Financial wellness is becoming more important for employees as time passes. Financial burdens from loans and debt to funds for retirement and children’s education are a reality for many – and the time to create a sound financial plan is not infinite.
In this article, we will look at the reality of money stress and its impact on life and productivity at work. These effects play an even more dominant role in financial wellness for women. It is particularly problematic due to the impact of the gender pay gap and retirement gap that has not closed significantly over the past decade.
Helping employees reach financial wellness and ensuring equal pay for women has many benefits for a company. So, what can employers do to identify and close a company’s gender pay gap, ensure financial literacy, and help all employees create financial wellness?
Financial wellness is the ability of employees to manage their finances responsibly and make confident financial decisions. It encourages employees to take a holistic view of their money, financial needs and financial planning.
It involves more than a “bottom line” approach to finances and instead emphasizes financial literacy and a comprehensive understanding of personal financial wellness to reach that state.
A company’s short- and long-term benefits combined with a well-structured financial wellness program that caters to different stages in every employee’s life can make a big difference in an employee’s present and future financial situation.
5 Benefits of Financial Wellness for Employer and Employee
- Increased productivity: improved efficiency through reduced stress as less time and energy is spent dealing with costly distractions related to financial stress.
- Greater loyalty: increased job satisfaction results in greater loyalty since employees feel valued and secure.
- Enhanced wellbeing: Increased security results in reduced financial stress.
- Improved retention rates: financial wellness helps to reduce stress levels. Companies that offer financial wellness programs and long term incentives can improve employee retention rates.
- Attract top talent: wider access to financial wellbeing and personal growth opportunities increases the ability for employers to attract top talent.
Empowering employees to improve their overall financial well-being through attractive benefits is a key determining factor for candidates to choose a company in times of an employee-driven job market and the Great Resignation.
Giving employees the essential tools to understand and achieve financial wellness is part of creating a successful organization. It empowers employees to plan and achieve financial wellness, live a balanced life, and be a productive part of the organization in a world with fast-changing economic circumstances.
Financial Wellness for Women
Financial wellness is especially critical for women. The gender pay gap means that worldwide, many women are paid less than their male counterparts in equal roles. As a result, it is more difficult for women to reach financial wellness, save and prepare for retirement. The effects of the gender pay gap are felt deeply by many women from entry level positions to leadership roles.
Today’s gender pay gap is staggering and unfortunately will not be resolved soon.
As a company, you cannot fix the global gender pay gap, but you can contribute to the solution by
creating awareness having attractive and meaningful benefits in place
ensuring mechanisms that foster equal pay practice.
Working towards closing the gender pay gap is a crucial part of employee financial wellness. Business leaders can play an active part in achieving equal pay in their organization.
3 Ways to Close the Gender Pay Gap in an Organization
> Salary Analysis: to understand the gender pay gap, start with the salaries paid to understand and correct a pay imbalance
> Pay Correction & accessibility: make compensation a topic that people dare to talk about and transparent where people are within their roles. Compensation is often avoided and this is something we need to change. We need to get comfortable talking about salary and making sure people understand their context to pay. As a business it is important to make steps to correct pay gaps and have a fair system in place to assess this in due time.
> Equal career opportunities: pay equity and transparency are a great achievement, but they need to be paired with promoting women to senior leadership roles.
How to Improve Financial Wellness for Employees
Helping your employees reach a financially stable place starts with setting up a financial wellness program that extends into all areas. Create a comprehensive financial planning and education program that delivers on all aspects of financial management and wellness:
- debt management
- estate planning
- a company’s Long Term Incentive Plans (LTIPs)
By helping employees understand and use different areas of personal finance and providing resources, companies can help them improve their financial situation and create a more productive, more content and loyal workforce.
To establish a pathway to financial wellness, here are five additional steps to take as an employer:
- Provide financial literacy and wellness education through seminars and resources
- Offer employer contributions to retirement plans and Long Term Incentive Plans
- Implement flexible leave programs
- Provide education for all phases of life: from how to grow investments, choose insurance, set up an emergency fund, to saving for retirement
- Ensure mechanisms that foster equal pay are in place
Take action on Employee Financial Wellness
As an employer, financial wellness for employees is not only an important topic to implement in your organization, but it also means the company is enabling employees to take control of their finances and is empowering women in a workplace that does not have a gender pay gap.
The goal is to build a foundation for long-term success, equality, productivity and loyalty that every employee and the entire company benefit from.
Finally, for employees, when discussing benefits with current or prospective employers, find out which steps are being taken towards equal pay and make sure you understand the offerings they give employees related to financial wellness.