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With organizations becoming more and more aware of the negative impact that poor financial health has on their employees and their business, financial wellness has become key to retaining and attracting top talent in highly competitive markets.
Employees concerned about their financial situation are twice as likely to experience health issues, have higher stress levels, and have less concentration. Furthermore, studies indicate that more than 40 percent of employees spend at least two hours a week resolving personal financial issues.
As a result, it is to be expected that employees with complex financial situations will be less committed to their work, which directly affects the company’s productivity.
Labor market trends point to a major shift in the mindset of employees, where striking a balance between work and personal life is one of their top priorities. Therefore, employees are increasingly drawn and committed to companies that have a more humane work culture, are committed to their holistic well-being, and focus on their financial stability, since they have endured financial hardship in recent years and the consequences of not having the resources they need to support themselves and their families.
The development of technological advancements, such as salary-on-demand apps that are widely used in Mexico since they were introduced into the market, have provided the tools and applications required to help millions of employees solve their cash flow problems as they try to save for emergencies or make recurring payments. This will allow them to have better control over their finances so they can meet their payment obligations on time and avoid having to borrow from friends or family members, which could damage their relationships, or paying penalties due to defaulting on loans from financial institutions that have high interest rates.
However, now more than ever before, organizations must go further and adjust their value propositions to provide real financial benefits to their workforce in the short, medium, and long term.
One of the strategies they should follow is to offer employees clear resources and guidelines that would allow them to develop healthy financial habits and provide them with specific savings plans to help them achieve their goals. Given that financial matters are quite complex, it is also advisable to provide them with valuable guidance that will help them gain more control over their finances.
Another matter to discuss is the importance of providing employees with customized benefits to address their specific needs. Companies must be able to distinguish the needs of professionals who are new to the job market, those who are starting a family or preparing themselves to pay for their children’s educational expenses, and those who are looking to invest for a not-so-distant retirement.
Companies must leave behind the idea that financial well-being requires isolated measures designed to correct general situations but that fail to consider the specific needs and preferences of each employee.
It’s a matter of privacy
Financial well-being is a particularly sensitive issue, as there could be serious consequences if a company interferes in an employee’s finances. However, while many employees realize that they need help, they have difficulty discussing the matter as they want to protect their privacy and remain in full control of their decisions.
Therefore, it makes sense to take advantage of the innovative solutions offered by companies that specialize in financial well-being services, as they provide a wide range of on-demand advice and benefits that can accommodate the needs of companies and their employees.
These platforms allow companies to offer their employees medical insurance, savings funds, remote and face-to-face medical advice, access to the salary they have already worked (salary on demand), advice on how to manage their money better, loans at preferential interest rates, and discounts in stores, among other services.
The challenge for human resources departments will be to analyze and detect each individual’s needs in a heterogeneous workforce, choose the appropriate tools, and offer a response that will meet the specific needs of each employee. However, technology has multiplied the possibilities for segmentation and communication with employees.
Beyond the need to have sufficient income, financial well-being means learning to manage a personal budget, setting and meeting a series of financial goals, learning to protect oneself from risks and uncertainties, and, to the extent possible, being prepared to deal with unexpected events. In general, having the tools and training to make wise financial decisions.
Regardless of their size, financial problems can become substantial long-term obstacles for both personal and professional growth. By including financial well-being as part of their wellness-centered employee experience, companies can anticipate these obstacles before they become a challenge that could give rise to high staff turnover and talent drain.
Nima Pourshasb is CEO and co-Founder of minu. He has extensive entrepreneurial experience creating and growing technology companies in different countries. He created his first company for Latin American consumers, FormaFina, with offices in six countries in the region. In Mexico, he collaborated at Banco Sabadell as head of personal banking. He was born in Iran, grew up in Spain, and completed his postgraduate studies in London and the US. Follow him on LinkedIn and/or Twitter. The opinions published in this column belong exclusively to the author.