How companies can help employees under financial stress

Companies have long made employee wellbeing an organisational priority but, until recently, corporate wellbeing programs have tended to focus on mental and physical health. How employees feel about their personal finances is an important factor that is often overlooked.

That is now changing thanks to a cost-of-living crisis across the OECD, and employers are under increasing pressure to address financial stress among employees struggling to make ends meet. 

PwC’s 2023 Employee Financial Wellness Survey found that 60 per cent of full-time employees feel stressed about their finances, with a significant proportion reporting flow-on effects on other aspects of their wellbeing, including quality of sleep, self-esteem and relationships.  

A recent survey by Reward Gateway revealed a similar finding, with 40 per cent of employees reporting feeling stressed, burnt out or overwhelmed, and 53 per cent indicating that stress from cost-of-living increases is negatively impacting their work. 

Financial stress now an issue for employers

Some demographics are feeling the pinch more than others. According to the Reward Gateway survey, those aged between 25 and 34 are the most affected (64 per cent), while sales, media and marketing is the most affected industry (79 per cent).

“Employees in Australia’s mortgage belt are certainly feeling cost-of-living pressure, and when you look at the interest rate rises that we have experienced in this country, it’s no great surprise,” says Kylie Green, managing director of APAC at Reward Gateway. 

 

"Employees may struggle to focus on tasks while worrying about their financial situation. As a result of financial stress, workplace relationships, especially with colleagues and supervisors, may suffer due to heightened stress levels, leading to conflicts and decreased morale within the team."

 

Green says there is a disconnect between employers, who tend to believe they are meeting the needs of their workforce when it comes to financial wellbeing, and employees, who want more support.

“We’re seeing that two in three employees are expecting their employer to address their cost-of-living challenges. They’re seeing it as an employer issue as opposed to a personal challenge,” Green says. 

“The other interesting thing is that one in two employees believe their financial wellbeing should be the number one priority of their organisation. They’re wanting change, and they’re wanting it now.”

Financial wellbeing and staff retention

Dr Connie Zheng, co-director for Centre for Workplace Excellence at the University of South Australia, says research shows financial stress negatively impacts employee mental health and overall wellbeing, leading to increased anxiety, depression and absenteeism among employees. This affects productivity and performance. 

“Employees may struggle to focus on tasks while worrying about their financial situation,” she says. 

“As a result of financial stress, workplace relationships, especially with colleagues and supervisors, may suffer due to heightened stress levels, leading to conflicts and decreased morale within the team.”

The financial wellbeing of employees also plays into the larger issue of staff retention. This is a priority area for many organisations faced with a competitive employment market and an unprecedented increase in the cost of replacing staff. The price tag of hiring an employee is now A$23,860 and time to hire has blown out to 44 days. 

According to Green, rolling out an attractive financial wellness program makes good business sense when one in three employees is looking for new opportunities. 

“One of the biggest challenges we saw coming out of the back of the pandemic was a real limitation in talent scarcity,” she says.  

“A lot of leaders quickly realised that the ability to attract, retain and engage talent is one of the biggest drivers of strategic growth, so anything that can help employees feel connected and engaged will absolutely support the organisation in improving performance.”

Providing financial tools

Financial factors are driving staff turnover. The Reward Gateway survey shows poor pay, a lack of financial, physical or mental wellbeing support and a lack of employee benefits are among the top 10 reasons respondents gave for choosing to leave their jobs.

As this list demonstrates, focusing on employee financial wellbeing offers an opportunity for employers keen to keep talented staff on board. 

Green suggests the first thing organisations should do is undertake a gap analysis to establish how their current financial wellbeing package aligns with or differs from what employees report they need.

Programs should include meaningful benefits and tools for employees across different demographics. For example, benefits such as subsidised childcare or gym memberships will not appeal to every employee.

 

"Employees in Australia’s mortgage belt are certainly feeling cost-of-living pressure, and when you look at the interest rate rises that we have experienced in this country, it’s no great surprise."

 

“Given the breadth of choice, employees at different life and career stages can self-select the financial wellbeing tools that best suit their unique and individual needs, and those needs change rapidly for employees as life circumstances change,” Green says. 

While remuneration is obviously an integral part of the picture, not all support has to be monetary.

“There will always be a lot of requests for salary rises, and that’s not always possible,” Green acknowledges.  

She says employers should consider what tools they have at their disposal to empower employees to take proactive steps to address the cost-of-living challenges they are experiencing. 

“That might be budgeting tools, financial education tools, stress management tools or tools to provide a discount or benefits to employees to help them amplify and stretch their disposable income.”

Zheng says organisations should empower employees to take a proactive approach to their financial situation. 

“Employee assistance programs should include counselling and financial education to help employees manage stress, and provide financial planning services, money management workshops, or resources on budgeting and debt management.”

Green adds that organisations must effectively promote financial wellbeing packages, too. 

“A lot of organisations communicate financial wellbeing strategies during onboarding. However, employees should be aware of how their organisation is providing tools to empower them throughout their employee lifecycle,” she says. 

Green describes middle managers as “the key connection between the organisation’s big picture strategy and employees on the frontline” and says they are critical to this process. 

“Educating and empowering them in the design and delivery of the tools helps organisations create the most impactful solutions for their people.”