HR.com, March 28, 2023, By Dinesh Sheth
Prices for goods and services have increased due to the pandemic, the war in Ukraine, and ongoing supply shortages. This is known as inflation at its best. Since the summer of 2021, the Consumer Price Index (CPI) has measured incremental increases in the prices of consumer goods, most recently measuring 6.4% between January 2022 and January 2023. Federal agencies, such as the Federal Reserve, have begun the disinflationary process to quell inflation but employees continue to stretch their budgets to afford the necessities - food, housing and energy - while planning for unexpected road bumps.
Worker's Financial Worries
To prepare for a potential recession, or the so-called soft-landing, employers and employees alike are cutting costs, paying off debts and seeking additional revenue streams, as well as assessing their financial situation to ensure they can prepare for the future.
Unfortunately, employees have limited options, if any, and many people are ill-equipped for an economic downturn: over two-thirds (39%) of workers have less than $1,000 in savings, according to a recent study. Financial stress due to inflation is altering employees' retirement savings and when employees plan to retire: 37% of workers report they tapped into their retirement accounts to make ends meet. Additionally, a recent survey found that more than half of women surveyed plan to delay their retirement due to inflation. Add the stress of paying off debt to the pile, and workers are not only struggling to reach their financial goals, such as owning property or starting a family, but this is impacting their overall well-being.
Start with a Self-Assessment
Achieving financial freedom during turbulent economic times is not only stressful but a challenging process as well. Employers already provide financial wellness benefits to help meet many of the financial needs of their employees. Some of the most common and impactful benefits include employer-sponsored retirement plans, insurance, encompassing health, life, disability, special education or legal assistance. However, employees may still feel anxious about the future - especially given the impact of inflation and a potential recession. Employees should have confidence in their finances, no matter the macroeconomic landscape.
Before overhauling your benefits or health & wellness systems, perform a self-assessment and ask yourself:
- Do my employees know how to access and alter their 401(k) contributions?
- Do my employees know how to enroll in employer-sponsored insurance plans?
- Do they understand and enroll in a Health Savings Plan, if eligible?
- Is payroll, tax and insurance information readily available when needed?
- Can we share additional financial education resources through digital channels?
- Do I have a flexible, digital HR ecosystem to make necessary changes to improve their lives without having to hire more people in HR?
These questions are the baseline for HR departments, but these simple conditions can make a huge difference in your employees' financial well-being. HR leaders should communicate their benefits and education resources consistently to remind employees of the support they receive. Additionally, promoting financial education and planning resources that boost accessibility to your benefits through the mobile channel can encourage and improve their financial well-being.
Educate Your People
Financial education is an important resource to share with your employees and their family members; something that many feel their employer should provide - 58% of Gen Z and 57% of Millennial workers believe their employer has a responsibility to help them feel more financially empowered. Today, there are infinite resources that explain retirement, 401(k)s, HSA, HRA, taxes and budgeting in eBooks, online courses, podcasts and even YouTube. Regardless of age or background, HR leaders should encourage employees to use the available financial education resources to learn and understand more about personal finance.
Also, benefits vendors - whether retirement, payroll, health savings or an insurance vendor - often create educational videos and FAQs for their users to help people make the most informed decisions about their future. HR leaders can easily upload or link these resources to their own website or mobile app as a simple step to educate their employees.
Consider Employee Apps
With the rise in smartphone usage and digital banking products, mobile banking is commonplace. Whether employees work from home, the office or a different work location, mobile apps are often the fastest and most convenient place to access and use financial information.
HR leaders can provide their own company branded mobile app with all their benefits, such as payroll, total rewards and especially financial education resources. Employees can quickly access all relevant information regarding their financial benefits and have their queries answered - a relief when considering the time sensitivity and weight of financial planning. Also, as we know, many benefits are decided and used by an employee's family. Creating a mobile access point for family members' benefits can relieve employees of the pressure to disseminate company benefits, services and information.
Address the Stress
Learning to budget is not an easy task. Employees are overwhelmed by their financial situations, so much so that their anxiety is hurting their overall health and productivity. According to a recent report, a third of women surveyed are experiencing physical and mental impacts of stress due to their financial situations.
That said, establishing an environment where staff can de-stress, whether by encouraging physical activity, mental health counseling or anonymously asking employees to share their biggest HR needs, can help improve their psychological and physical well-being.
Consistency
Planning is more difficult than ever, given the current economic challenges. Employers and employees alike are probably seeking a "silver bullet" solution to their financial needs. However, it takes time and consistent effort to achieve financial goals. Also, when company financial resources are limited and new, expensive financial benefits are out of reach for your HR budget, finding ways to optimize your existing digital HR ecosystem is the right step.
Ultimately, the success of a financial well-being initiative depends on communication from HR leaders. Targeted communication for recurrent activities like financial planning, annual enrollment in benefits, employer-provided benefits information, repayment of loans as well as providing easy access to financial education could give employees a hand in their busy lives.