It’s a challenge for any company to attract top talent. This primarily rings true in a competitive labor market where unemployment sits at roughly 3.7%, the lowest in nearly 50 years.1
As a company fighting for this talent, how do you set yourself apart? Sure, an employee may enjoy unlimited cappuccinos from the company cafeteria while sitting comfortably in a beanbag chair located in an open-air office, but sometimes people want more. They NEED more. That’s what makes financial education and wellness so important to recruiting and retaining your employees.
Many people think that financial wellness in the workplace simply means offering a 401k and an employer match program. That’s a start, but financial wellness offerings can range from financial risk assessments, budgetary calculators, analysis of spending habits, home purchasing advice, managing student loans, and short-term and long-term savings goals, just to name a few.
Eye-Opening Challenges with the Younger Generations
Medical insurance costs continue to increase. Student loan debt is sitting at $1.4 trillion.2 Seventy-five percent of Americans live paycheck to paycheck,3 and the average American doesn’t have more than $400 in savings.4
This is especially apparent with the Millennial and Gen Z workforce. Millennials comprise the largest generation in the workforce (35%5), and they struggle with financial wellness significantly more than prior generations. Lower starting salaries and crippling student debt are two leading causes of poor financial health among this generation.
Generation Z also is entering the workforce—30% of Gen Z is expected to be employed by 2021.6 They also have student loan and credit card debt, and many are learning how to live on their own for the first time. They need guidance on how to balance their expenses and debt, in addition to newfound expenses such as rent and car payments.
Financial stress can impact employers’ bottom lines by lost productivity, high turnover, and absenteeism. Providing a foundation to set these generations up for success is critical. After all, these workers account for 2/3 of our labor force. They still have many years remaining in their working lives, so investments made in their financial wellness are opportunities to retain them as happy employees for years to come.
How can we help our employees?
Financial wellness plans are not necessarily one-size-fits-all. Employees may have different needs, especially when it comes to the generation of your workforce. Some may be interested in alleviating student debt where another employee may focus on 401k and financial planning resources. It is imperative that a financial wellness program is holistic in its offerings. Here are a few key elements to consider when assessing and developing your benefits offering:
- Education on 401k
- Many employees may not truly understand the benefits of a 401k plan such as pretax deduction and employer match.
- Benefit Options
- With rising health premiums, present the benefits of a high deductible health plan (HDHP) coupled with a health savings account (HSA). Younger employees (less tenured in the workforce) sometimes shy away because of the deductible cost. Explain how an HSA can work for them and how they can invest that money in the future.
- Reevaluate voluntary benefits and their usage. Sometimes employees may not enroll in short-term or long-term disability, but it could prevent a catastrophic financial situation for them.
- Financial Education
- Offer educational tools and resources like budget calculators, spending analyses, financial dashboards, and savings programs. Employees might be amazed to see that they’re spending $200 a month on coffee when they could contribute a portion of that to a savings account.
- Debt Management
- Give your employees resources to learn how to manage their debt, including real-world solutions to handle today’s financial challenges. Whether these resources are online education courses, financial consulting, debt management programs, or other financial solutions, help your employees find the right path and refocus on work.
One final consideration: benefits are only of benefit if employees perceive them to be so. When you make the extra effort to improve your voluntary benefits offering, make sure that you and your employees fully understand the features included, why you’re providing it, and how it can help them. A focus on financial well-being in the workplace can lead to improved employee physical and mental health, retention, engagement, and overall morale. The best recruitment tool is a happy, healthy organization of loyal employees!
David Kilby is the President of FinFit.