The financial relationship between companies and workers used to be cut and dried: employee works, company pays. After the cheque cleared, what happened with that money was none of the boss’s business.
But lately, companies are seeing the benefits of taking a more active interest in the financial affairs of their employees, acrroding to Theresa Norris-Lue, Vice-Pesident of Group Benefit & Retirement and Individual Life & Wealth at Cowan Insurance Group, speaking recently at the PROFIT W100 Idea Exchange in Toronto.
“The lines between business and personal have become more blurred,” said Norris-Lue. “Years ago it wasn’t the employer’s’ business, but now they recognize that employees want education and resources—87% of employees say they want that help.”
In a conversation with Sue Reibel, Senior Vice President of Business Development in Group Benefits & Retirement Solutions at Manulife Financial, Norris-Lue drew a comparison between finances and health. Employers used to take a hands-off approach to employee health, beyond the standard insurance plan and following minimum health and safety regulations. But as the connection between the workforce’s productivity and the health of individual employees became clearer workplaces started getting involved ,with a range of health and wellness options such as subsidized gym memberships, nutrition campaigns, and anti-stress workshops.
“When we talk about employee engagement and productivity, we spent the last decade talking about employee wellness—physical and mental wellness,” said Norris-Lue. “Now we’re talking about adding financial wellness to that.”
Just as poor health came to be recognized as a tremendous drain on productivity and creativity, said employers are now waking up to the fact that financial stress among employees is taking a toll on the bottom line. “Twenty-five percent of our teams are financially distressed, and 40% are stressed,” said Norris-Lue, drawing on research conducted by the Conference Board of Canada. That means “they’re spending an hour a day dealing with financial stress.” That’s time that could be spent doing productive work, and employers often find that the modest cost of providing some training, counselling and even financial aid to employees produces far greater benefits in employee engagement and productivity.
Reibel cited Manulife research studying employees who were “financially prepared” versus ones who were “financially not prepared.” The latter group took 25% more sick days than those who felt more secure in their financial picture.
Traditionally, employers have often offered help with retirement planning, but that’s just the start when it comes to building financial literacy and preparation. Younger members of the workforce are increasingly grappling with large student debts, while their older colleagues feel unprepared to deal with the costs of major life events like getting married or having children. And household debt is larger and more pervasive than it’s been in generations, across all demographics.
With their financial situation so tenuous, “retirement is a question mark for many people,” Norris-Lue said. “It’s no longer 65 and out.” Helping those workers get their finances together isn’t just about being a nice employer, Reibel notes. “When people are nearing retirement age but aren’t prepared, you can wind up with employees who are retired on the job,'” she said. “They’re showing up to work but can’t afford to retire and aren’t really performing.”
There are a range of possibilities for employers who want to tackle the issue, from adjusting compensation packages to offering workshops on personal finances, in-house credit counselling, and more. But the bottom line is that more work, and better work, gets done by employees who feel financially secure. Whether you do that with a few extra dollars on the paycheque or just some free advice, it will likely pay dividends for you and your workforce.
“When you’re stressed, you can’t be creative, it dries up,” concluded Reibel. “You can see that as an owner of the business—when you are financially stressed, it’s hard to think in that entrepreneurial way. Your employees are the same way.”
More from the 2014 W100 Idea Exchange:
- 5 Tips For Balancing Your Company and Family »
- Is Your Organizational Model Stuck in the Dark Ages? »
- 5 Simple Ways to Increase Sales »
- 13 Ways to Up the Value of Your Business »
- The “Weird and Fast” Approach to Better Problem Solving »
- Hard-Earned Advice on Securing a Successful Exit »
Do you help your employees plan for their financial futures? What training or resources would you like your company to provide? Let us know using the comments section below.