employee financial well-being

Presenteeism – /prɛznˈtiːɪzəm/ – noun – the practice of being present at one’s place of work for more hours than is required, especially as a manifestation of insecurity about one’s job.

 

What is Financial Health

For the Indian economy, one can think of financial health as one’s (or the household’s) resilience to withstand and/or absorb financial shocks while continuing to chase his/her life-goals. Inability to nurture and deal with one’s financial health gives rise to financial stress with 53%¹ of employees experiencing financial stress ranging from struggling currently to being extremely worried about future status. This picture only gets murkier when one starts to ask these questions only to the blue-collared and the entry-level employees.

 

Why should you be worried?

More than 50%¹ of your employees are facing high financial stress which gets manifested at your workplace in the form of distraction, less productivity, increased sick-leaves and employee turnover. One study³ reports that financially stressed employees are-

• 2x as likely to report high personal stress
• 1.5x likely to report poor health
• Likely to lose additional 5.5 days of work annually
• 2x as likely to quit for another job with replacement costs being as high as 2x of an employee’s annual salary

From an employer perspective, it is important to identify these “at-risk” segments and understand their urgent needs to help them in a customized manner. It is an even more worrying trend to observe that the financially stressed section is predominantly the younger employees. With the demographic dividend of India booming, India Inc. could potentially be looking at 70% of their employee base being financially stressed and the implications of that could manifest in bearish stock market performance. Beyond presenteeism, financial stress can also perpetuate absenteeism where an employee is more likely to use sick time when not ill. The ones with future worries are likely to delay their retirement resulting in prolonged wages and higher health-care premiums. Persistent financial struggles constrain an individual’s resources and can impede cognitive function, both of which impair decisions and can perpetuate unfavourable financial and physical health situations – which can contribute to insurance claims raising the group insurance costs for an employer.

What could you do?

By committing to employee financial health, there is tremendous opportunity for employers to promote staff engagement, improve productivity, and reduce long-term healthcare costs, among other significant benefits. Addressing employee financial health is also a strategy that strengthens an organization’s employee value proposition. The effort shouldn’t stop merely at financial education without solving the problem for those who are struggling to get by. Hence, access needs to be coupled with literacy so that the employees find products and services that suit them. By being a partner in managing their employee’s financial lives, employers can also impact their retention and positive social image which can prove to be strong levers for sustained competitive advantages.

How do you do it?

57%¹ of employees feel that employers should actively encourage employees to save for retirement while 65% say that employers should take an active role in encouraging their employees to better manage their finances. Financial health is an important framework to consider because it is measurable and focused on impact. Investing in employee financial health means comprehensively serving the financial health needs of workers – across spending, saving, borrowing, and planning – through benefits, wellness programs, compensation, and other policies that employers can offer. Now, investing internally for such holistic financial wellness plans requires considerable investment as well as expertise. To get around that, corporates are increasingly partnering with third party firms who specialize in financial planning and implementation of such plans. However, the challenge doesn’t only stop there. It would, after all, be futile to expect an externality to harvest 100% of your internal capability without your assistance. An ideal financial wellness plan would be one where the employer partners with the third-party firm to launch an awareness and implementation campaign to maximize adoption. For employers to move beyond their conventional role and intervene to support their employees, a one-size fits- all approach cannot be adopted consistently across all organisations as a solution. Instead, employers need to plan their steps and partner with firms who can customise their offerings to different segments within the workforce based on their requirements. A case in point is KaleidoFin – we are determined to be a mass market goal-based wealth manager. One that is convenient and extremely affordable. KaleidoFin understands every person’s cashflow and financial health to recommend customized solutions that is based on each person’s persona and the goal. It also offers intuitive no-question asked liquidity line to prevent minor shocks from derailing one from one’s goals. Additionally, it protects the investor’s goal amount – should anything unfortunate happen to the investor, it will maintain the sanctity of the goal by crediting the investor with the outstanding amount of the goal.