When we meet with CEOs, CFOs and HR Directors we consistently hear what is most important to them in regards to their employees. They are trying to increase productivity, attract and retain talent and improve employee engagement.
Here are a few reasons why an employer should care if their employees are financially well.
This may not come as a surprise but personal finances are a big distraction for employees. According to an “Employee Financial Wellness Survey” by PricewaterhouseCoopers in 2016, 46% of all employees say they spend 3 hours or more thinking about, or dealing with, issues related to their personal finances. If you do the math, that equals 156 hours or almost 20 days of work time per year. With regular education on basic financial literacy topics this number can be reduced drastically over time.
When an employee leaves the company, it costs the company time, money and other resources to rehire for that position. Studies show that replacement costs can be as high as 50%-60% of an employee’s annual salary. This means that if an employee was making a $50,000 salary, it would take $25,000 – $30,000 of time and money to replace them.
Employees leave a job for an assortment of reasons but taking a pay raise tends to be a key factor. By offering financial education for employees, you can help your employees manage their finances through budgeting, debt reduction and savings. This should reduce the chances of that a happy, financially fit employee would leave for another company.
80%+ of Americans are under saved for retirement. 1 in 4 have less than $1,000 in their savings account. Most employees who are not prepared for retirement say they will just keep working. According to a 2014 study from Aon Hewitt, each employee who delays retirement will cost the company an additional $5,000 year in health insurance premiums.
How can you help your employees be financially fit?
Help your employees become financially fit by deploying robust financial literacy education. These initiatives will encourage them to make smarter decisions with their money that in turn will enhance their productivity, boost the company’s bottom line and most importantly have a lasting impact on their overall happiness.
 PricewaterhouseCoopers LLP. “Employee Financial Wellness Survey” (2016): Pg. 8. PWC. April 2016.
 Cascio, W.F. 2006. Managing Human Resources: Productivity, Quality of Work Life, Profits (7th ed.). Burr Ridge, IL: Irwin/McGraw-Hill. Mitchell, T.R., Holtom, B.C., & Lee, T.W. 2001. How to keep your best employees: Developing an effective retention policy. Academy of Management Executive, 15, 96-108.
 “Aon Hewitt Analysis Shows Upward Trend in U.S. Health Care Cost Increases.” Aon Hewitt, Nov. 2014.