Employees have been through a period of extreme economic volatility and financial turmoil over the past several years. From the COVID-19 pandemic to exploding inflation in 2022 and 2023, employees endured a relentless series of economic shocks that have kept their personal finances top of mind. As financial stress has risen and economic uncertainty continues to loom, employees increasingly look to their companies for support.
Despite the growing demand for financial assistance, too many companies fail to provide it. This negatively affects employees' stress, energy, and engagement levels – all detrimental to the company's culture and productivity. HR teams can avoid these consequences and improve their workforces' health by prioritizing employee financial wellness. Financial wellness encompasses everything from retirement planning to debt management to charitable contributions, so HR teams should adopt a holistic approach to assisting employees.
HR teams can also use innovative benefits like convertible PTO – which allows employees to put the value of unused time off toward other financial priorities – to meet the diverse financial needs of their workforces. These benefits are especially attractive because they reduce the balance sheet liabilities created by large amounts of accrued PTO while improving employees' financial circumstances. No matter what approach HR teams adopt, it's clear that they need to be proactive about offering financial support to their employees in 2024.
|Employees face major financial challenges
While there has been some good economic news lately – the labor market remains strong and inflation is falling – the global economy still confronts significant headwinds. The OECD anticipates that U.S. GDP growth will slow to 1.5% this year (down from 2.4% in 2023), and a recession is possible. Meanwhile, total household debt has risen to almost $17.3 trillion (including $1.08 trillion in credit card balances) and the personal savings rate has collapsed to well under pre-pandemic levels.
It's no surprise that 57% of employees report that finances are the top cause of stress in their lives, and significant proportions say this stress has negatively impacted their sleep, mental health, self-esteem, physical health, and relationships. Financially stressed employees are also five times more likely to be distracted by work-related money concerns. Gallup reports that employee stress has reached record levels, contributing to an engagement crisis; less than a quarter of employees say they're engaged at work.
Financial stress affects every aspect of employees' lives and work. It can cause mental health issues, disengagement, and falling productivity – all of which are harmful to your company's culture and performance. At a time when lingering inflation and the specter of an economic slowdown are increasing financial anxiety for millions of employees, HR teams are responsible for addressing this anxiety by offering robust support.
|Financial support is a key employee priority
Employees look to their companies for help with managing their finances. This is why HR teams need to focus on financial wellness education, personal savings assistance (such as the establishment of emergency funds), investment programs, and convertible benefits that enable employees to pursue their major financial priorities with the value of the PTO they've earned. By improving employees' financial literacy and health, companies will receive significant ROI through engagement and productivity.
Almost three-quarters of employees say they want financial guidance. An even larger proportion (76%) say companies are responsible for financial wellness, and 96% of employers agree – yet just 2 out of 5 offer financial wellness programs. A recent PTO Exchange report notes that 96% of employees regard their employers' financial literacy and wellness programs as helpful. As employees contend with difficult economic circumstances and the proportion who feel "financially well" has collapsed from 57% in early 2022 to 42% in June 2023, these programs are all the more important.
As employees have attempted to navigate a series of economic crises over the past several years, they've realized that employer support is vital for their financial wellbeing. This realization has permanently changed employee expectations around their relationships with companies; they want employers to be financial partners who help to guide them toward a more secure future. HR teams must meet this challenge by providing benefits that will put all employees on a more solid financial footing.
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