Numerous studies underscore the strong correlation between employees’ financial well-being and their workplace performance. In this blog, we explore the critical connection between employee financial security and productivity.
Financial security and worker productivity
Due to significant changes in the workforce, employees are increasingly turning to employers for guidance on financial wellness. In fact, businesses that offer financial wellness programs enjoy a competitive edge in recruitment and retention.
When asked to define financial wellness, employees overwhelmingly emphasized the importance of “a sense of security and freedom from current financial stresses.”1 Therefore, an employer-based program aimed at supporting employee financial wellness should encompass various tools and resources to assist employees in managing personal expenses, optimizing their income and savings, and addressing unexpected financial challenges.2
The impact of financial wellness
According to MetLife’s 2023 Employee Benefit Trends report, a staggering 62% of employees believe their financial well-being significantly affects their job performance. This financial stress is linked to issues like lower engagement, decreased morale, and increased absenteeism.
In fact, MetLife’s report suggests that 46% of financially stressed employees spend more than three hours each workweek dealing with personal financial matters, hampering their work efficiency.
The cost of financial stress to employers
- American businesses are losing a staggering $500 billion per year due to the financial stress experienced by employees.
- 42% of people who are financially stressed are 11x more likely to have sleepless nights, 10x more likely to not finish daily tasks at work, 9x more likely to have troubled relationships with their coworkers, and 2x more likely to be looking for a new job.
The rise of financial wellness programs
The U.S. Chamber of Commerce underscores that offering financial benefits to employees can lead to increased job satisfaction, ultimately elevating productivity and retention.
This is because workers are increasingly expressing their desire for financial wellness offerings, including education classes, online financial management tools, digital financial advice and planning, accrued wage advances, low-interest loans, and debt consolidation/payment programs.
For employers, the benefits of a comprehensive approach may include reduced turnover, fewer cases of absenteeism, decreased loan requests, and enhanced employee satisfaction.
The role of EWA and talent
This is where earned wage access (EWA) fits in. EWA is the ability for employees to access a portion of their already earned wages, if needed, outside of a traditional pay cycle. It’s also sometimes referred to as early pay, instant pay or on-demand pay, providing employees with early access to their wages, helping them cover unexpected expenses and avoid overdraft fees, reducing financial stress.
Most employers believe that offering EWA can help them attract and retain talent. Notably, a significant majority of millennials view the availability of EWA as a deciding factor in their job acceptance, further demonstrating that financial well-being has implications for the whole business and requires coordination amongst leadership to understand and strategically plan for the implementation of EWA.
Health = wealth: What this means for employers
Regarding program adoption, employers prefer an EWA solution that does not disrupt their existing payroll processes, is straightforward to implement, and doesn’t involve additional work for their staff.
Four steps to create an effective financial wellness plan
- Establish clear communication about why your company wants to promote financial education.
- Engage your employees and get their feedback by seeking their input through surveys.
- Analyze your company’s data to identify areas where your employee benefit plans may be underutilized or need improvement.
- Determine what kind of information can bridge any learning gaps.
Learn more about how ADP’s earned wage access (EWA) program has evolved into an established business practice that can help improve employee financial security as well as talent acquisition, retention and productivity— and your bottom line.
1 The Power of Financial Wellness. ADP Retirement Services, 2019.
2 Employee Financial Wellness Survey. PwC, May 2018.
This article originally appeared on SPARK powered by ADP.
