Why Holistic Employee Well-Being Can Be a Difference-Maker

HR departments and their total rewards (TR) function traditionally have been responsible for the well-being of the organizational workforce, but this responsibility has become increasingly demanding in recent years.

Employees don’t just look to HR to settle workplace disputes, file complaints or submit paid time off (PTO) requests. They increasingly expect their employer, in general, and the HR/TR team, specifically, to take their welfare into account across many dimensions — from personal finances to physical and mental health to professional development. HR/TR teams that prove capable of holistically and sustainably improving employees’ well-being will likely put their organizations in a much stronger competitive position.

When these teams focus on holistic well-being, they take important steps toward:

Demonstrating the organization’s commitment to each individual employee;
Increasing employee engagement; and,
Ultimately, improving morale, retention and productivity.

The HR/TR team should continuously be thinking of how it can position employees for success — from improving their financial health (which can reduce stress and drive engagement) to ensuring they have the skills necessary to keep pace with a rapidly evolving global economy. It’s also vital to meet workforce demand for flexibility, which means having open discussions about internal mobility and providing flexible benefits.

The relationship between employees and their employer has evolved in recent years. It has become less transactional and more oriented around holistic and personalized support. While this means employees expect more from HR and TR, it also means those functions that exceed these expectations likely will be rewarded with greater workforce loyalty and productivity.

Embracing Employee Eagerness to Learn

Many workers have experienced extreme stress over the past several years. The COVID-19 pandemic pushed them to reimagine how and where they work overnight. A period of surging inflation then made it more difficult for many workers to pay for daily necessities and save for the future. Now, they confront the rapid emergence of artificial intelligence (AI), which has the potential to fundamentally transform the global economy and the nature of work.

McKinsey research found 30% of the hours currently worked in the U.S. economy could be automated by 2030, while a Microsoft study showed three-quarters of global knowledge workers are already using AI. On one hand, this can help employees manage their workloads — the Microsoft survey reported 68% of workers “struggle with the pace and volume of work,” while 46% feel burned out. On the other hand, it means there’s immense pressure to upskill — 66% of organizational leaders polled by Microsoft said they wouldn’t hire someone without AI skills. Employees clearly recognize the need to focus on learning and development, as 79% of those surveyed by Microsoft said AI skills will broaden their job opportunities.

According to a global PwC survey of 56,000 workers, more than two-thirds said “opportunities to learn new skills are a key factor in any decision to job-switch.”

When HR/TR teams provide employees with needed professional development opportunities, they increase the odds of enhanced workforce productivity and reduced turnover.

Employees Need Greater Financial Assistance

As mentioned in the previous section, in the past few years, many workers’ financial health took a significant hit. Inflation reached a multi-decade high in the summer of 2022, and the proportion of employees who reported their compensation wasn’t keeping pace with the cost of living rose from 41% in 2021 to 59% in 2023. Americans have $1.17 trillion in credit card debt, “hardship withdrawals” from employees’ retirement accounts have risen and millions of Americans rely on payday loans with stratospheric interest rates each year.

According to a SoFi survey, 86% of U.S. workers “feel increasingly stressed about their finances.” The survey found financial stress can have a harmful effect on sleep, mental health, motivation and other key aspects of well-being — 29% of polled workers even said they have delayed medical procedures and other healthcare needs due to their financial situation. While 76% of HR professionals surveyed by SoFi believe employees’ financial well-being is either “good” or “excellent,” just 59% of surveyed employees agree their financial wellness is that high.

Just as most employees are eager to learn new job skills, the PwC study found nearly three-quarters also want financial guidance from their employers. Beyond education on financial literacy, organizations can offer resources such as access to flexible benefits that allow employees to save and invest their money as they see fit. As HR/TR teams adopt a more holistic approach to employee well-being, they may find that comprehensively focusing on financial health as a core part of this process generates value.

Flexibility Can Be an Essential Well-Being Driver

Employees are generally no longer content with one-size-fits-all benefits. They want benefits that meet their unique needs and priorities, such as specific financial and professional goals. A central aspect of holistic workforce well-being is treating each employee as an individual, which is why benefits such as traditional PTO — which are widely underused because they don’t take employees’ particular needs into account — are no longer sufficient.

According to Harris research, 78% of surveyed workers don’t use all their allotted PTO, which means they aren’t getting the full value of an important benefit. At a time when 41% of employees report they feel stress at work every day and nearly half of workers around the world struggle with burnout, it’s especially alarming that so many are leaving their hard-earned vacation time on the table. This is why HR/TR teams should consider flexible benefits like convertible PTO, which enable employees to redirect the value of their unused time off toward other priorities — from retirement contributions to student loan payments.

Seventy percent of workers responding to a MetLife survey said they’re interested in customizable benefits, and HR/TR teams should be responsive to this demand. An emphasis on flexibility is particularly important right now, as 79% of CEOs surveyed by KPMG said formerly in-person employees who are now remote or hybrid will return to the office over the next three years. A recent Randstad global survey of more than 26,000 employees found 83% consider work-life balance a top motivator — making it even more important than pay. Randstad respondents also generally said remote work is a key aspect of work-life balance. HR/TR teams likely will have to provide flexibility in other ways as employees return to the office.

The relationship between employees and employers has undergone a fundamental shift over the past few years. Employees want to work for organizations that take their individual well-being seriously, which means HR/TR teams should consider how comprehensive and personalized benefits can help meet this demand.

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