Financial stress could be impacting your business in more ways than one. An Ernst & Young (EY) study shows that 81% Indian employees have faced a financial shortfall between pay cycles. With limited access to credit options and poor financial education, several tend to opt for high interest loans without understanding the impact it could create. This often leads to a vicious cycle causing massive financial stress.
This financial stress tends to occupy much of the mind space, leading to mental stress which is carried into the workplace. Stress, in turn, causes distraction, absenteeism, reduced performance and ultimately employee turnover - all of which hurt your organisation’s productivity and bottom line.
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According to a PricewaterhouseCoopers (PwC) study, 76% stressed employees say financial worries have a negative impact on their productivity. And according to the EY study cited above, up to 20% employee turnover can be attributed to financial stress.
It is hence in the employer’s best interest to do more to assist employees in regaining financial stability. And this goes beyond perks like free meals, casual Fridays and breakout areas. There are quite a few ways employers can make an impact. Some forward-thinking leaders have started by providing financial wellness programmes and benefits. In the process, the modern workplace is discovering novel, low-cost and simple ways to assist employees in creating healthy financial connections.
What can employers do to help?
Traditionally, expense reimbursements, festive bonuses, loans against salary and group financial wellness sessions have been some of the commonly offered financial benefits to employees in India. However, with changing times, a few simple yet powerful solutions can go a long way towards helping employees attain financial stability.
Fundamentals of finance
One game changer is offering individual one-on-one financial coaching. This includes investing in proactive financial literacy and wellness initiatives at work, intended to assist employees in changing their money habits. On-site money management and financial planning seminars are common, however, managing finances is a very personal subject. Hence, group sessions add very little value to individuals.
Providing one-on-one access to certified financial planners will go a long way in enabling employees to understand and manage their finances better. These sessions are informative, tackle issues specific to the individual and are more relevant than group sessions.
Cover against everyday troubles
Pocket insurance is the new trend and a valuable one. While life and term policies have always been part of employee offerings, many progressive employers are looking at providing access to insurance against daily mishaps of life such as cybercrimes, home damages, job losses and so on.
Pocket insurance can be a powerful tool to provide cover against life’s unexpected scenarios and enable people to better deal with their situations.
Salary on-demand
Expenses occur every day, but salary is credited only once. It is time to balance this equation. Employers can transform the consumer credit paradigm by providing innovative financing solutions at workplace. Earned wage access (EWA) or on demand pay is a carefully designed, minimal-cost finance option that prevents employees from getting caught in debt cycles. As the name suggests, on-demand salary enables employees to access their earned salary real time, between pay cycles. By doing so, they need not wait for the month end to receive their funds and have better control and flexibility in terms of managing their own financial needs.
Employers can also use this as a tool to reward employees by strategically setting the withdrawal limit for employees. For example, employees with long associations with the company can be rewarded with higher withdrawal limits than those who are yet to cross key milestones.
On-demand pay is a must-have new-age benefit for your company if you want to attract talent faster and retain employees. In fact, nearly 59% say they would consider salary on-demand as one of the key deciding factors for their next job.
Recent times have caused a major shift in the thinking and expectations of employees. Most employees seek more flexibility and are also willing to forgo higher salaries for peace of mind. Employers have a key task at hand in terms of keeping their workforce motivated and engaged. Solutions like financial coaching and on-demand pay can have a significant and life changing impact on employees which in turn can help unlock a stress free and more productive workforce.
(The author is the CEO & co-founder of Refyne)