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Financial wellness programs equip employees with the knowledge and confidence to overcome personal finance challenges, covering topics like debt reduction, asset management, and saving for current and future needs. Increasingly, employers are offering financial wellness programs as a part of their overall benefits strategy in pursuit of improved employee morale, focus, productivity, and loyalty, all results that reduce costs and create greater mission impact.
The 2018 Employee Financial Wellness Survey produced by PricewaterhouseCooper (PwC), compiling responses from 1,600 full-time employees, shows that finance-related stress affects 47% of all respondents (and a full 53% of Millennials), and that this stress has increased over the past year among 41% of them. Most tellingly, 46% of stress-affected respondents said they spend three or more hours during the workweek dealing with or thinking about financial issues.

Financial wellness programs mitigate this stress by helping employees understand the importance of personal financial preparation, management, and goal-setting. Early reports by the Center for Social Development link work-provided financial wellness services with lower rates of absenteeism and distraction, improved productivity, increased employee engagement, and greater organizational commitment. Over the past two years, PwC has substantiated these outcomes with their own research. Let’s explore some of the key findings.

Stress and productivity

According to PwC research, the effect of financial stress on worker productivity is striking. Compared to their colleagues, employees who are stressed about their finances are nearly five times more likely to be distracted at work by their finances, twice as likely to spend three hours or more dealing with financial matters, and three times more likely to spend five hours or more. Stressed employees are also twice as likely to miss work on account of their personal financial issues, and are more inclined to cite health issues caused by financial stress. They are also more likely to experience difficulties with relationships at home.

Employees who are stressed about their finances are nearly five times more likely to be distracted at work by their finances.

In a 2010 study, the Federal Reserve reported that financial stress costs businesses $5,000 annually in lost productivity per distracted employee. To make the case for investing in a financial wellness program for your organization, you might want to consider calculating the amount it’s costing you.

For that, you should use the recent PwC survey data, which indicates that 25% of all employees, and 33% of Millennial employees, are distracted by their finances at work. Among those distracted, 43% say they spend three hours or more at work each week dealing with issues related to their personal finances.

For the sake of simplicity, let’s assume I have 100 employees, and their average wage is $26 per hour. Using the statistics above, that means I am likely to have 25 financially-stressed workers; among them, 11 are distracted at work for at least 3 hours per week. Over a 46-week work year, those 3 hours add up to 138 hours; that means lost productivity costs me $3,588 per distracted worker, per year. My grand total is $39,468 per year – a conservative estimate, given the fact that my most stressed workers might be spending more than 3 hours each week distracted by finances.

To crunch the numbers for your own organization, use the “cost of low productivity tool.”

Cost of low productivity tool

  1. (Total number of employees) x .25 = Number of financially-stressed workers  
  2. (Equation no. 1 result) x .43 = Number of workers distracted at least 3 hours per week
  3. (Average hourly pay) x 138 hours = Yearly cost of reduced productivity per distracted worker
  4. (Equation no. 2 result) x (Equation no. 3 result) = Yearly cost of reduced productivity to the organization. [Note that this a conservative estimate.]

Stress and healthcare costs

Healthcare costs have become a major concern for employees, and these concerns have impacted their work and their health. According to the PwC survey, a large majority of employees (about 78%) believe healthcare costs will rise over the next several years. With the potential for changes to current healthcare laws still looming, a significant percentage (54% of those feeling stressed financially and 34% of those not reporting stress) say they are most concerned about A) their ability to save for future healthcare expenses, and B) how the rising cost of health care impacts their ability to save for retirement.

More than a third of employees reporting financial stress say their health has been impacted by their financial worries.

In addition, more than a third (35%) of those reporting financial stress say their health has been impacted by their financial worries. Absenteeism spurred by financial stress adds to the productivity calculations in the previous section. It’s worth noting that, whatever the direct costs of employee absenteeism – that is, in terms of the hourly rate expended for time employees are absent – a number of hard-to-measure indirect costs will also accrue, such as lost opportunities, missed deadlines, and overtime increases for those who might need to fill the gaps.
Cost of absenteeism tool To calculate total absenteeism cost over a year:

(Average hourly pay) x (Total absentee hours in a given year) = Total direct cost of employee absenteeism.*

To calculate total absenteeism cost over a year attributable to those whose health is affected by financial stress:

  1. (Average hourly pay) x (Total absentee hours in a given year) = Cost of absenteeism for the year
  2. (Equation no. 1 result) / (Number of employees) = Average cost of absenteeism per employee
  3. (Number of employees) x .0875 = Number of financially distressed employees whose health is impacted by financial worries
  4. (Equation no. 2 result) x (Equation no. 3 result) = Estimate of total direct cost of absenteeism due to financial stress for the year.*

*Note that indirect costs accrue as well, such as lost opportunities, missed deadlines, and overtime increases.

