What can leaders do when financial stress turns into overall well-being stress?
Employees continue to face financial anxiety over basic necessities. Grocery bills are growing higher, rent is barely affordable and there’s little money left over to spend on things you actually enjoy.
Many can’t even consider buying nice-to-haves when it’s hard to secure need-to-haves. WorkLife previously reported on how a six-figure salary was once celebrated, but now it’s expected. And now workers are dealing with the impacts of vanishing annual cost of living increases that range between 2 and 5% of your salary to take inflation into account.
Workers are saying they need more money, or at least better benefits to make up for the lack of salary increases that help them live comfortably.
Financial wellness platform ZayZoon’s 2024 State of Employee Wellness Report revealed that 73% of the 5,000 employees surveyed said that their biggest financial concerns are necessities, including bills, rent, and groceries. It also found more than half of employees feel this anxiety daily, impacting their ability to focus on work. Of the 500 HR professionals interviewed, they say that employee financial health has the most impact on employee focus.
“It’s not surprising, but it’s sobering,” said Tate Hackert, president and co-founder of ZayZoon.
Over 61% of HR professionals noted that employees live paycheck to paycheck, with significant numbers facing eviction, medical costs, wage garnishment, bankruptcy and other strenuous financial challenges. 58% of employees have no savings for unexpected expenses and 71% have poor to fair credit scores, exacerbating their financial woes and stress.
That financial pain can no longer be ignored, especially considering its impact on how these employees show up to the workplace. Fifty percent of surveyed employees experience financial stress daily, which employees and HR professionals alike noted negatively impacts employee focus, morale, and overall work quality. Fifty-two percent of surveyed employees stated that they are stressed about their finances daily or multiple times per day.
“It’s productivity loss due to pure focus,” said Hackert. “Individuals are either just stressing out and not paying attention to work, or they’re actually taking sick days to combat that stress. That also manifests with people taking longer breaks than they should.”
That’s why it’s absolutely necessary to bridge the gap, helping reduce absenteeism, presenteeism, and other productivity lulls. HR plays a big part in that, having to keep financial well-being top of mind when choosing workplace benefits.
“I think finance is such a taboo subject and has been, but workplaces don’t think twice about doing benefits enrollment and bringing professionals around, providing information packets,” said Hackert. “Healthcare, similar to finance, is an unknown area that everyone needs help with. More and more are seeing the need for this when they see the positive effect.”
Mutual insurance company Guardian’s Mind, Body, and Wallet 2024 report found that 74% of 2,000 employers said that addressing and improving their employees’ financial health is very important. Meanwhile, of the 2,000 employees surveyed, 52% wished their employer would educate them about benefits with onsite support and 53% wished they had access to financial wellness information during open enrollment.
Similar to ZayZoon’s report, almost half of the respondents said that financial health has the largest impact on their overall well-being. Eighty-two percent of those who rated their financial health as low also cited their emotional health as poor (vs. 78% who rated their financial health as high and reported excellent emotional health).
“Since the pandemic began, things like cost of living, housing costs and paying down debt were the top sources of stress for people,” said Gene Lanzoni, head of enterprise content at Guardian. “This year it was off the charts. Everything that you hear and read about, that’s exactly what we saw in our study too.”
Aside from a busy mind impacting productivity, people who are squeezed financially might actually end up seeing an impact on their physical health. If you have to choose between dinner on the table or going to your next doctor’s appointment, you might end up skipping that appointment. That can have detrimental effects.
“Having access to benefits can make a huge impact on overall well-being,” said Lanzoni. “There’s been an increased interest in wellness offerings to support that, like having paid leave and flexible workplace arrangements.”
Benefits can go a long way, but maybe not far enough. Guardian’s report found that just 25% reported their company’s benefits positively impact their financial security. As the saying goes, cash is king. Will employers need to eventually start leaning back into promotions, bonuses and other perks directly related to cash in the pocket? With companies stretched thin, maybe not for a while.
“We’re seeing an increased interest in these other kinds of benefits, like employer flexibility,” said Lanzoni. “For parents, caregivers, these benefits are more important than a 2%, 3% salary bump. We’ve seen more interest in empathy and advantages related to that than we have seen in terms of compensation.”