How Women’s Financial Wellness Is Affecting Retention Rates

How female employees react to financial stress—and their levels of financial savvy—can profoundly affect both their career paths and intent to stay with your company, according to new research from Mercer, InHerSight, and Ellevate Network. Read their research, and learn more about the unique needs women have for financial wellness, including how companies can meet them and drive retention at the same time.

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Financial wellness has become a focal point for companies over the past few years. In 2017, a Fidelity survey found 84% of large and midsize companies were offering financial wellness programs—up from 76% in 2016.

Over the same period, companies also created a strong focus on driving gender equality—usually with the goal of improving the hiring, promotion, retention, and engagement of women in their organizations.

Interestingly, few companies have spent time looking at the intersection of these two important issues—examining the impact of women’s financial wellness on their success and careers.

That impact, as it turns out, is significant.

InHerSight, Ellevate Network, and Mercer’s When Women Thrive recently teamed up to look at this intersection. In this new 2018 study, they asked questions to understand:

  • How stressed women feel about their financial situation
  • How women perceive their level of knowledge about financial matters
  • How likely women are to make career changes in the near future, like ask for a raise, apply for a higher-level position, start their own business, etc.

The results, captured in this infographic, show that women’s financial stress and savvy strongly affect the decisions they make about their careers—which, in turn, affect if (and how) they remain with your company.

Women’s Overall Financial Wellness Is Lagging

To understand these new data, it helps to take a step back and look at Mercer’s Inside Employees Minds Women and Wealth report from 2017, which set the stage for this research. In that report, we found that men have a huge head start when it comes to financial wellness—62% of men scored in the medium-to-high or high range on Mercer’s Financial Wellness Index compared to only 41% of women.

The financial wellness index measured five factors:

  1. Level of comfort in meeting financial obligations
  2. Stress regarding finances
  3. Current indebtedness
  4. Ability to pay for unforeseen expenses
  5. Ability to absorb costs from a medical issue

That research also found that women are less likely to possess financial courage, with 30% of women exhibiting medium or high levels of financial courage versus only 49% of men. Mercer measures financial courage via five factors:

  1. Attitude toward financial matters
  2. Time spent worrying about finances
  3. Preferences around financial planning
  4. Self-assessment of financial knowledge
  5. Preference for control over investments

Women spend more time worrying about short-term financial issues. They are also subject to a “perfect storm” financially. According to Mercer, “They are paid less than men are on average, have more gaps in employment, engage in more part-time employment and are more risk-averse investors. All of these factors potentially reduce the amount of money women are able to accumulate for retirement—yet a woman’s retirement tends to last on average three years longer than a man’s does.”

New Research and New Opportunities

Building on Mercer’s Women and Wealth report, InHerSight, Ellevate Network, and Mercer’s When Women Thrive team wanted to understand how women’s financial confidence might impact their career decisions and plans.
We surveyed 1,200 women: 47% were married, and 53% were single; 42% were mothers; 18% had completed high school; 13% had an associate’s degree; 43% had a bachelor’s; and 25% possessed a master’s or above.

The data show that women who feel financial stress are under intense pressure—which can seriously impact their longevity with your organization. But the data also represent a huge opportunity for companies because women who have nurtured their financial savvy—or been helped by their companies to do so—are also more likely to stay put and thrive!

The Findings

Higher levels of financial stress make it more likely that women will leave.

Forty-three percent of women report that they are consistently stressed about money. Financial stress can shape the path of a woman’s career, according to the new research, but this can also impact businesses.

Contrary to what one might think, women who are more financially stressed are actually more likely to leave an organization. They are more likely to:

  • Find a higher-level position at a new company
  • Leave their job without having another lined up
  • Leave their job to pursue higher education

Higher levels of financial savvy give women confidence in their careers.

How women perceive their own financial situation and knowledge is also an important signifier of career decisions. Women who consider themselves financially savvy are more likely to feel less anxious about asking for a raise or promotion in their current company, according to the research. Women who feel more knowledgeable about their finances are more likely to try to advance themselves in their current organization. If they leave their organizations, it is because they are more likely to start their own business or venture.

Financially savvy women are more likely to:

  • Ask for a raise
  • Ask for a promotion
  • Apply for a higher-level position within their own organization

Additional findings from the survey showed that married women report being less stressed and more financially knowledgeable than single women and that younger women are more stressed. Women under the age of 30 report more financial stress and feel less financially savvy, finds the research. Women with children feel the same level of stress as those without children, but they also report greater financial knowledge, and women with higher levels of education feel less financial stress and more financially confident—perhaps due to their ability to earn higher salaries.

Helping Women Build Financial Courage

Overall, this might seem to paint a grim picture, but there is hope in both of these research studies. Women start off in a more financially precarious position—with lower pay and less job stability—and they are more vulnerable to financial stress. But when companies are able and willing to address women’s unique financial needs and bolster their financial wellness, they can also transform their careers more holistically and increase engagement and retention within companies—positively impacting the bottom line.

The solution, suggests Mercer, is helping women build financial courage.

Financial courage, says Mercer, has more bearing on a woman’s ability to improve her financial situation. “Women are less confident in their financial knowledge than men are and thus are less likely to obtain help from a financial advisor, less aware of available financial programs and education and less likely to participate,” states the report. One of the major obstacles to financial wellness is women’s own lack of confidence in their financial knowledge, or even to seek out help when it is available.

Rather than the long-term investment frame that men respond well to, Mercer claims women are more emboldened by a series of small steps that can help them build courage steadily and manage their finances more holistically, creating a “virtuous circle that entices women to participate in financial programs and education and become more engaged in their finances.”

According to Mercer’s research on Women and Wealth, higher financial courage leads to higher engagement and higher retention—both of which make an investment in women’s financial wellness a smart investment for companies. These strategies include:

  • Focusing on building financial courage rather than simply on improving financial knowledge
  • Helping employees tackle short-term financial issues, as well as retirement
  • Offering innovative retirement solutions that are geared toward women’s unique financial circumstances

What are you doing to address the unique financial needs of women in your organization?  For more information, view this infographic and webinar about the research findings.

Pam Jeffords is a partner at Mercer and a global expert on diversity and inclusion in the workplace. She advises global employers on how they can break through the inertia and drive progress with their gender diversity initiatives. She has been featured in numerous publications, including the National Association of Corporate Directors and Fortune, and was a contributor to Mercer’s research When Women Thrive, Businesses Thrive.