Keep The Change: It’s Time To Talk About Financial Wellbeing
Australian businesses are doing an incredible amount to support their people. Yoga days, gym memberships, novated leases, salary packaging, learning and development programs, and my personal favourite, bring-your-dog-to-work day.
Aussie businesses are also going above and beyond to implement flexible practices that support staff in living a lifestyle more suited to their personal circumstances.
Aussie businesses care a great deal about supporting diversity and inclusion in the workplace.
But there is a missing piece.
Financial wellbeing is not getting the attention it deserves in the workplace. Traditionally, employers have been reticent to get involved with their employees’ finances, and for too long the employer/employee financial paradigm has consisted of rudimentary value exchange of money for work performed. Arguably this view is: (a) shortsighted, since for most Australians their sole source of income is from their employer, meaning greater importance needs to be placed on this relationship, and (b) deeply misaligned with the in-house chefs and yoga teachers we see supporting our employees’ broader wellbeing. So, in much the same way that Aussie businesses are implementing robust benefit suites, flexible work practices and supporting diversity and inclusion, there is a strong argument to be made that we should also be implementing flexible practices to support financial diversity.
Now, let’s take a deep dive into financial stress.
Today, one in two Australians are living paycheck to paycheck (NAB). This means that many of them fail to make repayments on credit and loans and others fall short on money for household goods, groceries or bills. On top of this, one in three Australians aren’t able to access $500 in an emergency (CBA). There is a worrying and pervasive issue around the financial wellbeing of Australians, and given the research, the arbitrary wait for payday exacerbates the issue for those who can’t access money when it’s most essential to them.
This has trapped many Australians into taking out unnecessary debt due to a lack of financial literacy, savings and access to income when they need it most, which in turn has fueled a thriving payday loan industry to ‘help’ people manage their cash flow and make these immediate payments. There are over 780,000 payday loans taken out each year in this country, 35.6% of which are taken out for one-off household goods. The average household that takes out a payday loan takes out 3.64 per year, a worrying statistic that clearly points to an ongoing debt spiral.
What does this mean for Australian employers? Well, financial stress remains the #1 concern in the workplace, with as many as 56% of workers identifying it as a primary cause or at least a contributing factor towards stress.
Are employees lying awake at night wondering when their next yoga day or massage will be? Probably not. It’s much more likely they are lying awake wondering how they are going to make the rent the next day, pay for their daughter or son’s birthday the day after that, all while their pay only comes through in three days time.
And nowhere is this issue of financial stress more acute than with retail employees. More than 500,000 employees across Australia are employed in casual retail work. Because of the nature and variability of their employment, many of these workers do not have access to comprehensive benefits and also do not have guaranteed work. If you mix the unique challenges that retail workers face in particular with the financial stress that Australian’s face more broadly, and the fact that the retail industry is in the top five industries struggling with financial stress (AMP), it’s clear that many are having difficulties to make ends meet before payday.
A fascinating study conducted by EY concluded that financial stress can cause a person with an average IQ to fall to that of a ‘borderline deficient’ individual. Given the customer-facing requirements of a retail environment, this translates to a real impact on the bottom line as customer service and brand experience declines
However it’s not all doom and gloom, as new financial wellbeing benefits coming to market seek to alleviate financial stress and even address its underlying causes. For example, Earnd is fighting financial stress by providing employees with a suite of tools to reach financial freedom, including:
– Access – allowing employees to unlock their pay on demand and when they need it, thereby providing them with the cheapest and most transparent access to finances for those in a bind;
– Save – helping employees automate savings, so they can build their own financial safety-net;
– Learn – providing employers with a voice around financial stability and employees with tangible and timely content to support their financial wellbeing.
Supporting people in managing the most critical & stressful sphere of their life can have an incredible impact on their personal and professional lives. And this impact creates a ripple effect throughout an organisation, not only with increased staff happiness & productivity but also with retention, and for retail in particular, with shift filling (allowing staff to access their pay on demand can do wonders for filling hard-to-fill shifts).
It’s no wonder that one of the world’s largest retailers, Walmart, has cottoned on to the potential benefit that financial wellbeing products can bring to its people and its bottom line. Walmart has now rolled out flexible pay to over 1.4 million of its employees. Because of this, Harvard decided to conduct a study into flexible pay and financial wellbeing benefits, which found that the solution “shows tantalizing potential for significantly reducing employee turnover and save millions of expense dollars annually at large employers”. The figure that Harvard landed on was a 19% reduction in attrition as a direct correlation of implementation.
It’s time to give financial wellbeing the recognition it deserves in the modern workplace by implementing flexible practices to support it. Some may even say it’s a god-given right…
“Pay them their wages each day before sunset, because they are poor and are counting on it. Otherwise, they may cry to the Lord against you, and you will be guilty of sin.” Deuteronomy 24:15