Diversity & Inclusion

How to Make Financial Health Equity Part of Your Broader DEI Strategy

One of the major trends coming out of 2020 is the growth in hiring diversity, equity, and inclusion (DEI) leaders. Recent research has found that the rate of hiring new chief diversity officers in publicly traded companies has jumped to historical highs. While DEI leaders have been part of the workplace for decades, the pace at which these roles are being filled or added suggests a major sea change is underway in terms of how companies view their role in promoting and advancing workplace DEI programs.

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Such programs have historically focused on recruiting, hiring, retaining, and promoting diverse talent. These are laudable goals, and there is much work to be done in advancing these efforts. There is also much work to be done in better connecting DEI efforts with broader total reward design and how total reward design can be a tool for promoting financial health equity.

At the Financial Health Network, we define financial health equity as equal financial health outcomes across populations. We work to assess financial health equity by using our financial health-scoring tools to identify and understand outcomes across different dimensions of identity, such as race, ethnicity, gender identity and expression, sexual identity, and ability.

For example, when looking at the general U.S. population in 2020, approximately 33% of people were financially healthy. But when we break down the data, we see significant disparities by demographics. For example, 39% of white Americans were financially healthy in 2020 as compared with 24% of Latinx and 15% of black Americans. While this example is not a full representation of the diverse country we live in, it does underscore that financially healthy outcomes are not equal.

Of course, there are many factors that contribute to these disparities in financial health outcomes, and employers are likely not in a position to address all these variables. However, employers can rethink how they design their total reward programs, with an eye toward closing the gap in financial health outcomes.

Here are three practical steps employers can take toward integrating financial health equity into their total reward design:

  • Measure and disaggregate your data. What gets measured gets managed. Understanding the financial health of your workforce is an important initial step organizations should take in their journey toward financial health equity. Part of the measurement approach should include disaggregation of data by key demographics. This will allow an HR team to understand where there are inequitable outcomes and help an organization better understand the challenges its diverse workforce faces.
  • Design and implement solutions to address inequities. Armed with insights about the disparities, HR teams will be better-equipped to make strategic investments aimed at closing the outcome gap. For example, we know that long-term savings and wealth accumulation are significant factors in the racial wealth gap. If through the assessment you see significant deficiencies in long-term savings, you may look to redesign your retirement program, but you may also decide to expand your equity compensation program to a broader set of employees. Ownership interest, regardless of industry or underlying demographics, is a way employers can help shrink the racial and gender wealth gap and increase financial health outcomes.
  • Measure the impact. Understanding if solutions are having the desired impact (i.e., whether employee financial health is improving, especially among the demographics whose outcomes were lagging) requires measuring the impact of those solutions. In other words, assessment is not just for diagnosis—it is part and parcel of evaluating the effectiveness of your solutions.

Once we better understand and identify the inequities, we can collectively work together to achieve financial health for all.

Matt Bahl is Vice President and Head of Workplace Financial Health. In this role, Bahl leads market development and workplace strategy efforts across the organization. He is deeply committed to helping improve financial health for all and believes work and the workplace play a key role in making that goal a reality. With over 15 years of financial services, consulting, legal, and HR experience, Bahl understands the impact that work and the workplace can have on improving worker financial health.