Financial wellness benefits: Employers can’t afford not to offer them now

It might sound obvious to say that employee benefits are vital to workers’ happiness, productivity, and overall well-being. Yet we can’t underestimate how much companies’ benefits can affect employees’ mental, physical, and financial health. While recent waves of layoffs across tech and other industries may make it seem like the labor market is loosening, the workforce is still missing nearly 2 million Americans when compared to February 2020. Industries like health care are still facing worker shortages and are desperate to staff their teams to avoid employee burnout.

Savvy professionals aren’t just looking at the numbers on their offer letters and pay stubs – they’re taking a more holistic approach and assessing the strength of their employers’ benefits packages. As 57% of employees say their finances are the top cause of stress in their lives, paid time off and health insurance have become table stakes. Above-average benefits – including those that support financial wellness – are now a must, rather than a nice-to-have. In fact, more than half of workers say they’d likely take a lower-paying job for a more robust benefits package.

Financial wellness benefits are the next frontier of perks that workers have their eyes on, and many companies are offering perks that go far beyond a 401(k) plan. In competitive job markets, employees are expecting more from their companies and they’re pushing for greater financial flexibility. Some employers might think, “We already give our staff a paycheck, isn’t that enough of a financial boost?” But the fact is that benefits packages amplify the impact of paychecks and make workers’ dollars go further. If you’re overlooking financial benefits, much of the money that you pay your employees is going down the drain. Pointless fees like payday loans and credit card interest, accident overdraft penalties, and other unnecessary expenses snatch away their hard-earned dollars. And 66% of your workers think that employers are responsible for their employees’ financial wellness. They want – and even expect – your support.

Walmart found a creative solution to meet the needs of its massive workforce. With more than 1.5 million associates across the country, Walmart leadership understood that traditional approaches to workforce well-being need to reach beyond physical health. Dedicated to acting on this feedback, the retailer acquired two fintech companies in 2022 and transformed them into Walmart’s internal fintech arm, Hazel. Now, Walmart workers have access to powerful tools for budgeting, emergency savings, early wage access, and other benefits.

Take a page from Walmart and you may see similar results. On the flip side, failing to provide benefits that employees see as necessary will make it challenging to attract and retain talent. When employees feel undervalued and sense a lack of support, they disconnect from their work. The resulting stress, burnout, and lack of engagement tank the organization’s productivity and effectiveness. The worst cases fuel a ripple effect of calamities including high turnover, diminished morale, and tarnished brand reputation.

Analyze ROI from the bottom up and top down

I know what you’re thinking – “But I don’t have the budget for this!” Yes, adding new employee benefits requires time, effort, and money, with the latter being particularly top of mind as Tax Day looms. Luckily, there are a few ways to assess what’s working and whether the proverbial juice is worth the squeeze.

Regular program assessments are crucial to gain insight into how well your benefits program is paying off and how to optimize it with ongoing iteration. From the bottom up, conducting employee surveys and gathering feedback will give you a good benchmark. This data will help you assess your current offerings, utilization rates, employees’ perceived value of the benefits you provide, and their effect on worker satisfaction. Every team is different but providing a range of options will move your organization in the right direction.

From the top down, take a bird’s eye view of your employee base. Do you have a lot of younger, entry-level team members? If so, they likely need to increase their financial literacy as they are still figuring out how to manage their money. Unfortunately, these crucial life skills are not well taught in schools. To give them a leg up on building wealth and their money management skills, look into student loan repayment or contribution matching, financial counseling and education, and on-demand pay.

Related: Employees want financial wellness, but what are they really asking for?

Industry-leading companies that are investing in these programs include Verizon, which offers a program that provides resources and counseling to help employees with budgeting, managing money, and paying off debt. Chipotle recently announced a new suite of employee benefits, including 401(k) matching for student loan payments, so workers don’t have to choose between paying off debt or saving for retirement. Meanwhile, Starbucks offers stock options and tuition reimbursement.

If you have many older employees, tailor your offerings to their needs, too. Seek options like 401(k) and Roth IRA matching, retirement plans, life and disability insurance, and additional health care benefits. Other financial wellness benefits, such as emergency savings accounts and the ability to use pre-tax dollars for caregiving expenses, can also help struggling workers across generations.

Check your score in the talent war 

Recruiting and retention are two of the biggest challenges in a tight labor market and they’re also where better benefits can make a big impact. After evaluating what matters most to your employees, observe your recruitment and retention numbers month-over-month and year-over-year. Compare your progress to evaluate how effectively you’re keeping current employees engaged and new talent walking through the door. Low turnover doesn’t just mean you have happy employees — it also means reducing recruitment and training costs, helping your bottom line.

Tracking metrics like applicant quality and job offer acceptance rates shows how competitive your benefits package is against industry standards. The vast majority of job seekers – 88% – consider health, dental, and vision insurance benefits as part of their job searches. For more qualitative insight, ask your recruiters about the questions and feedback they receive from candidates in benefits discussions. Conducting an audit of your competitors’ job listings and websites to gauge what perks they’re touting can be an illuminating step. Compare side-by-side to see where your offerings stack up and where they fall short.

Happy employees = healthy bottom line 

After gathering data, it’s time to crunch the numbers. To calculate the financial impact, you’ll need to consider any spending, including administration costs, premiums, contributions, and the time it takes for your HR team to manage the program. Plus, don’t forget to factor in potential savings from reduced turnover, fewer employee absences, and increased productivity. One way to do this is to compare numbers from before and after you began offering specific financial benefits to analyze whether the data is trending in the right direction. While benefits brokers can provide this kind of analysis, there’s no replacement for doing your own homework, as you know your employees and their needs best.

Ultimately, investing in a strategic financial benefits program isn’t about offering trendy perks that seem exciting but add no real value. It’s about investing in your company’s most valuable asset – your people. By demonstrating a commitment to their well-being and financial security, you empower employees to thrive, driving success for both your workforce and bottom line.

Nico Simko is co-founder & CEO of Clair, the first workplace-connected banking app that offers free wage advances coupled with better banking services than most Americans have today.