In The Media, Financial well-being, Human resources

How to support employees through personal financial challenges

In parts of the United States hit hard by natural disasters, people are facing a new challenge: the loss of insurance. Over the past several months, multiple insurance companies have announced they will no longer offer new policies in disaster-prone states, citing the need to manage risk amid the rising costs of climate-related disasters and construction.

This loss of insurance comes at a time when individual financial well-being is already struggling. A recent LendingClub survey found that 61% of Americans are living paycheck to paycheck. In addition, 57% of Americans feel their emergency savings aren't sufficient, and a Betterment at Work survey showed that 41% of individuals report having no emergency fund or safety net at all. This financial instability is having a direct impact on individual well-being. Most people say their finances cause them anxiety, even leading to a severe or major impact on their mental health.

On top of that, facing natural disasters also impacts mental health. The American Public Health Association found that around 54% of adults suffer depression after experiencing a disaster. When you compound those negative effects with a loss or lack of insurance, the impact is likely to multiply.

These Financial Struggles Are A Human Capital Concern

While the business risks to insurance companies are real, so are the risks to disaster-impacted individuals who need insurance as a lifeline. In the wake of unprecedented challenges, insurance provides individuals with the financial ability to recover and rebuild. Without it, they face an uncertain future, which can impact every other aspect of their lives, including their work.

Employee financial instability, no matter what the cause, has a direct impact on the organizations these individuals serve, with tangible effects on engagement, productivity and retention. According to the Betterment survey, more than half of employees said financial anxiety has made it difficult to focus at work. A 2023 PwC survey found that financially stressed employees are twice as likely to leave companies than their financially stable peers. This is also affected by whether employees feel their current company cares about their financial well-being, with 76% being more attracted to companies that do.

Those issues likely amount to significant bottom-line impact. Globally, the annual cost of lost productivity and turnover in the United States is $322 billion, and disengaged employees cost companies between $450 and $550 billion a year.


Providing Support To Financially Stressed Employees

In the face of all this, what can HR leaders do? Here’s where you can start.

Assess your current well-being programs.

Many companies have implemented programs to support the financial and emotional well-being of their workforce. As threats to well-being, like this insurance loss crisis, accumulate across many aspects of life, these programs require constant innovation and evolution. Determine whether your company's well-being programs and benefits are being utilized and/or whether they're working.

Consider asking others in your field or industry what has worked with their well-being programs and why. This strategy provides you with real-world insight, which can help you assess how new programs will work within your organization.

Understand your workforce's demographics.

It's important to understand what factors impact your workforce's financial and mental well-being. Collect and study data about the age, marital status, income and caretaker status of your employees, as well as their vulnerability to hardships or disasters. You can collect this information efficiently with brief electronic surveys. You can also utilize company employee resource groups to collect information and feedback.

Ask your employees what they need.

Though it may sound simple, this is a crucial and often overlooked step among HR leaders. A recent survey found that nearly four in 10 employees don't feel their work-sponsored benefits package is strong enough. In the same survey, 66% of respondents believe employers are responsible for ensuring employees are financially secure and well.

Ensure accessibility and communicate the program benefits.

Every member of your workforce should be able to access your programs and benefits. Consider any barriers and work on removing them. Then, share success stories to increase awareness. After all, even the best programs are only worthwhile if your workforce knows they exist and understands how to access them.

A commitment to communication also helps foster a strong culture within your organization. Employees understand how you’re working to support them, which can build loyalty over time and increase retention.

Whatever the right solution for your business, human resources leaders must understand the diversity and intensity of financial challenges facing the workforce today. With that information, we can build a stronger, more resilient and more satisfied workforce for the future of our organizations and our global community.


This article was originally published on Forbes. To read the original article, click here.

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