The High Cost of Financial Stress — and How Employers Can Help
As we approach the second half of 2023, the ongoing state of global economic uncertainty continues to affect both workers and business leaders alike. In a new survey conducted by my company, Workplace Intelligence, and BrightPlan, a leader in Total Financial Wellness, the vast majority of employees, HR leaders, and C-Suite executives said they’re concerned about high inflation (96%), a potential recession (93%), rising interest rates (90%), and market volatility (89%).
On top of feeling anxious about these external economic conditions, 92% of employees are stressed about their personal financial situation — and for good reason. Nearly half (48%) say they have more debt than they can manage, and 35% have no emergency savings or only enough for up to 2 months. What’s more, 52% are saving either nothing at all or less than 10% of their income for retirement.
Taken altogether, these concerns are having a notable impact on people’s well-being. The majority of those we surveyed say that financial stress is negatively affecting their mental (72%), social (64%), and physical (60%) health. In addition, 72% report that they’ve passed up opportunities to spend time with family, friends, and co-workers because they simply couldn’t afford to participate. For many respondents, this includes skipping weddings, birthdays, happy hours, trips, and other important gatherings.
Financial worries are also impacting people at work, with around half reporting that their engagement (50%) and productivity (48%) have declined as a result. In fact, workers report that on average, they’re losing 8.1 productive hours each week due to their financial stress. That’s over one day per week for every employee, which could be costing U.S. employers nearly $200 billion annually.*
To regain control over their financial situation, many workers are taking matters into their own hands. At least 8 out of 10 say they’re improving their financial habits (81%) or cutting expenses (80%). At work, around one third report that they’re going above and beyond to avoid getting laid off, working extra hours to boost their savings, or developing transferable job skills.
But employees can’t turn things around completely on their own — and most leaders recognize this. The vast majority of the HR and C-Suite executives we surveyed believe that their company should provide guidance and tools to help their employees grow their wealth (95%), improve their financial literacy (93%), and manage their money on a day-to-day basis (89%).
This is certainly a tall order. But given our study’s alarming findings around productivity loss, I think it’s evident that improving workforce financial well-being should remain firmly on the C-Suite agenda in the months to come. However, leaders may need to take a step back and evaluate how best to move the needle on this issue.
In today’s article, I’ll describe three steps employers should take to address the poor state of workforce financial well-being, backed by the findings from my company’s new research with BrightPlan. Let’s take a look.
1. Take a pulse check on your workforce
As a first step, executives need to gain a more accurate understanding of their workforce, including their financial well-being and their perceptions around how their company supports them. This is critical, because our survey uncovered multiple disconnects between employees and business leaders.
For example, just 9% of employees say their financial situation is “excellent,” but leaders estimate that 26% of their workforce has an “excellent” financial situation. We also found that while 94% of leaders believe their company offers employees the financial guidance, support, and tools they need to achieve their life goals, just 48% of employees agree.
Gathering this information doesn’t have to be difficult or time-consuming — an anonymous employee survey can provide an abundance of insights. Leaders may also wish to hold meetings or town halls with employees to discuss in greater detail how people are feeling and where they’d appreciate more support.
2. Upgrade your financial wellness benefits
One of our more concerning findings was that 74% of employees are not satisfied with their financial benefits. While most companies offer retirement matching or basic financial tools, today’s employees want benefits that support other aspects of their financial well-being. For example, workers say they’d like access to an emergency savings fund, debt management services, home ownership assistance, a financial advisor, and personal or home loans.
There’s certainly a price that comes with adding new financial benefits, but savvy employers recognize that the benefits far outweigh the costs. Recall that financial stress is costing organizations over one day a week in lost productivity per employee, at a loss of nearly $200 billion annually.* That means that even a 10% reduction in workers’ stress levels could save employers $20 billion each year.
Companies should also consider the potential impact that a best-in-class financial benefits package can have on retention and talent attraction. Our survey revealed that financial wellness benefits are one of the top innovative benefits that people look for in an employer — coming in only behind flexible time off.
3. Boost benefits usage and awareness through better communication
While adding new benefits will help move the needle on people’s financial well-being, this should go hand-in-hand with boosting communication efforts. That’s because many workers simply don’t know what’s available to them. In fact, for most of the financial benefits we asked about, around 1 out of 4 employees have no idea if their company even offers them.
This lack of awareness is likely driving low benefits usage, another pressing issue revealed by the survey. Other than retirement matching (used by 87% of employees who have this benefit) and company stock options (used by 58%), we found that less than half of employees use any of their other financial benefits.
By not using their benefits, workers are missing out on critical opportunities to improve
their financial situation and build long-term wealth — and it’s up to leaders to help. Recognize that your employees probably feel inundated with company communications, then work with your HR teams and benefits providers to ensure that information about your company’s financial benefits is cutting through all the noise.
A proactive approach is key for happier workers and a healthier bottom line
External economic conditions as well as personal financial concerns are having a significant impact on people’s well-being and productivity, which ultimately affects the business bottom line. In fact, workers and leaders alike are losing a significant amount of time each week due to their financial stress.
To address this challenge, companies need to take action — and quickly. This means getting a real-time pulse on employee sentiments, ensuring that workers have access to the financial tools they need, and amplifying communications around financial benefits so people know what’s available to them.
Leaders who take the initiative around this will not only help their employees improve their financial situation, but they’ll also bolster their organization’s effectiveness and position their company as an employer of choice. And in the face of widespread economic uncertainty, this proactive approach will be critical to ensuring continued business success.
* Assumes there are 100,206,000 knowledge workers in the U.S. with an hourly wage of $38.60. 24% of knowledge workers have high or very high levels of financial stress and 48% of them have 8.1 hours of lost productivity per employee per week as a result of financial stress. Source: Federal Reserve Economic Dataset, BrightPlan.
Thanks for reading — be sure to join the conversation on LinkedIn, and download the study report to see the complete findings from my company’s latest research with BrightPlan. For a live walkthrough of the findings, join me and other industry experts in this May 11 webinar.