Improving Employees' Financial Wellness: Why It Matters and What Employers Can Do About It

Abstract

Multiple national surveys have documented that the number of employees experiencing financial stress is increasing. This working paper presents an overview of the research literature related to financial stress, how it can affect employee productivity, and real world data regarding the estimated costs to businesses when financially stressed employees are left to struggle on their own. Absenteeism, presenteeism, turnover, and health-related costs can all contribute to reduced employee productivity, and these hidden costs can seriously impact business profitability. Some experts estimate that these combined costs can total as much as 15% to 20% of a company’s total compensation paid to its employees. Reducing these events and their associated costs even by 5% to 10% can result in considerable cost avoidance and cost savings, improved productivity, and increased profitability.

Keywords: Financial Wellness, Financial Stress, Cost Avoidance, Employee Benefits