Stress and engagement

Financial stress may also influence employee engagement. PwC’s comparative data indicates that employees’ loyalty, morale, and appreciation for their salary and benefits, as well as efforts to recruit and retain talent, may be linked to workers’ overall sense of financial wellness.

Among the data to consider:

  • Loyalty: 50% of employees who report financial stress are less likely to think their employer cares about their financial well-being. That’s important because a whopping 76% say they’re more likely to be attracted to an employer who does care.
  • Morale and appreciation: Employees who report financial stress are more than twice as likely than their non-stressed colleagues (58% to 28%) to report feeling their compensation is not keeping up with their living expenses. Stressed employees are also less likely to believe their employer benefit plans are competitive with other organizations (at a rate of 60%, compared to 67% of non-stressed employees).
  • Recruitment competitiveness: Those reporting financial stress are not as likely to be proud to work for their employer (72% versus 77%) and less likely to recommend their employer as a great place to work (66% versus 72%). Because many of the best employees come from referrals made by your current employee base, this means recruitment can also take a hit.
  • Retention efforts: “Happiness” with the job is documented to be lower among the financially stressed, leading them to jump around for pay (often without weighing the value of competing benefits packages).

You can estimate the cost of stress-related turnover by figuring that the average cost of replacing anyone amounts to 40% of their total salary value (that is, wages plus FICA plus the value of employer-offered benefits), and considering the number of employees who might leave you for financial reasons.

Cost of turnover tool

  1. Salary + FICA + value of employer-offered benefits = Total value of employee compensation
  2. (Equation no. 1 result) x .40 = Cost of turnover per employee lost, representing average costs of decreased productivity during last phase of employment, replacement costs, and ramp-up period for new employee.
Whether calculating the direct costs in productivity and distraction, or indirect costs of lower competitiveness and overall engagement, nonprofit employers can gain a lot by helping their employees access financial wellness services.

Is financial wellness a fad?

Those on the front lines of human resources know that competing for talent, retaining talent, and reducing costs are primary concerns for nonprofit employers. Therefore, as more and more studies link employer gains in productivity and engagement to financial wellness programs, the case for investing in one has only gotten stronger.

Although some employers debate whether they should get involved in their employees’ finances, HR leaders across industries agree that financial health is a major component of employee wellness. If employers say they’re concerned about the wellness of their people, they can’t ignore their role, and their potential, in helping to improve employees’ financial health.

This sentiment seems to be gathering steam. The Society for Human Resource Management (SHRM) noted in its 2017 Employee Benefits survey report that 49% of employers surveyed offer a financial wellness program, up from 36% the year prior, a trend which began following 2014’s low of 28%. As the figure has held steady in 2018 at almost half of employers, there’s evidence that financial wellness is more than a fad, and multiple reasons to believe it will continue to represent a win-win-win benefits strategy – good for employees, good for employers, and good for the bottom line.

Will employees use this type of resource?

Evidence of the popularity of, and demand for, financial wellness programs can be found throughout recent research. In their 2018 financial wellness study, PwC found that 25% of respondents ranked unbiased financial counseling no. 1 on their list of most desired benefits not currently offered. Further, 20% stated that they wanted help understanding and utilizing already-offered benefits like insurance and retirement accounts; 54% report that they “want to make their own financial decisions, but are looking to have someone to help validate that decision.” The 2016 Employee Benefits Study from the International Foundation of Employee Benefit Plans reported that demand for employer financial wellness programming increased 44% over a single year.

When a financial wellness program is offered by an employer, employees take advantage.

In addition, PwC’s 2018 study showed that, when a financial wellness program is offered by an employer, employees take advantage: 72% of financially stressed respondents and 64% of non-stressed respondents reported using their company’s financial wellness offerings. After all, employers are the only or the deepest information sources available to most workers when it comes to saving, retirement, taxes, insurance, and other critical financial management topics. Employers worried about usage should pay attention to inflection points such as new hire orientation, benefits onboarding or renewal sessions, staff meetings, or annual review discussions, where they can seamlessly provide financial education resources. The optimal approach to offering financial wellness programming is two-pronged: Via an online platform alongside in-person or on-call advice from a trusted, unbiased source.


On financial wellness programs
Why financial wellness is becoming an even bigger benefit trend (Employee Benefit News)
2018 Employee Financial Wellness Survey (PricewaterhouseCooper)

On benefits
2017 Nonprofit Employee Benefits Report (PPI Benefit Solutions)
2017 Employee Benefits Study (Society of Human Resource Management)

On nonprofit compensation
Nonprofit Compensation Report (GuideStar)
Nonprofit Survey Salary Report (Association TRENDS)

On employee engagement
The nonprofit workforce speaks (Work for Good)
Engaging Nonprofit Employees (Quantum Workplace)
2017 Employee Engagement Trends (Quantum Workplace)

The content on provides general information and does not constitute legal, tax, accounting, financial, or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information; do not endorse any third-party companies, products, or services described here; and take no liability for your use of this information.

© Georgia Center for Nonprofits 2019

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