How Important is a Financially Empowered Workforce for a Successful Business?

Financial wellness is steadily gaining recognition as people become more aware and thoughtful about financial literacy and stability. Financial wellness has become paramount with rapid advancements in both personal and professional spheres.

Financial expert Dave Ramsey once said, “Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make so you can give back and have money to invest.” Today, financial wellness is not just about employees thinking about saving and investing but also about how employers contribute to financial wellness programs for their employees.

Importance of Financial Wellness

Financial wellness is critical in fostering a thriving workforce in today's dynamic and rapidly evolving business environment. The financial well-being of employees has never been more important. While many understand financial wellness, knowing how to achieve it is challenging. Whether it's raising awareness among employees or comprehending what it takes to be financially fit, organizations need to strategize to ensure the financial well-being of their workforce. Implementing effective financial wellness programs can significantly manifest employee productivity, morale, and financial health and boost organizational success.

Financial wellness is one of the fastest-growing benefits globally and is becoming increasingly common. This blog discusses diverse perspectives and understanding of financial wellness from industry experts, exploring strategies they follow to empower their workforce financially and what they think should be done to help employees thrive in the dynamics of economic health.

To spread awareness on financial well-being, SHRM hosted a webinar with Senda, a financial wellness platform, to capture insights from industry leaders on financial literacy and its importance in the workplace. 

Financial Stress

Financial stress is a common issue when it comes to financial wellness. The Indian workforce mainly consists of young employees, a mix of millennials and Gen Z. Many are early in their careers, and financial literacy is an excellent way to help avoid financial mistakes made by previous generations.

Interestingly, a survey highlighted that employees are worried not only about their future but also about their present. Many are worried about their retirement, buying a home, or even funding education, and they struggle to save monthly. They fear they won't be able to manage financial emergencies, leading to requests for advances from their employers. Given India's young retirement age, this seems understandable. Many employees worry about their monthly expenses and their future, a problematic combination that impacts attrition. Rising city rentals and living expenses also contribute to financial stress, leading to a desire for higher salaries to meet lifestyle aspirations.

Employees understand what financial wellness means—the effective management of their money across all aspects of life. However, they often lack the knowledge on how to achieve it. Here, it's also important to assess whether the benefits offered by employers are helping employees feel financially secure. If employees feel insecure or perceive their lives as average, even the best salaries and benefits may become irrelevant.

Challenges Faced by Employees and Organizations

Employees often face numerous financial challenges, such as managing monthly expenses, saving for emergencies, planning for retirement, and buying a home. These challenges can lead to significant financial stress, affecting their productivity and retention. On the other hand, organizations may believe they are providing adequate financial support. Still, there is often a disconnect between what employers are offering and what employees feel they are receiving.

Impact of Financial Wellness on Employee Retention and Productivity

Financial stress can have a profound impact on employee retention and productivity. Employees who are financially stressed are more likely to be distracted at work, less productive, and more likely to leave the organization in search of better financial support. This creates a paradox where employers believe they are doing enough, but employees still feel unsupported. Addressing this gap is crucial for creating a thriving workforce.

Final Thoughts

Both employees and employers have roles to play together. Employees expect help and support from employers, and employers, in turn, seek engagement from employees. An employee-employer paradox exists in this financial wellness world: employers believe they provide enough financial help and resources, while employees feel they are not getting adequate support. When employees struggle to meet monthly expenses, it drives economic decline, reduced sustainability for employees and their families, and negative repercussions for employers, which remain hidden, such as decreased productivity and increased attrition. Requests for advances, a preference for remote work, and moonlighting often stem from financial insecurity. This is a real problem hidden beneath the surface of organizations. It's time to address and solve it with strong scientific data rather than just a token effort.