Many walks of life
As a college education has become an essential prerequisite at many workplaces, people from a variety of backgrounds have sought higher education credentials. Combined with ever-increasing tuition costs, more employees today not only enter the workforce with student debt, but may still carry that debt decades into their professional lives.
A credit check may be a standard practice for some companies and organizations. If the credit check is being used to weed out applicants that carry a lot of debt, then it may be counterproductive. With the cost of education requiring people to take out significant student loans, employers need to adjust their hiring practices to reflect new financial realities.
A workplace that cannot make accommodations for employees with a variety of financial situations will miss out on a large section of the talent pool. Many organizations have discovered the value of diversity in the workplace when it comes to gender, ethnicity, and life history. When a company provides workplace financial wellness resources, they allow themselves to be more supportive of diverse financial positions as well.
Financially well employees
Financial wellness doesn’t necessarily mean being free of debt. A financially well person is financially savvy and can manage their financial situation, even if it includes payments on loans or debt.
The benefits of having a financially well workforce are numerous. Financially well employees report lower levels of stress and fewer health issues. For an employer that provides health care to their employees, a financially well workforce can help reduce overall health care costs for an organization.
A financially well employee is half as likely to miss work as an employee with high personal debt. Devoting resources to workplace financial wellness can reduce absenteeism and increase the amount of productive work days for each employee.
When at work, an employee that is financially well is less likely report being distracted from their job. Although it may seem that needing money to pay off debts will make an employee work harder, research has shown that over a third of employees find themselves distracted while at work due to financial struggles. Resolving a difficult financial situation does not necessarily act as the motivator it may be assumed to be, and in fact may sap productivity.
How employers can increase financial wellness
The world of personal finances can be hard to navigate alone, and the stigma attached to debt can stop people from finding the best solutions to their financial burdens. One of the simplest methods to increase workplace financial wellness is through employer provided classes and coaching sessions. These classes may be general financial wellness classes that seek to increase financial literacy for employees. Helping an employee understand how personal finance works, and the specific language used in financial discussions, can reduce the amount of mental space an employee must spend learning these skills alone.
In addition to general financial literacy, workplace financial wellness education can highlight opportunities and benefits the organization itself provides, such as 401k plans to help save for retirement and employer child care benefits. Some employers help their employees consolidate their debts or offer tuition reimbursement. Considering the amount of personal debt that is due to student loans, a company can make a significant impact on their workplace financial wellness by helping to eliminate employee student debt through an employee tuition assistance program.
Benefits for the employer
Employers that implement workplace financial wellness programs report a number of benefits for their company. Most employers surveyed that have implemented workplace financial wellness practices report increased loyalty from their employees. There may be tax benefits for the employer as well. When an organization provides an employer educational assistance program that includes student loan repayments, the first $5,250 of loan repayments can be counted as a tax credit for the employer. Employers also report a net increase in job satisfaction and productivity from their workforce, as many of the negative associated with low workplace financial wellness are mitigated.