Today’s difficult economic climate has placed a greater emphasis on employee financial wellness than perhaps ever before. Employees’ current financial pressures—from inflation to rising insurance rates to much higher grocery bills—have encouraged employers to provide more support towards their employees’ financial well-being.
But, while most employers (95%) believe they have a responsibility to support employees’ financial well-being, only 36% of employees say they feel completely financially stable.
It’s clear that employers want to support their employees, but according to Payroll Integrations’ 2024 State of Employee Financial Wellness Report, there’s a disconnect between the role employers believe they’re playing in employees’ financial well-being and how supported employees feel.
Employers need to understand employees’ financial and benefit-focused needs and priorities so they can make better decisions to address them.
For our inaugural report, we spoke with 250 full-time U.S. employees and HR leaders to get a better understanding of employers and employees’ views of financial wellness, and how employees feel employers can help to improve their financial well-being. Here are three ways employers can transform their financial wellness offerings and benefit programs to best support their employees’ financial well-being.
- Eliminate the guesswork of employees’ financial priorities by asking them directly
This may seem like simple advice, but given that nearly half (49%) of employers believe they’re completely supporting employees’ financial wellness while only 28% of employees feel the same, it’s clear that most employers and employees are not aligned on what’s important. Instead, many employers are guessing what benefits and programs are important to employees and their financial well-being.
This guesswork is not beneficial to employees and could significantly impact employers in the long run because unsupported and unhappy employees will ultimately leave the company.
To figure out what matters most to employees when they think through their financial wellness, employers need to simply ask them. This can be done through an online company-wide survey or an in-person focus groups–anything that will offer employers an in-depth look at what benefit offerings employees believe impact their financial well-being the most.
These conversations are not one-and-done–they should happen frequently. Economic conditions change and employees’ priorities change, and the only way employers will be aware of these shifts is if they’re constantly in tune with employees. This doesn’t mean employers and employees must check in every week–but focus groups or surveys should happen quarterly, or at least yearly, to make sure there’s constant alignment.
- Invest in the benefits that matter most to employees
Once employers better understand what employees want, they can make investments in the benefit offerings and financial wellness programs that properly align.
For example, while 41% of employers say they plan to spend more on financial education and planning offerings within the next year, only 18% of employees view financial education as a priority. Rather, 54% of employees want their employers to provide better health insurance while another 43% report the need for greater retirement investment.
It is understandable why employers might want to invest more in financial education, particularly when greater financial and benefits education tends to result in greater employee wellness. But, at a time when every cost in their lives has risen so significantly, employees are more concerned about the de facto dollar value of their life-essential benefits (such as healthcare).
The priorities of specific benefits will also vary across generations. Following retirement (73%) and healthcare (72%), Boomer, Gen X and Y, Millennial and Gen Z employees all differ in what benefits they rank most important. Forty-four percent (44%) of Boomers (ages 59+) say pensions are most important, 46% of Gen X and Y workers (ages 43-58) say additional compensation, 31% of Millennials (ages 27-42) say Health Savings Accounts (HSA/FSA) and 38% of Gen Z employees (ages 18-26) say lifestyle compensation.
Employers should prioritize what matters most to employees when they consider financial wellness investments. And if there are other offerings that employers think employees would benefit from, they should be transparent about their reasoning when investing in them. Understanding the why behind benefits employers choose to invest in, rather than just seeing the options, will help employees to feel more supported.
- Stay competitive in the job market with top-tier benefits
Beyond addressing employees’ current financial pressures, employers are also preparing to potentially navigate the Great Resignation 2.0 as more people plan to switch jobs over the next year than they did during the initial ‘Great Resignation.’ Employees need to implement benefit programs that adhere to existing employees’ needs as well as attract talent at a time when highly skilled labor is hard to find.
Employer-sponsored benefits are often deciding factors in whether prospective employees will take a job, with a majority of employees noting that they wouldn’t even consider job offers if retirement plans (67%) and health insurance (65%) were not part of the benefits package.
While there are undeniably costs associated with providing these benefit packages at a competitive level, employers must remember that the cost of an unfilled position and of resignations can easily be higher. This is especially true when working in a high-skill, high-demand industry such as cybersecurity, cloud computing, or software engineering, where deeply experienced professionals can often be the backbone of entire divisions.
As they evaluate employee financial wellness and work to improve it, employers need to constantly remind themselves of one guiding principle in HR management: their people are their greatest investment.
