At E4E Relief, we recently identified four key areas that are on track to affect business and workforce strategy, as well as corporate sustainability and success. Here’s a look at what you need to know this year.
At E4E Relief, we track financial stability as a key workforce metric because it has a significant impact on other key human capital metrics, including productivity, engagement and loyalty. Research shows financial well-being is struggling. 63% of Americans are living paycheck to paycheck. This includes not just low- and middle-income individuals; 47% of high-income earners report living paycheck to paycheck, as well. The number of employees who would rate themselves as financially stable has dropped by 9%, while those who feel financially unstable increased by 8%. 88% agree that inflation and rising costs of living have notably increased their financial anxiety this year. And 54%of employees say this anxiety has made it difficult to focus at work. On top of that, 41% of Americans have no emergency fund or safety net, and 57% of U.S. adults are currently unable to afford a $1,000 emergency expense.
The lack of a financial safety net leaves many individuals vulnerable to the disasters and hardships that are affecting communities around the world in increasing frequency, which brings us to the next trend impacting the workforce in 2023: climate disasters.
2022 was a significant year for climate disasters in the U.S. and around the world, with multiple one-in-1,000-year rain events, punishing heat waves and devastating hurricanes. And years like that are becoming the rule, rather than the exception. Between 2017 and 2021, there were just 18 days on average between billion-dollar disasters—compared to 82 days in the 1980s. Some 3.3 million adults living in the U.S. were displaced by natural disasters this past year. And vulnerable communities bear a disproportionate share of the burden, often finding it more challenging to recover and too costly to rebuild or retreat.
When climate disasters strike, financial well-being takes a particularly large hit. Individuals impacted can experience a loss of income or work disruption. They can suffer property damage or be forced to evacuate, which now carries a cost of around $1,200. They can experience long-term displacement and, in the most tragic occurrences, the injury or death of a family member, which can exert both an emotional as well as a financial toll.
Another important topic for businesses around the world is the increasing focus on environmental social governance, better known as ESG. While companies have been investing in environmental efforts for some time, many are increasingly focused on the social aspect of ESG, which relates to how companies support the members of their workforce, as well as the communities they serve. This is, in part, due to a recognition of the value of people to the success of an enterprise: In 1975, 83% of the value of S&P 500 companies was tied to the physical assets on those organizations’ balance sheets. In 2015, 84% of the value of these companies was mapped to human capital.
In addition to the increasing value of human capital, workers now prioritize factors such as belonging and inclusion when deciding whether to remain with their company. And 76% of consumers say they would discontinue their relationship with companies that “treat the environment, employees or the community in which they operate poorly.”
Finally, purpose has received increasing attention in recent years as both workers and customers evolve their expectations of companies. Now, 75% of Americans say it is no longer acceptable for companies just to make money. They must positively impact society, too. 74% of investors believe the most profitable companies are purpose-driven, and 86% believe companies should work for the benefit of all stakeholders, not just shareholders. Company leaders have caught up to this shift in employee and customer values: Only 7% of Fortune 500 CEOs believe their companies should “mainly focus on making profits and not be distracted by social goals.”
Fortunately, there are many actions companies can take to address the shifting priorities of the workforce, the increasing impact of natural disasters and the challenges brought on by financial instability. One of those is investing in an emergency financial relief solution. Emergency financial relief helps restore individual financial stability, providing charitable grants to a company’s key stakeholders in times of disaster and hardship. These grants help individuals recover from disaster and hardship and return to work more productive, engaged and loyal. At the same time, an emergency financial relief program allows companies to showcase their commitment to their people and to solidify a culture of caring and support across their organizations. It’s a win for your workforce, your business and the communities you serve.
We recently discussed these trends and more during a free webinar. You can watch any time on demand here.