Should business leaders prioritize their employees’ financial health?
The short answer to this question is yes. Your business is only as good as the financial health of those who work for you.
In fact, an employee’s financial health is tied to both their physical and mental well-being. In turn, the state of any of these factors can directly affect their productivity and output at work.
There’s a wealth of psychological research proving these connections. In one study, people diagnosed with either depression or anxiety (or both) were found to be three times more likely to accrue debts. Even those who only experience slight declines in their mental health, before being diagnosable with any mental illness, become more susceptible to financial stress – leading to an even worse mental state.
Understanding these connections entails having an unobscured view of the entire psychological well-being spectrum. Health and illness are at the opposite ends of this vast continuum.
Where you fall in this spectrum depends on a wide range of factors, including but not limited to: overall physical health, nutrition, sleep quality, stress levels, productivity, mood, and the state of your finances.Employee well-being during COVID-19 – What we can learn from behavioral scienceGet started
Any significant drop in even just one of these factors can pull other factors down, and further push you closer to mental illness in the spectrum. In short, finances are inevitably tied to mental and physical health, and vice versa.
It’s doubly important to grasp these connections today, in the face of the overwhelming change and uncertainty brought on by the global health crisis.
This knowledge can not just help you get to the bottom of productivity issues, but more importantly, it can help you pull your employees up in every sense of the word.
As business leaders, the more we take concrete steps to prioritize our employees’ financial health, the more we invest in the future of our respective business ventures. Apart from being a smart business strategy, taking concrete steps to financially help out employees is also not as hard as it sounds.
One of the keys to doing this is through effective communication between leaders and employees. There needs to be genuine channels for feedback so employees can voice out their most immediate concerns – and so leaders can listen.
This mechanism is crucial for any business leader concerned about the financial health of employees. For middle to upper management, it’s important to note that you will get your fair share of both negative and positive feedback.
Both types offer different opportunities for your organization, which is why it’s important to encourage employees to be honest about communicating their needs and concerns.
Apart from knowing about their employees’ financial health, listening to feedback can allow leaders to take action on any immediate problems, which can prevent internal struggles from getting worse.
Through a genuine feedback mechanism, you can glean tons of constructive criticism from your own employees, paving the way for actual programs or policies that can help employees get back on their feet.
Giving free courses in financial literacy, for instance, can do a lot for employees, and this is something that more and more companies have been offering.
Last year, a report found that more than twice as many companies were offering workplace financial wellness programs to employees compared to 2015.
The report found that employees made personal advice the top priority, with a focus on the “availability of financial solutions and services to help with their entire financial lives”.
One aspect of this is how to manage different types of loans. Personal loans can be used for a number of purposes, including debt consolidation, home improvement, wedding expenses, moving/relocation expenses, and even vacation funds. In addition, the site notes how those who take on any type of loans should be aware of the annual percentage rate (APR).
Out of all the numbers employees need to look at when taking out loans, the APR can let them know exactly how much they need to pay for the loan each month, which also means that a fixed APR can simplify and decrease the financial stress related to accruing debts.
Taking on debt intelligently is just one of the many benefits of financial literacy. This type of knowledge may also set employees on the path to putting up high-yield savings accounts and other long-term options that can decrease their overall financial stress and in turn raise productivity. Apart from arming your employees with the knowledge to make the most of their finances, there are more direct ways to help employees.
One CEO raised employee salaries by cutting his own. As the head of web-based credit processing company Gravity Payments, CEO Dan Price first did this game-changing move in 2015 when he read a study about happiness and how added income can raise a person’s emotional well-being.
And in 2019, Price slashed 90% off his $1 million CEO salary with the goal of raising the minimum salary for all his 120 employees up to $70,000 by 2024. With their newfound wealth, over 10% of his employees purchased their first houses while employee 401(k) contributions more than doubled.
As a result of empowering their employees, Gravity Payments is weathering the storm of the global pandemic much better than most other companies.
In a similar move, Yum Brands CEO David Gibbs will reportedly forgo what remains of his 2020 salary in order to pay for employee bonuses. Gibbs’ would have made around $900,000 this year. Instead, his salary along with more corporate funds will be redistributed to pay for one-time $1,000 bonuses to Yum Brand’s almost 1,200 general managers for restaurants like KFC, Taco Bell, and Pizza Hut.
In addition, some funds will be allocated to Yum Brands Foundation Global Employee Medical Relief Fund, which will provide financial hardship grants for struggling restaurant employees.
While these moves may seem extreme for some business owners, it’s undeniable that these businesses are doing what’s right for their employees. And in turn, these businesses can reap the rewards of having a healthier, more productive, and more loyal staff.
Combined, arming your employees with key financial literacy points and giving them the actual money to pull themselves up may prove to be the most historic and biggest steps in your company’s growth and evolution.
As Deepak Chopra once said, “Every time you are tempted to react in the same old way, ask if you want to be a prisoner of the past or a pioneer of the future.”