Help your employees reach financial wellness: 3 practical tips for HR teams
Do you remember the last time you were short 20 dollars? Or when a pretty big expense like rent or a car payment came up and you weren’t financially prepared? I remember growing up and seeing my parents have to make a choice between having enough food for the family or making rent. This is the reality for millions of workers who have to deal with stressful decisions like this on a regular basis.
More and more, HR and payroll professionals are being asked to do more to help minimize this kind of financial stress where possible at their organizations. It's not just about paying your people a fair wage anymore, providing retirement options, or investing in other attractive benefits. That's all important, sure, but it's also essential — especially with all the added stress employees have been under — to support them in building lasting financial wellness that leads to greater stability in their lives and greater engagement in their work.
So how do we do that? Let's take a quick look at why financial wellness is so important, what kinds of tools exist to help HR and payroll promote it, and what you should be looking to deliver with these solutions.
Why financial stress is a critical issue to address
Financial stress is known to be one of the leading stressors in the daily lives for people, and it’s not something that only affects their personal lives. With life and work blurring together these days, it’s pretty easy for financial stress to trickle into the workplace. In a study commissioned by Visa from 2019, they found that "employees can spend a significant amount of time at work on personal finances." That same research also showed 84 percent of employees worry about finances while at work, which means they’re disengaged and probably not being as productive as they could be.
The call for employers to do more and care more about their employees has reached an all time high as struggles to retain and find talent due to the Great Resignation continue. Financial wellness is an area that can help your people feel secure and make you more attractive as an employer while also driving positive business impacts.
What is earned wage access (EWA), and how can it help?
By now, you’ve probably heard about earned wage access (EWA), a strategy designed to provide employees timely access to pay they’ve earned that's sparked a lot of new solutions in the HR and payroll space. It’s a hot new benefit that continues to garner a lot of interest from many organizations for a lot of different reasons such as:
- Building a deeper and more meaningful relationship with employees
- Keeping employees engaged and happy
- Reducing absenteeism due to financial stress
- Attracting talent with forward-thinking benefits
In a nutshell, employees don’t have to wait until payday to access their pay. Expenses don’t always line up with pay day and addressing the real-world financial challenges many people share more proactively can lead to financial wellness. With EWA, people can simply take care of these expenses in the moment and avoid costly late fees, interest, and predatory loans. Having this kind of independence helps your employees manage challenges in their personal lives more easily, which in turn improves their performance at work — a great example of what we at UKG would call a life-work connection.
So how do I pick the right EWA option for my people?
If you've been searching for an EWA vendor for any of the reasons I just talked about and are getting overwhelmed with what seems like an ever-increasing number of possibilities, let me break it down for you. You'll find most solutions will offer employees access to pay early and have different names related to things like on-demand pay or daily pay. It’s important to keep in mind not all EWA solutions are equal, and each has a different set of features, so it really comes down to asking some important questions about EWA and the benefits you want to provide. There are two important areas you’ll want to focus your questions on:
Business:
- What's the impact on my organization, and what's the level of effort needed to get the solution working?
- Will the new solution require our people management system to go offline to get set up?
- How will payroll be impacted?
- How long will it take to deploy the solution?
- What results will I see from EWA from a business perspective?
Benefits:
- What features beyond paying people quickly does the solution offer to help foster personal financial growth?
- What's the experience of using the solution like? Is it fast and easy?
- Is there a paycard included with the solution?
- Can employees track spending and savings?
- How soon can employees access earned pay?
- What's the cost for employees to join and use the EWA solution?
The 3 EWA must-haves to look for
EWA is something we've been thinking about a lot lately at UKG, and we see it as more than just making money available to your people — it's something that should elevate the employee pay experience and go beyond just the simple words "earned wage access." As impactful as it is, providing on-demand access to pay is just the first step toward financial wellness.
At this point you may be asking "well, what else is there?" The answer is there are three additional pieces that can take the value of your solution further if you find the right partner:
1. Goal-based savings
Things in life are so much easier with a plan and that’s why setting up a plan based on personal financial goals is more likely to be successful. You should look for a solution that allows your people to easily set goals for whatever they want to save up for: college, a gift for mom, or even the vacation they've been planning for.
A strong EWA solution should calculate a person's income and spending, then automatically project how long it'll take to hit the goal they set at the current rate of savings. It should also back those targets up with guidance on spending by adding in the employee's income and subtracting expenses like car payments, groceries, or rent to find opportunities to save more and encourage meeting savings goals.
2. Financial counseling and resources
Employees should have access to all the information needed to learn about personal finance and how it plays a crucial role in the their life goals. Look for options like one-on-one sessions with financial counselors (preferably free) who can help answer questions about different areas of personal finance to get people on the right track.
If you’re an avid reader like me, you’ll also recognize the value of providing personal finance topics curated to help people learn the right habits. Sometimes, all that’s needed is just a simple knowledge drop for people to see how small actions can snowball into a mountain of debt. This is something that your EWA solution should be able to readily provide.
3. Discounts and perks for employees
It doesn't make much sense to help people be fiscally responsible and then expect them to pay full price for things they need. That's why a strong EWA solution should help your employees keep more money in their pockets ideally. Keep an eye out for something like a discount marketplace where employees can compare prices and get savings on everyday expenditures like prescriptions, movie tickets, and other similar items. Having a network of retailers at your disposal to assist employees with these kinds of buying decisions is another huge benefit.
Conclusion: EWA helps transform the pay experience
As your organization strives to become a place where everyone wants to work, transforming the pay experience starts with the right earned wage access solution is a step in the right direction. The solution we've built, UKG Wallet, takes a thoughtful approach to encouraging personal financial growth and financial wellness. It’s a win-win for both you and your employees, helping build happier and more engaged employees looking towards a brighter tomorrow.
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