The Secret Weapon for Employee Retention
With skill shortages and rising recruitment costs, top employers are exploring innovative ways to attract and retain talent. While competitive salaries and traditional benefits are key, evidence suggests that financial wellness programs are emerging as a powerful tool. So why is financial wellbeing support in the workplace gaining importance, and how can it benefit both your employees and your organisation?
The financial stress epidemic
Financial stress is hitting employees hard, across all industries and levels. A PwC survey* reveals a staggering 59% of full-time workers say their pay isn’t keeping pace with rising living costs, with one in three admitting money worries negatively impact their productivity at work. This financial pressure is taking a toll on workplace productivity and engagement.
The impact doesn’t stop there – financially stressed employees are also twice as likely to job hunt (36% vs. 18%)*, meaning improved financial wellbeing can play a critical role in boosting employee loyalty and reducing turnover.
The message is clear: financial wellbeing isn’t a perk; it’s essential for employee productivity and retention.
The impact of Financial wellness on employees
Employees in any company, are typically in one of three groups:
- Outbound – Employees considering leaving the organisation.
- Steady state – Employees happy with their work and plan to stay.
- Inbound – Potential hires considering joining the organisation.
A robust financial wellness program can have significant positive impacts across all three groups.
Reducing Outbound employees: Financial stress affects employees across all salary levels, regardless of their compensation. Poor financial literacy and budgeting skills can lead some to believe that a higher-paying job is the solution to their challenges. However, a well-designed financial wellbeing program can effectively reduce this stress – one mid-sized tech company saw a 15% reduction in turnover within a year of implementing a comprehensive financial wellness initiative! **
Increasing Steady State employees: An effective financial wellbeing program helps counter the “grass is greener” mindset by reducing the appeal of other employers. PwC found that 73% of financially stressed employees consider switching to companies that prioritise financial wellness. By implementing such a program, organisations can boost employee satisfaction by up to 33% and productivity by 44%, leading to lower turnover, reduced costs, and higher output.
Attracting Inbound employees: Over the past five years, company culture, work-life balance, and employee support have become critical factors for job candidates. Employers who show a strong commitment to supporting employees beyond the workplace are more likely to stand out as employers of choice. In fact, 72% of employees consider financial wellness programs essential to job satisfaction, according to the Employee Benefit Research Institute—a statistic too significant to overlook.
Investing in a financial wellness program isn’t just a way to support employees—it’s a strategic advantage in today’s competitive job market. With the cost of replacing an employee reaching up to 50% of their salary, retaining talent has never been more important. Financial wellness programs not only reduce turnover and improve satisfaction among current employees but also make your organisation more attractive to top talent. In a world where skilled workers are in high demand, prioritising financial wellbeing is a cost-effective way to enhance employee loyalty, boost productivity, and solidify your reputation as an employer of choice.
For more help with your financial wellbeing program, look out for our forthcoming guide to implementing a successful program.
Sources:
* PwC’s 2023 Employee Financial Wellness Survey
** Close Brothers Financial Wellbeing Index 2023
*** Lyra Healthcare: The Value and Impact of Workforce Mental Health
