Employers and Employees Must Work Together to Achieve Financial Well-Being
#evolve Magazine
January 12, 2023

There is a cost-of-living crisis in America. Historic levels of inflation are making it more difficult for people to achieve their financial wellness goals, and financial insecurity is a leading contributor to one’s overall well-being and mental health. Studies show that financially stressed employees are less productive, more distracted, and more likely to be searching for work elsewhere. This presents a real challenge for businesses of all sizes: in the middle of an incredibly competitive labor market, the cost of attrition and decreased productivity is a powerful motivator for business leaders who are committed to having a resilient and engaged workforce.

Inflationary pressures, such as skyrocketing healthcare costs and high employee turnover, are affecting businesses in a similar way. In response to the “Great Resignation” brought on by the pandemic, many companies began introducing costly additions to their benefit offerings and wage increases to improve retention. These expenditures put significant pressure on many corporate coffers, leaving tighter budgets, limited resources, and fewer levers to pull today. In 2023, some businesses will struggle to merely maintain their current levels of total well-being programs introduced in 2021 and 2022.

Employers have a unique ability to help employees with their financial well-being, which will also help to boost the physical and mental well-being of their people. This isn’t just the honorable thing to do, there are significant material business reasons to do so. 

Maximizing Financial Well-Being with a Cooperative Approach

Financial wellness initiatives are a two-way street. With today’s volatile economy and inflation likely to persist in 2023, employers will need to enlist the help of their employees to properly leverage limited corporate resources to reduce financial stressors.

From a business perspective, this goal is best realized in a four-pronged approach:

  1. Listen: Hold forums to gather data and feedback from employees, then act on what you hear.
  2. Customize: Micro-target financial wellness programs to fit employee needs.
  3. Educate: Effectively communicate offerings so employees can make full use of resources.
  4. Engage: Maximize employee participation so nobody is left behind.

The basis of this approach is a set of mutual commitments between employers and employees.

Listen. Employers must give employees a voice in shaping future benefit offerings as well as sharing the status of their top stressors, both at work and in their personal lives. Employees need to fully participate when asked for their feedback and provide honest responses.

For example, OneDigital conducts a benefits survey every year and uses results along with our engagement data to help inform our benefits offerings. This year, we heard from employees that financial stress was their top concern, so we took the unprecedented step of not just keeping employee health premiums flat but reducing the employee-paid portion significantly compared to last year.

Customize. Employers have more tools than ever before to target, personalize and individualize resources to their people. Resources like total compensation statements and targeted “ads” for those not fully participating in an eligible benefit are highly effective. Additionally, these tools help pull back the curtain on the full costs of your benefits for both the employer and the employee. At the same time, employees have a responsibility to access these resources and participate in the programs available to them. They also have an obligation to understand the financial constraints facing employers and how these pressures may lead to decisions to change or eliminate some programs. 

Educate. Employers have a responsibility to provide benefits and financial wellness program communications in an easy-to-understand way. By repeatedly reinforcing your total well-being story, you can effectively re-recruit your highest performers throughout the year. Employees are then obligated, and should be encouraged to read these materials, ask questions and actively enroll, which will increase the utilization of these offerings. 

Engage. Employers should provide more equitable well-being programs based on changing employee circumstances, needs and demographics in combination with the company’s strategic priorities. For example, OneDigital’s Diversity, Equity, Inclusion and Belonging priority, combined with employee feedback, showed reproductive health as a growing need for our people. We augmented adoption assistance with fertility benefits, so regardless of an employee’s path to parenthood, OneDigital has their back. In turn, employees should recognize that their company is more than just an employer, but an advocate for their total well-being. 

When employers and employees align their priorities, it becomes possible to craft effective financial-wellness initiatives and obtain higher utilization rates. The tools and tactics below can serve as effective guideposts for building a genuinely impactful total rewards program that helps the people in their organization weather tough economic circumstances, while maintaining a fiscally conservative approach.

