Employee wellness can pay dividends

Talented workers will be attracted to and stay at firms that offer superior benefits

Nov 9, 2019 @ 6:00 am

By Sandra McCarthy

Ask a worker from generations past about how corporations measure success and they'll likely tell you succinctly: the bottom line. For years, and without question, sales, revenue and expenses have driven the corporate world. These figures aren't going anywhere, but a new way of thinking about the bottom line is emerging, changing the focus to how employees, and their overall wellness, contribute to that bottom-line success.

[More:Bad news for advisers offering financial wellness programs]

By more carefully considering the employee experience, we see that employee wellness positively impacts corporate success through talent acquisition, retention, productivity and engagement. This concept, which benefits both a corporation and its employees, is worth examining.

Let's start with the idea of employee wellness. Traditionally, in the retirement industry, wellness was viewed mainly in terms of retirement readiness — a monthly pension benefit or the amount in a 401(k). More recent ideology has taken this further, expanding financial wellness beyond retirement planning and into health savings accounts, student loan assistance, debt management, financial planning, education and more. By focusing on an employee's comprehensive financial picture, employers not only position employees for financial wellness but overall wellness, as the two are strongly connected.

It's easy to see how this benefits employees, but what motivates corporations to offer this comprehensive support? The reasons are multifold.

[More:Hybrid robo looking to offer financial wellness to retirement plan sponsors]

Not surprisingly, top talent is attracted by superior benefits. As employers look to hire individuals who drive outcomes, total benefits solutions are becoming essential. The notion here is to look at employees, and the way we offer benefits, holistically — meeting employees where they are in terms of financial wellness. This new approach allows us to be multidimensional and consider more than just an employee's age or years to retirement as we offer benefits — instead expanding to look at the big picture of age, gender, geography, savings, deferral rates and major life events.

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Corporations with financially sound employees also enjoy improved retention. Besides the boost in experience that comes with tenured employees, companies can avoid the disruption and cost associated with turnover, which is significant. A Forbes article estimated the cost of turnover at 50% of salary for an entry-level position, 125% for mid-level and 200% for a senior executive.

Increased productivity and engagement result when employers help employees plan for and manage financial worries. An employee's biggest source of stress when they come to work is often related to financial security. Can I afford to pay the rent? How much will my doctor's visit cost? Will I outlive my retirement savings?

Impact on productivity

These questions don't just bother employees at home — they cause distraction and impact productivity and engagement in the office. Data from Willis Towers Watson shows that employees with financial struggles lose 41% more work time due to absence, have lower engagement levels and are less productive, as compared to peers without financial stress.

[More:Levering tech for financial wellness]

In addition, financial wellness may be directly tied to physical and mental wellness — especially in situations where employees aren't financially able to have regular doctor visits or take other preventative health measures. Besides the impact this may have on productivity and engagement, it can ultimately lead to higher health costs for both the employee and the employer, or extended periods of absence.

Sandra McCarthy is president of retirement services, at OneAmerica.

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