It is hard to read, watch, or scroll through the news today without recognizing that the U.S. economy is in a state of uncertainty following the COVID-19 pandemic. While some experts are divided on whether an official recession is in our future, people nationwide are dealing with inflation's impact on fundamentals. According to recent data, the Consumer Price Index rose 9.1% from a year ago, with some of the biggest price increases in food, rent, and gasoline. On top of this, employers are seeing a significant rise in health care costs and some corporations are facing tightening budgets and layoffs, despite historic lows in unemployment.
While business professionals do plan for future economic white waters, it is critical for HR and benefits professionals to proactively plan for the impact this uncertainty can have on their workforce and company culture. Financial stress can affect employee mental health, productivity, and retention, which can contribute to an overall undesirable environment. Despite these negative indicators, HR leaders have opportunities to engage and support their employees, encourage them to be present and productive, and feel better about their circumstances. Here are three key ways HR leaders can address these issues and improve financial wellbeing among their workforce during times of economic uncertainty, and improve overall wellbeing in the process.
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Recognize and address mental health concerns
Most HR leaders recognize the impact that burnout and exhaustion can have on employee mental health. Data shows that 42% of U.S. adults feel that money has a negative effect on their mental health as well, making them feel stressed, anxious, and overwhelmed. These challenges can make it difficult for employees to feel motivated, satisfied, or present at work and ultimately lead to lower levels of productivity, attendance, and engagement. Those that are already financially stressed are likely to be even more anxious if or when the country experiences another recession.
HR leaders need to prioritize the mental health of their employees and include an acknowledgment of the power that financial wellbeing can have. Companies can address these concerns while improving the overall wellbeing of employees by providing them with the freedom to speak about mental health challenges they might be facing due to financial concerns and connecting them to resources, peer groups, and qualified coaches that can help them get through it. Beyond this support, leaders can also leverage aspects of company culture to encourage community and belonging, including employee resource groups, rewards, and recognition programs.
Provide resources to combat presenteeism & quiet quitting
Any financial stress that employees feel will not magically disappear during the workday, and it can influence employee productivity. A study found that 78% of employees that deal with financial stress are distracted at work. This lack of productivity (presenteeism) can lead them to feel discouraged and overwhelmed by their workload or stunt their professional development. Employers may also see the emergence of quiet quitting, when employees set firm boundaries about their work – an indicator of stress and the need to manage it.
To combat this, companies can offer financial planning workshops, benefits, and coaching designed to meet employees where they are on their financial journey. Whether they are saving up to buy a house, getting married, becoming a parent or caregiver, facing student loan debt, or dealing with divorce, each employee will have unique financial challenges that cause varying levels of stress. Providing a personalized approach and varied resources will help employees feel empowered to tackle any finance-related challenges and allow them to focus on work that needs to get done.
Improve satisfaction and retention through financial literacy
Employees with money worries are 2.2 times more likely to be looking for a new job. This is exacerbated by the fact that in recent years, employees have started to prioritize non-monetary benefits like less stressful jobs, greater wellbeing support, better work-life balance, parental leave, and the ability to work remotely or flexibly.
Leaders can prevent high rates of turnover by helping employees understand and navigate their financial worries and challenges. Implementing programs and tools that help employees improve financial literacy can go a long way in reducing the amount of time they spend worrying about their money situation or looking for another job option. Examples include platforms that bring key financial data points together (such as 401k, health plan balance, and wellbeing rewards), helping employees establish plans to pay off student loans or build emergency funds, teaching them how to budget or pay down debt, or offering flexible spending options. If employees know their employer has their back when it comes to financial wellbeing, they may be more satisfied and engaged in their current roles and less likely to look elsewhere.
Read more: ICHRA: The inflation antidote to help your clients navigate a higher-priced, uncertain world
Businesses and individuals are facing times of economic challenge and uncertainty, and while there is little we can do to change that reality, there are steps HR leaders can take to support employees. Companies that address money-related stress can improve the overall wellbeing of their people, reduce mental health challenges, improve productivity, and limit turnover within their organization. By providing employees with the resources, tools, and benefits they need to build life-long responsible financial habits, leaders can remain one step ahead of future uncertainty.
Laura Walmsley, executive vice president and general manager, Employers, Virgin Pulse
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