Financial Wellness at work: why you should care 📝
After the pandemic, a lot of workers were caught off guard and had to face financial hardships with little relief in sight. They lost their health insurance, financial inability to meet basic needs (food and sheltering). This is a direct consequence of the majority of workers being in a situation of struggling to pass through each monthly financial responsibility, let alone save and plan for the future.
But this poses an opportunity for business owners and CEOs to differentiate their organizations by focusing on workers’ financial well-being. Research proves that investing in employees’ financial wellness not only improves their lives but also leads to meaningful improvements in key business outcomes, including reducing turnover and increasing productivity and customer satisfaction.
I understand that we are all running businesses that ultimately are focused on maximizing profitability, but investing in the financial stability of your workforce is not only a social responsibility for the company but also a strategic business decision.
When employees are under financial stress, they are more subject to higher absenteeism and ultimately turnover. They may be less productive during their working hours given the worries or trying to fit in more than one job in order to make up for their living expenses. And turnover has obviously terrible consequences: operational instability, more costs with the training of replacements, and inability to create a foundation for growth as you will always be focused on starting from scratch with the new coming staff.
In addition to that, customer service will also suffer. Famous CEO and Founder of Zappos Tony Hsieh once said that you can't have happy customers without having happy employees. So if your employees are financially distressed this will definitely have an impact on the quality of the output of their work. If they have customer-facing roles, the issue becomes even worse.
Let’s go through a simple framework in which you can create a meaningful and measurable impact on your business:
Living wage analysis: benchmark with competitors, local labor market and industry average. Sometimes that may not necessarily mean ensuring financial security: the cost of living for a family needs to be considered as well. This link has a calculator for a decent living wage according to each state of the US.
Benefits analysis: from health insurance to paid parental leave, employer-provided benefits are designed to ease financial burdens of workers. To ensure an efficient allocation of investments, identify participation rate for key benefit packages, along as asking them to rank the packages that actually help employee's financial wellness. For example, your employees may be more concerned about child care related benefits if they have families. Or if they are younger, they would appreciate more financial literacy and opportunities to invest and save for their future.
Financial education: many employers underestimate how critical could be the benefits of providing a financial education platform to their employees. Learning and planning around finances (spending, saving, borrowing and investing) could be a game changer regarding employees' financial vulnerability.
🎧 Podcast recommendations
▶️Tim Ferris Show: The Lost Presentation That Launched the 4-hour Workweek: unless you’ve been living under a rock, you heard about Tim Ferris' book on how to have a productive life in 4 hours of work. This is his first presentation in SWSX 2007 talking about the concepts in the book.
▶️ The CFO Playbook: Balancing Speed and Discipline when Scaling: This is a great interview with Tony Russo, CFO at Imply who has an extensive career on joining companies and preparing them for an acquisition/liquidity event. Great framework on how to measure and strategize M&A opportunities.
This is Open Books - a weekly newsletter carefully curated by me, Leticia Souza. Every week I’ll be compiling relevant topics around finance and financial strategy - from choosing your first accounting system to how to successfully close a fundraising round to your business.
In a world full of noise, I aim to bring clarity and direction to your finance processes so you can manage your business in peace. If you find the content useful, do your friends a favor, and please share this newsletter with them.
See you all next week 👋🏼
Leticia
Important to treat people fairly.