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Workers looking to employers for help managing their overall financial wellness
The impact of the recession and tepid economic recovery is causing lingering hardships for organizations as well as employees, according to a new Society for Human Resource Management survey report, Financial Wellness in the Workplace (or view the executive summary).
Workers are looking to their employers for help managing their overall financial wellness, according to the study, sponsored by the McGraw-Hill Federal Credit Union and fielded in December 2013 through January 2014.
HR professionals with the title of assistant director and above were asked about the impact of employees’ financial challenges on the workplace and the types of financial education resources they provide to their employees. Almost one-quarter of respondents indicated that employees were experiencing more personal financial challenges compared with 12 months earlier, despite the recession’s end.
Forty-two percent of HR professionals reported medical expenses as the personal financial challenge affecting employees at their organization the most, up 7 percentage points from 2011 and possibly reflecting the continued shifting of health expenses to employees. Forty-one percent reported that an overall lack of funds to cover personal expenses is affecting employees at their organization the most.
Top Employee Financial Challenges
HR professionals said the challenges most affecting employees at their organizations were:
42% of respondents cited
Overall lack of funds to cover personal expenses
Saving for retirement
Credit card debt
Source: Society for Human Resource Management.
A potentially alarming finding was that 62 percent of HR professionals agreed or strongly agreed that employees were more likely to request a 401(k) or other defined contribution plan loan in the previous 12 months compared with previous years, and 44 percent agreed or strongly agreed that employees have been more likely to request a defined contribution savings plan hardship withdrawal.
Aspects of employee work performance most negatively affected when employees face personal financial challenges, according to HR professionals, include:
“Given the potential negative impact of financial challenges on employee performance (e.g., the ability of employees to focus on work), organizations may find value in offering financial wellness programs to their workforce,” according to the report, which notes more than one-half of organizations provide financial education to their employees. Just over one-fifth that currently do not offer financial education programs had plans to do so in the next 12 months.
Baby Boomers were most interested in retirement planning, according to HR professionals, whereas members of Generation X and Millennials were most interested in financial investment planning. Thus, “when developing a formal financial education program, it is pertinent that HR professionals tailor this benefit to different generations in the workplace,” the report advises.
Among respondents whose organizations offered financial education to employees, the services most frequently provided were:
Organizations also use various tools and approaches to deliver financial education to their employees. Those that provide financial education said they most commonly:
Among HR professionals who indicated their organization provides financial education, 72 percent reported the financial education initiative has been somewhat or very effective in improving their employees’ financial wellness. However, 28 percent reported that financial education has been somewhat or very ineffective, indicating an opportunity for improvement.
Significantly, fewer than one out of five HR professionals (16 percent) from organizations that provide financial wellness programs indicated their organization has conducted an employee needs assessment (such as surveys or focus groups) to determine what financial education offerings would be the most beneficial to their employees. “These types of internal studies may help organizations provide the tools their employees would find the most useful, enabling them to use their financial education budget as effectively as possible,” the report states.
Recent SHRM research has shown that most employers do not leverage their benefits programs as a retention/recruitment tool (just 18 percent use them as a retention tool and 26 percent as a recruitment tool). However, organizations that do leverage these benefits frequently cite their retirement savings and planning benefits as a means of keeping or attracting workers.
“Business leaders should be troubled that many of our
nation’s workers continue to face financial hardships and related stress,
especially during working hours,” said Shawn Gilfedder, president and CEO
McGraw-Hill Federal Credit Union.
“Companies can and should take action to help employees effectively address
their financial concerns, which will help improve the lives of workers and
their families and also help strengthen company performance,” he added.
“With the influence that financial challenges have on
employees and their performance, the survey suggests that employers will find
value in offering financial education to their workforce,” said Bruce Elliott,
SHRM’s manager of compensation and benefits.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.
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