Building Financial Resilience with Focused Tactics

Understanding Employee Preferences

Many companies already conduct regular employee engagement assessments that evaluate employee’s overall approval of their work, their relationship with their team/manager and their trust in leadership. These surveys should also be leveraged to understand employees’ financial pain points, their enthusiasm for existing benefit and well-being programs and their opinion of prospective changes to the company’s total rewards mix.

By combining the results of these surveys with benefits-usage data and internal focus groups, it is possible to gain insights into what’s working, what’s not and what changes your employees would like to see. These insights can then enable management to create a lean, efficient and focused total well-being package that’s tailored to the desires of their employee’s needs. 

Expanding Voluntary Benefits

Expanding voluntary benefit offerings is a great way to execute a hyper-customized approach to financial wellness. Voluntary benefits, also known as supplemental benefits, are niche offerings that employees can access at a discount. Employers can secure these offerings by negotiating custom group pricing with providers who are interested in selling directly to employee populations. Ideally, an employer will be able to offer several different voluntary benefits to their employees, who then decide to participate in whichever ones make the most sense for them.

In many ways, this a-la-carte approach is a win-win: voluntary benefits cost less for employers than traditional benefits, directly save employees money, and can be micro-targeted to the preferences of employee populations. One of the most effective programs we put into place to address concerns about burnout was to introduce Summer Hours, where employees could get a head start on their weekends and enjoy extra time with their friends and family.

Strategic Pruning

If an employer offers a financial well-being program, but nobody uses it, does the well-being program really exist? The answer is yes it does — and it costs the company money that could be better spent on other, more popular initiatives. Because of this, employers should consider axing perks and programs with low engagement. Money saved from a strategic pruning of these ghost benefits can be used to improve more popular offerings or launch new financial well-being programs that are inspired by employee survey results. 

Crisis Funds

Employer-sponsored crisis funds are an excellent way to provide rapid financial relief to employees suffering an unforeseen financial emergency. At OneDigital, we have the “We’ve Got Your Back” fund for colleagues who are experiencing severe personal hardship, and it’s been tangibly helpful in assisting those in crisis. Funds like these are typically reliant on a mix of individual employee donations and corporate support, although it is also possible to partner with external nonprofits and other entities. 

Innovative Workarounds

Employers can maximize limited resource constraints by experimenting with a suite of “out of the box” approaches that augment employee pay in a fiscally sustainable manner. One trend is to allow employees to “sell” unused PTO days back to the company for cash. Alternatively, consider the expansion of performance-based bonuses, or a deferred compensation plan that grants employees increased equity as they reach milestones in their careers such as service years or promotions to a higher professional level. Additional options may include adjusting hours and/or pay.

For example, if a non-exempt employee is working 30 hours a week but is realistically capable of performing their duties in less time, the employer could offer them a promotion that increases their pay rate by 50% while also cutting their weekly hours down to 20. This would keep compensation costs flat for the employer while giving the employee more time to take on a part-time role elsewhere to earn extra income.

Getting the Big Picture Right

Of course, building a resilient workforce requires more than just conducting surveys and introducing new offerings. Companies must also look at the broader picture and work to ensure that employees have the knowledge that’s needed to maximize the effectiveness of the financial wellness programs being offered to them.

This requires persistence, follow-through, and individualized attention on the part of employers. Questions you should ask include:

  • Why aren’t eligible employees signing up for key benefits?
  • How can we better partner with internal communications teams to raise awareness and provide easy-to-understand materials that boost benefits literacy?
  • What resources do plan administrators need to directly contact those who may be unintentionally forfeiting financial well-being assistance?
  • Do employees need help with access to financial planning and educational programs that empower them to make the most of the resources being offered and operate in a financially sound way?

Finding the answers to these tough questions is always worthwhile. Not only does it identify the root cause of the success or failure of your financial well-being programs, but it also guides the best approaches for making strategic decisions. The result of these efforts will be an employee population that is more resilient, productive, engaged, and financially secure.

Editor’s Note: Additional Content 

For more information and resources related to this article see the pages below, which offer quick access to all WorldatWork content on these topics: 

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