5 questions about financial wellness

How does an employer benefit when employees are financially healthy?

5 questions about financial wellness

Many Canadians feel overwhelmed by their debt, and many are losing sleep because of financial worries. That’s not good for business.

Canadian HR Reporter spoke with Karim Nanji, CEO of Marble Financial in Vancouver, about how encouraging employee financial wellness can benefit employers as well as employees.

Q: What does financial wellness mean?

A: “In its simplest terms, financial wellness is just being able to effectively manage your economic life and being able to meet your current and ongoing financial needs. It's also a mindset, feeling secure about your financial future and being able to make the choices you want to enjoy your life.

”When we say things like ‘economic life,’ it’s with respect to your own specific life but keeping spending within your own means, being financially prepared for emergencies, and having the confidence that you can meet those emergencies, and then [it’s about] financial literacy, being educated, having information and the tools necessary to help you, and having some sort of plan for the future.”

Q: Why should employers and HR professionals be concerned with the financial wellness of their employees?

A: “Financial stress is one of the major drags on employee productivity in the workplace. It's a big driver towards absenteeism. Why it's important to employers is because it translates into dollars and lack of productivity. When we're looking at the cost of retraining employees or they’re asking for a raise, rather than being able to source the problem, it leads to higher benefits costs in general. So a company with around 200 employees, it can work out to thousands of dollars per employee per year.

And it's a big impact on the culture of the organization. Benefits programs for employees are typically suited towards medical and physical issues, but financial wellness never gets in there and it's the big driver to both the physical and the mental wellness of the individual in the workplace.”

Most employees believe that an employer-sponsored financial wellness program would positively impact their financial stress, according to a survey.

Q: How can an employer benefit from employees who are financially healthy?

A: “Employees in a good place financially are not spending a lot of time during work hours dealing with that bounced cheque or trying to figure out how they're going to get the car fixed. When you have a culture that is focused on financial literacy, helping the employee understand what they can do and teaching them with programs in the workplace, you have a culture that is focused.

“An employee that is not losing sleep is coming to work more energized and productivity levels typically go up while absenteeism is lower. It translates to higher productivity, better culture, fewer dollars spent by the employer.”

Q: How do employees who are financially unwell impact their workplace?

A: “A lot of times they're disgruntled, they're missing work, or they’re spending time in the workplace calling their bank; there are arguments in the household over bounced payments or not being able to pay the rent, and these are significant distractions in the workplace. Typically, with disgruntled employees, there's a higher rate of resignations. Employers are constantly faced with, ‘I need more money, I need a raise.’ The root of the problem is not being solved and it directly impacts mental wellness.

“So it's very important for employers to understand this and provide programs not just with benefits, plans for health like a gym membership, but understanding that providing programs, lunch-and-learns, webinars, things of that nature, for the employee to let them know that the resources are available in order to help them cope and plan based on their goals and needs.”

The number of employers who feel extremely responsible for the financial wellness of their workforce has risen steeply in the past decade, a U.S. study has found.

Q: How can employers encourage financial wellness?

A: “[Offer] programs that help them budget and teach them the importance of debt management planning. A lot of the issues that we're dealing with related to financial stress is because Canadians carry a lot of debt. A lot of employee benefits packages provide employee assistance programs, which is obviously positive, but it requires the employee to have to pay for something.

Subsidizing some of these costs and providing experts or programs where they're educating the consumer and giving them programs on how to improve, that is very important for the employee because the employee also looks at the HR manager or the employer to be able to provide access, regardless of how many dollars you have in the bank account. We're typically financially illiterate about those things that impact our financial wellness.

Karim Nanji

“Ask more specific questions because the younger workforce has different issues. The younger workforce is coming in with a lot of student loans and nobody teaches the impact of credit. When I'm talking about credit, specifically, it's because Canadians borrow a lot, and carrying a lot of debt and being unable to make payments impacts your credit, which makes it harder to get low interest rates from major financial institutions. So you're forced to deal in alternative finance, which is a lot more expensive and very challenging to get out of.

“A lot of people want help, but they don't know how to ask for it, and a lot of people are embarrassed about their situation but they don't realize that there's a lot more people in the same boat than there once was. They just need to have that ‘Aha’ moment, and having access to professional advice that can help in areas like not only savings, but insurance, tax planning, all these things is very important.

“Financial stress is causing a lot of illness in the workplace, both from the mental perspective and also on the physical side. With employee benefits, you include smoking cessation, drugs, and different things to prevent physical illnesses, but not enough focus is on financial wellness.

“It's very encouraging to see that HR managers now realize that they are looked upon as the one-stop shop and where the buck stops, and that they are actually moving forward to provide something. It’s not just the issue of caring about employees and the culture, but there's a tight association with dollars lost in terms of productivity, employees leaving, turnover, disgruntled employees, poor relationships, mistakes in the workplace, all these things.”

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