4 tips to cultivate a work environment that better supports financially struggling employees

Although we have seen recent indications that inflation is coming down in the U.S. market and employment levels are up, most people are still struggling financially. More than three-quarters of Americans live paycheck to paycheck and the stress is harming their productivity.

HR teams can help employees lighten the burden of financial stress and struggles by having open conversations about financial challenges and ways to alleviate them, but only if they know where to start. Understandably, people are often reluctant to talk about their money problems with office colleagues, particularly those in leadership roles.

HR leaders have several avenues of approach to kick off these vital conversations, starting with a shift in their own thinking. Here are a few tips HR leaders can use to initiate productive conversations with employees about their finances to help improve their financial wellbeing and address their financial stress.

Add short-term thinking to your long-term planning

Understanding the financial difficulties your employees face is fundamental to creating a supportive and successful environment. However, most companies simply don’t have information about the current challenges people are facing.

HR leaders generally know how much they pay their people and what their 401(k)s look like, but they don’t have any idea when team members are drowning in credit card debt, behind on student loan payments, or struggling to afford rent. A strong first step is understanding the signs that your people need help and how to access that information.

Without comprehensive data, companies can mistake the limited information they have as all they need to know about employee financial wellbeing. While long-term solutions like retirement plans are important, they don’t solve the financial issues employees face right now. Most financially stressed employees’ financial struggles involve short-term needs. In many organizations, change has to start with a fundamental shift to focusing on those employee needs and ways to address them.

Maximize existing data

Before soliciting employees for additional insights into their situations, use the data you already have to fill in some of the gaps of your workforce’s financial story. You can develop more-focused programs that better meet your employees’ needs by understanding and applying available data from your workforce and beyond. For example, recent data shows that 25% of frontline workers are considered financially vulnerable. Combined with the fact that financially vulnerable people spend 14% of their income on debt attributable to fees and interest rates, it becomes clear that frontline employees would likely benefit from debt assistance programs.

Additional data points could include recent reasons for attrition (e.g., employees leaving for a competitor that pays 25 cents more an hour), 401(k) hardship withdrawals, requests for payroll advancements, employees indicating they have taken on second jobs, and high engagement with early wage access solutions. These are all signs that your employees are struggling to make ends meet and need appropriate support before their financial circumstances become an even bigger problem. Sometimes employers miss the implications of these types of readily available data, so make sure you don’t overlook them.

Give employees opportunities to share

Once you’ve embraced a short-term perspective and analyzed existing data, the next step is to identify employees’ immediate needs by collecting meaningful information that can lead to real change.

For example, confidential employee surveys and forums that ask employees whether they would benefit from specific programs like student loan assistance, credit card debt relief, or budgeting support will illuminate particular needs and indicate opportunities to educate employees about programs you offer.

When structuring surveys, it’s important to do so in a way that will elicit actionable responses. Instead of simply asking employees what their biggest financial stressors are, try to get a sense of the exact issues and their weight with questions such as: “If we were to offer the following five financial solutions, rank which ones you would need the most to make ends meet.”

To help further secure your employees’ trust, it’s important to follow through on an action plan from the data. Don’t send out a survey and do nothing; employees need to trust that the results are going to lead to change.

Leaders must also be careful to treat any discussions about financial needs with sensitivity and respect for employees’ privacy, and make a concerted effort to remove any feelings of shame or judgment that employees might feel around financial struggles. Organizations should create safe spaces where employees are heard, valued, and understood without being judged. When sharing feedback via a survey, assure employees that the data will only be used in the aggregate and not tracked to an individual.

People may be reluctant to share feedback initially – explain that you are asking about their challenges so you can create programs that support their needs and ultimately help alleviate the financial stress and uncertainty they face. Open, transparent communication and genuine care will encourage greater insights and help leaders meet employees’ needs more effectively.

Related: Employers, take note: Financial wellness benefits employees really want

Understand the benefits to your bottom line

Again, listening to your employees won’t matter unless you take action based on the feedback you receive. Leaders will boost their own bottom line by incorporating short-term financial assistance programs that address employees’ needs and support their people at every stage of their financial journey.

Companies lose top performers because they can’t afford where they live, or productivity drops because people are preoccupied with more important personal financial worries, like how to feed their kids. Healthcare costs are also impacted if your people can’t afford preventative care or can’t pay for prescription medications. Providing resources that offer solutions for these types of concerns and improve financial wellbeing benefits everyone.

Proper financial care enables your people to get the mental and physical support they need to be their very best at work. Your genuine commitment to providing ongoing resources and robust support will benefit your employees in the short-term and deliver long-term rewards for your company in the form of increased retention, improved efficiency, shareholder value, and a growing bottom line. Transforming your thinking, listening to your people, and understanding the benefits to your company that come with supporting financially stressed employees is a great place to start.

Petrina Thompson, Head of HR and Client Services at Brightside