Employers are taking action as the personal financial stress of employees spill over into the workplace. Putting financial literacy on a par with education on physical health, employers are using models they already have in place to adopt a more holistic approach to wellness.
The economy may be showing signs of improvement in certain areas, but Mercer’s Annual Workplace Survey shows employees are still not confident about their own situations.
Employers are realizing their employees can’t save for retirement and are struggling to make ends meet when they’re faced with debt, the job loss of a spouse or foreclosure.
Other recent surveys tell a similar story:
• The American Psychological Association’s 2010 Stress in America Survey showed 76% of respondents say that money causes them stress, which also concludes that money, work and the economy “remain the most oft-cited sources of stress for Americans;”
• 59% of employees find dealing with their financial situation stressful, according to the PricewaterhouseCoopers 2010 National Financial Wellness Survey; and
• 43% of employees find it difficult to meet their household expenses each month, the PwC survey also says.
“Employees tell me they make good salaries, but still have trouble making ends meet,” says Mike DiMaio, an independent financial counselor and principal of New Focus NJ, who works with companies like Prudential to provide individual counseling to employees.
The dilemma is as much, if not more, a result of poor long-term financial habits and decision-making as it is a fallout of the recent financial crisis, experts say, but the crisis brought clarity to the issues.
Financial distractions like these play out in workplace absenteeism and tardiness. Stressed-out employees spend an average of about 20 hours a month dealing with their financial problems, according to Mark McAvoy, a member of the Organizational Development Expertise Panel of the Society for Human Resource Management that conducted national surveys with managers.
“This equals about 30% of a 40-hour work week and includes time to go to the bank or call the debt collector from the office.”
And this is bad news for young job candidates: Employees of retirement age are staying in the workforce longer, blocking the way for new talent in many industries, according to McAvoy.
Employees are staying behind the desk longer because they can no longer rely on their 401(k) plans to give them enough money for retirement. “If the workforce can’t retire, then the [retirement] plan isn’t performing efficiently,” says Bill McClain, a principal of Mercer’s Seattle office, which highlights an underlying problem, the lack of good retirement plan benefits recruitment and retention.
Borrowing From a Proven Model
Employers were beginning to see that much like physical ailments, financial stress may be caused by one of many different factors, says Kent Allison, PwC’s partner in charge of the financial education practice. Employers had improved health behaviors over the last few years with proactive, targeted and incentive-based paradigms. Why couldn’t they do the same with financial literacy?
At Prudential, employees had been benefiting from a holistic approach to wellness for “some time,” says Ken Dolan-Del Vecchio, vice president, health and wellness. The company used its Employee Assistance Program, FEI Behavioral Health, to refer employees when necessary to one-on-one financial counseling.
When the financial crisis hit, field and corporate managers reported that there were undercurrents of financial stress among clients and employees. To bring a human element to the crisis for both groups, Prudential made counselors available to help sort out personal financial problems. In April 2009, Prudential took a further step and launched a Personal Budget Coaching program which joins a financial coach with an employee to complete a personal financial analysis and develop a budget.
Personal Coaching Ranks High
While online personal finance tools are helpful, nothing beats personal interaction. “When people have acute distress around finances, it’s hard for them to use online tools,” Del Vecchio says.
A McDonalds USA spokesperson says that it provides all company-owned restaurant employees and some franchisees confidential and unlimited access to professional consultants through McResource Line. Counselors help employees find with credit counseling and debt management and provide information about community programs that offer financial education/assistance.
McDonalds’s is not alone. PwC’s flagship Financial Fitness Assessment for clients and employees is a 10-minute assessment that enables participants to identify specific areas of concern. The follow up provides a personalized action plan, including direction to additional resources like personal coaching. And Mercer partners with a third-party vendor, Financial Engines Inc., thatoffers employees professional management through an advisor representative, or provides a do-it-yourself investment option.
The companies also offer a variety of online tools to help employees navigate the financial waters.
An “Ask the Expert” series that runs in Pru Today, Prudential’s daily in-house newspaper, and its "Myth Debunker" series on Pru Tube, an in-house weekly broadcast, cover IRAs and tax issues relevant to changing legislation.
At McDonalds, an interactive Web site, is available to all employees and is packed with financial tools and resources including educational videos. The application also offers two new iPhone apps: a budgeting calculator and financial football.
“Putting targeted and proactive communications, education and coaching in front of employees when it is most timely and relevant allows for a more surgical approach to addressing an employee's financial needs,” says Allison. “The tactic also increases the probability that employees will indeed take action--and employers will be able to drive desired behavioral change.”