Financial wellness, simply defined is managing one’s finances effectively and meeting current financial needs, while working towards future financial goals. This includes regular savings, reducing and managing expenditure and even planning emergency funds. Today, personal finance is said to be one of the leading causes of stress for young, working professionals. A PwC study revealed that over 54% of all employees are stressed about their finances. This stress, in turn, leads to loss of productivity that reportedly cost businesses about $300 billion, annually.
Hence, companies must have in place systems to provide financial advice and related offerings to their employees. It’s important to ensure that these provide them with actual benefits and adequately meet their needs and necessities, and aren’t just policies that offer no real value to them. Businesses must not only facilitate the option of an employee being able to avail of a salary advance or a loanfrom lenders that offer these, but should also look at the bigger picture and offer financial counselling, financial wellness seminars, credit health check-up opportunities and so on.
Employers must take care to ensure that they make arrangements for providing at least basic financial education to workers, followed by periodic training sessions, workshops, etc. to promote financial wellness. These impart necessary financial knowledge, life skills and most importantly the confidence required for good personal financial management to employees.This can go a long way in assisting employees learn to manage their income and expenditure and build their wealth consistently.
Apart from these services, developing the right organisational culture is important to ensure the emotional, physical and even financial well-being of employees. These would pay off in the long run in terms of sustaining far higher employee retention rates. Especially with the stiff competition in any given industry today, retaining top talent within the organisation is extremely crucial. Thus, companies must focus on providing a well-rounded employee experience. An employee today looks beyond a paycheque and perks, and constantly desires for a more holistic workplace experience. They seek a workplace environment receptive to their needs and troubles and one that engages with them regularly on all these fronts. This is why building the right corporate culture can go a long way in improving the organisation’s employee retention rates or in reducing attrition.
Quite contrary to popular belief, these initiatives don’t increase costs for the organisation. Employee satisfaction and happiness have a significant impact on the organisation’s long term growth and future, even in terms of profitability than one would typically assume. Ideally, where the organisation seeks to go, and catering to employee concerns especially of the financial kind, must superimpose and go hand in hand as part of the long term vision or goals of a business.
Several disruptive companies today in the Fintech sector are specialising in consumer lending. Some of them are involved in lending to salaried individuals across the corporate ladder, including blue or grey collar workers. Businesses should consider partnering with such third party Fintech lenders as they offer loans at some of the best interest rates. Young working professionals often experience a month-end cash crunch and due to lack of credit-score knowledge, they are unable to borrow money from the traditional credit facilities available. These Fintech companies help them to borrow in a matter of minutes, thanks to the latest financial technologies like Machine learning, Artificial Intelligence, etc. that they deploy. Moreover, they offer a host of services and schemes like interest-free EMIs and long term loans.
Such financial wellness partners even help employees build their credit score apart from providing periodic financial health check-ups and guidance. It is the equivalent of having a bank run 24×7 on their mobile phones, one that not only acts as a safety net for them but can even pre-pone their salaries if required. This also means reduced charges and processing fees for both the employer as well as the employee.
Businesses that provide such options to employees are also simultaneously safeguarding their own organisational interests. As much as one in three employees state that personal finances are a cause of stress at work, although the two are seemingly unrelated. These mainly stem from high debt levels, poor cash flow management, student debt and so on. Financial wellness programmes apart from prevention of loss of employee productivity and subsequent impact on profits,also help retaining employees which in turn help businessesachieve massive savings. Given that such financial wellness initiatives cost companies a bare minimum, they provide a win-win situation for both employers and employees.
Views expressed in this article are the personal opinion of Vikas Shekhri, Chief Growth Officer at EarlySalary.