Nima Pourshasb
CEO
Minu
/
Startup Contributor

Your Employees’ Financial Wellness Is Your Company’s Wellness

By Nima Pourshasb | Tue, 12/07/2021 - 17:15

Employees today face multiple challenges, both professionally and personally; however, regardless of their age, profession, or the stage they are in their life, financial stress consistently reigns over a vast majority of them as they are unable to meet their recurring commitments or lack the necessary resources in the event of a financial setback, which could affect both their physical and mental health and, therefore, their performance at work.

We know that there is a direct correlation between financial and emotional health since personal finances are a very delicate and important matter that deals with the construction or preservation of a nest-egg and future well-being. For many, it is practically impossible to reach the end of the month in the black. This inability to balance income and expenses, coupled with concerns about a lack of cash flow to meet their commitments, has led to problems such as stress, anxiety, guilt, or depression, affecting their lives in countless ways.

As a result, in a time of global financial recovery and in the wake of the ongoing health emergency, the concept of financial wellness takes on great significance and entails a great challenge for organizations.

Quantum Talent’s study, Base of Productivity, found that Mexican companies that require a large employee base, such as the retail, mass consumption, or financial services industries, experienced a 4-11 percent decrease in productivity as a result of high turnover rates. Another study conducted by Bersin and Deloitte revealed that the costs associated with the process of replacing midlevel employees (after adding the hiring value, interview process, training, opportunity costs, and downtime for the vacancy) could represent 400 percent of the monthly salary for the company.

According to the Society of Human Resource Management, 83 percent of human resources department employees state that, in addition to affecting their employees' ability to concentrate, financial problems could be detrimental to their health, causing absenteeism and high turnover rates, which could, therefore, give rise to significant financial losses for the company.

Empathy and Support

Improving an employee's financial condition not only involves taking action in terms of their salary but also helping them meet their personal financial needs. Therefore, more and more companies are introducing different financial wellness programs for their employees.

These programs are a trend that is gaining strength in various countries around the world, including Mexico, and highly appreciated especially by millennials and young people who belong to Generation Z.

Non-economic remuneration that contributes to the integral well-being of collaborators, also known as emotional salary, makes employees happy and causes their productivity to rise, in addition to reducing days lost due to non-fulfillment of goals. At the same time, it minimizes absenteeism due to work disabilities and personal problems.

These benefits include flexible hours, home office, professional training, days off, leisure spaces and comprehensive health programs. Especially noteworthy are the benefits that seek financial well-being, highly appreciated in this time of crisis, ranging from personal finance courses, personalized advice and reward systems that promote savings, to salary apps on demand, which allow employees to access their salary already worked at the moment they need it without having to wait for the payroll and with it, have the necessary liquidity to meet their commitments on time, in addition to avoiding debt due to loans conditioned by high interest.

However, as more companies add increased benefits, the question remains: How can companies know if these benefits are paying off for them?

When it comes to financial wellness, one of the best indicators to know how much employees value these benefits is their commitment to their organization; therefore, it comes as no surprise that one of the main reasons employees decide to leave a company is precisely their lack of commitment, as well as a lack of commitment from the company with the employee. Employees who feel that their company cares about their well-being will undoubtedly feel a strong bond and will put their best foot forward.

Work relationships, like personal relationships, must be nurtured daily and are a two-way commitment, where both the employee and the employer must make an effort and where the human resources departments are key to detecting and addressing the concerns and needs that may arise in these processes.

Therefore, it is important to foster this commitment, beginning with a holistic and integrated program led by human resources departments that guide and inform their employees of the advantages of having a financial wellness program in the company.

In other words, it is not just about offering a financial wellness program but, rather, generating a culture of financial education that provides a roadmap aimed at improving employees’ knowledge and habits to empower them to make more informed decisions to support their wellness and help them manage their resources. When employees understand and capitalize on these benefits, they feel more confident to take charge of their circumstances, which translates into greater productivity and commitment to the organization. A financial education culture is important to both companies and employees, and it is based on the commitment and participation of all those who are involved in pursuing their well-being. As such, today more than ever, companies must support their employees in maintaining good financial health, training, and providing them with practical advice to prevent indebtedness, including specific information on how to create a budget so that they become aware of their income and expenses, take control of their resources, and avoid spending more than they earn. 

In the end, it is clear that good financial wellness will reduce absenteeism and improve productivity.

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 did his postgraduate studies in both London and the US. Follow him on LinkedIn and Twitter. The opinions published in this column belong exclusively to the author.

Photo by:   Nima Pourshasb