculate a return on investment. Critical Evaluation requires analyzing and interpreting relevant data to inform decisions. The technical competency of HR Expertise requires knowledge of the design of compensation plans and benefit plans.
A SHRM-certified HR professional also demonstrates interpersonal behavioral competencies, such as Relationship Management and Communication, which are useful for educating employees about the importance of finance-related matters.
As we know, though, just having technical skill sets does not make us competent to apply them. It is the combination of all of these—knowledge, skills and abilities—that puts HR in the right place with the right competencies to make a positive impact on employees' lives.
HR Professionals Can Help Employees Become Financially Literate
By incorporating financial literacy into the workplace, corporations and employees reap many benefits, including increased productivity and retention. Financially literate employees tend to have greater focus and less stress, making them more effective. Lower stress levels, in turn, have been linked to lower health care costs and absenteeism. Financially literate employees also have a much better understanding of their total rewards: They understand the value of their 401(k) plans, health and disability benefits, tuition and profit-sharing plans and the like; they even have an easier time managing within high-deductible health insurance plans. Financial literacy carries through to employees' everyday jobs, as well, in terms of increased business acumen.
Since the early 2000s, Congress has recognized National Financial Literacy Month as a time for public and private institutions and nonprofits to promote educational initiatives that will help people better understand and control their personal finances. Starting a financial literacy program does not need to be a huge undertaking. There are many resources on the SHRM website and through benefit providers, plus programs and information from these and other organizations:
Small steps go a long way toward improving financial literacy. Together, we can have a positive impact.
Mary Mohney, C.P.A., is SHRM's chief financial officer.
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