The economic impact of COVID-19 has put financial wellbeing in doubt for many. Although they still have a job, employees are vulnerable to heightened financial anxiety as well as other mental health impacts of the pandemic. Get ideas for taking a balanced, sensitive approach to supporting your workforce.
With a portfolio of responsibilities that just keeps growing, HR teams are now being challenged to find the right approach for an issue that is becoming more urgent – financial wellbeing. Recent research from Maxxia tells us many employers are cautious of getting too involved with financial support measures for employees due to compliance and privacy concerns. So what can you do for your employees financial wellbeing without getting into hot water? We discuss three ways to support employees with their financial wellbeing that could be affecting their overall wellbeing.
Ongoing impacts of financial anxiety
Financial anxiety isn’t new to the workplace. But since the arrival of a global pandemic and recession in 2020, research studies have raised continued impacts on mental health, and the lasting effects of financial wellbeing, in particular. Elevated levels of money stress among employees can create significant problems, both for their productivity and financial wellbeing. Feeling stressed about money is, paradoxically, less likely to result in positive financial choices such as saving and planning ahead for unexpected costs1. These behaviours fuel even more concerns about money, leading to a spiralling levels of financial anxiety.
Not only is this unhealthy for employees, it’s a serious problem for our economy as a whole. According to research findings from the Employee Benefits and HR Consulting division of Gallagher, 70% of employees say they worry about, or spend time dealing with, personal finances at work, regardless of their position or level of income. This is costing employers a substantial amount, with an estimated $47 billion+ each year lost to financial stress among their workforce2.
HR professionals consulted in our recent research into financial wellbeing and employee benefits agree there is demand for financial education among their workforce. However, they also report that services already available to support employees with their financial wellbeing are not being taken up. Education on super, salary packaging options and Employee Assistance Programs are three popular employee benefits that can all play a part in improving financial wellbeing among employees.
1. Super education
Not all organisations will have a single superannuation provider. For those that do, there could be immediate benefits to pass on to employees such as discounted rates on account fees and insurance premiums. For example, employers may consider funding certain insurances linked to superannuation however this may be subject to employers needing to consider or obtain independent advice regarding their regulatory obligations.
Another financial wellbeing element offered by most super funds is their education program. Regular seminars on insurance options and levels of cover and investment choices run by accredited and licensed professionals can introduce key concepts to get employees more engaged with their super. For employees interested in engaging further, super funds may also offer one-on-one meetings with one of their representatives either in person or over the phone. Many providers now also offer online education, resources and tools such as budgeting apps to support employees.
2. Salary packaging and novated leasing
Depending on their individual circumstances, salary packaging may help employees pay for their car or other items in a cost and tax-effective way. The potential savings that come from paying for purchase, maintenance and running costs with a combination of pre and post-tax dollars can give employees a better way to budget for their car, for example.
Depending on who an organisation chooses as their novated partner, employees may also benefit from volume discounts on pricing for certain vehicles, as well as competitive rates on servicing, maintenance and fuel. These potential savings could help employees buy their ideal vehicle without blowing the budget. If they need a larger car for their family or lifestyle, the buying power of a specialised novated lease provider may help put their first choice within reach.
3. Employee Assistance Programs (EAPs)
EAPs have become more and more popular with organisations looking to support employees, and their family members, with a wide range of challenges in their life and work. Research shows just how successful these programs are, with 95% of employees satisfied with their EAP experience and employers reporting an ROI of five to 10 times their initial investment for productivity alone3.
A best-in-class EAP offers support for employees for different mental and physical health problems. These could be related to a work situation, family, health, finances and more. As well as one-on-one counselling, an EAP provider will often partner with other support services, including financial coaches who can help employees address behaviours causing anxiety about their finances.
As a premium provider of employee benefits to many organisations across Australia, Maxxia are committed to making a positive difference to the financial wellbeing of employees with salary packaging. Not only can take up of salary packaging potentially boost the disposable income for employees, a best-practice program supported by effective communication can also strengthen your employee value proposition as a whole.
Maxxia can offer your organisation a full benefits assessment to measure the effectiveness of your current employee benefits offer. We can also put a dollar figure to the potential savings and efficiencies from running the program and compare overall performance with best-practice for your industry.
1. Capital One/The Decision Lab, Mind Over Money Study, 2020
2. Gallagher, Employee Financial Confidence Report, 2020