When we talk about employee wellness, the focus is often on ensuring the physical, mental, and social well-being. Organisations often overlook the importance of having a financial wellness program in place. Financial stress can take a huge toll on the productivity of your employees at the workplace, which makes it is essential for companies to give equal emphasis to the financial stability of their workforce.
The National Wellness Institute defines wellness as ‘…an active process through which people become aware of, and make choices toward, a more successful existence.’ Now, ‘Successful Existence’ could mean different things for different people – an established career, a balanced life, a happy family, or a six-figure bank balance. While organisations have been tirelessly working to promote employee wellness, with emphasis on the social, physical, and emotional health of employees, they often forget to focus on outlining a solid financial wellness program.
In today’s volatile world, technology changes, corporate mergers, bankruptcies, and regulatory troubles can result in today’s jobs being extinct tomorrow.
Financial stress can take a huge toll on the productivity of your employees at the workplace, have a negative impact on their morale and eventually result in absenteeism.
Today, organisations are continuously looking to boost their headcount and hire Millennials. Now, this generation, though smart, may lack the financial awareness and how it impacts their well being for tomorrow. ‘Live for the day and not worry about tomorrow’ may be a good approach if you are an unmarried individual but having family will bring a new set of challenges.
A typical individual in India will think of investing in real estate or LIC policies or fixed deposits at a bank or a post office or even mutual funds or direct equity markets.
LIC Policies are badly marketed as investment products in India instead of being used for what they really are (small succour of relief for your family if death comes about to the policyholder). The return on LIC policies over the policy term hardly exceeds 5% (inflation routinely crosses 10%) and the only glimmer is the sum assured is tax-free upon policy term ending or upon death.
Mutual funds come in so many forms. Front-load and trailing commissions, sign up fees, management expense ratio (anything more than 1.5 is worrisome) can eat up a lot of investment gains.
Unexpected life-changing events (disability due to accident or serious health condition) can result in huge expenses which are unforeseen and there are no emergency savings to tide over. Without a good analysis of their own risk profile, individuals tend to invest in high-risk equity markets creating an opportunity for the wipe-out of the principal invested.
The advent of several plastic money payment options has created high levels of debt and its associated credit history problems and the experience-based behaviour (gadgets, travel, culinary) has piled on the misery as well.
A need-based and a customized financial wellness program can be a good source of employee engagement and retention, better presentment, productiveness improvement and loyalty.
The financial wellness programs should be targeted towards specific groups of employees — Baby Boomers, Gen X, Millennials and women to be effective and the outcomes of the programs must be measured by the employers to predict the need of any tweaks and act upon it (participation levels should give a good view of the ROI).
Financial wellness programs may not be the right fit for all companies. It may be a trend but an organisation would be better positioned to survey its employees and assess the need before rolling out such a program.
From an employer perspective, the key payoffs of a well-rounded financial wellness program can be reduced absenteeism and reduced support calls related to tax-saving instruments, insurance, etc.