(Editor’s Note: Today’s article is brought to you by our friends at ADP SmartCompliance®, a combination of technology and service that can cover an organization’s compliance requirements. Check out their latest guidebook on “Building an Adaptive HCM Compliance Strategy”. Enjoy the article!)
I regularly read a personal finance newsletter from The Washington Post. A recent one talked about “unbanked” Americans (i.e. people who don’t have bank accounts). While this article was focused on the challenges of unbanked Americans not being able to get their stimulus money in a timely fashion, they had some very interesting statistics about unbanked households.
According to the Federal Deposit Insurance Corporation (FDIC), 7.1 million households don’t have bank accounts. Lower-income and minority populations are disproportionately represented in this number. Nearly 14% of Black and 12% of Hispanic households are unbanked. In addition, the number of unbanked older adults is increasing.
The newsletter reminded me of the article I shared a few weeks ago about “Financial Wellbeing: Employees Want to Decide How They Get Their Pay”. When we talk about financial wellbeing, it’s important to remember equity. Unbanked employees should not be disadvantaged when it comes to getting and managing their pay.
I think that’s one of the reasons that financial programs like ADP’s Wisely® are so unique. It allows employees to get paid the way that they want to. In fact, employees who use Wisely can actually get their pay early and aren’t subject to all of the fees that can come with being unbanked, such as check cashing fees, payday loans, etc. In addition, Wisely doesn’t require or track an employee’s race, income level, or credit score. Its focus is on providing a more equitable way for individuals to manage their finances and build financial wellbeing.
What’s Good for Employees Can Often Be Good for the Company
While financial wellbeing is very employee-centric (as it should be), that doesn’t mean organizations can’t also benefit. Here are three ways that employee financial wellbeing helps the organization.
RECRUITING: In the ADP’s Research Institute report on “The Evolution of Pay”, 84% of employers believe offering financial wellness tools will help attract top talent. Organizations can promote this in their recruitment marketing. It could be a contributing factor to a candidate saying “yes” to a job offer.
The Society for Human Resource Management (SHRM) shared in a recent article that organizations should expect a “turnover tsunami” once the pandemic ends. They cite studies saying this turnover is a result of employee disengagement, burnout, and typical career factors like wanting a pay increase. Even if employers aren’t in a position to offer more pay, this is an opportunity for employers to show that they place a priority on making sure employees receive their pay in a timely fashion and in the method they prefer.
PRODUCTIVITY: In a report from the Consumer Financial Protection Bureau (CFPB), 61% of human resources professionals say that financial stress has an impact on work performance. 57% of employers say financial education boots productivity.
Organizations can include personal finance management tools as a part of the total employee wellbeing package. In “The Evolution of Pay” report, 90% of young Americans say they’re willing to share personal information with a payroll provider in order to obtain money management advice. Including a financial wellbeing component in an overall wellbeing strategy improves employee performance and productivity. It sends the message that the company is aware of employee stressors and prepared to do something about it.
RETENTION: Finally, organizations can use financial wellbeing to improve employee retention. I don’t have to tell you that 1) if organizations show employees that their needs matter and 2) part of that means making sure employees have the tools to meet their financial goals, it goes a long way toward achieving employee retention. This can help organizations make sure they’re not on the receiving end of the turnover tsunami we mentioned earlier.
Financial Wellbeing Programs Don’t Have to be Complicated
Some of you might be thinking that creating a financial wellbeing program is going to be complex to implement and administer. Not true. The Wisely program is enabled for national compliance in all 50 states. HR and payroll departments have an easy-to-use administrative portal that allows them to fund each pay option accordingly. There are also marketing and educational support tools to help with user adoption goals. Organizations can get closer to 100% electronic pay by allowing employees to choose the option that works best for them.
Best of all, ADP’s Wisely can integrate with your organization’s existing payroll technology. Yep, that’s right…you don’t have to leave your existing payroll company.
After all their hard work, employees want the freedom to manage their money their own way. Organizations can do that. They can show employees they care. Offering employees financial wellbeing doesn’t have to be complicated – for the company or employees.
BOTTOM-LINE: When employees benefit, the organization benefits – in recruiting the best talent, in creating employee engagement, in higher productivity, and in keeping talented people. It’s a win for everyone.
P.S. If you want to learn more about how technology can help your organization maintain compliance, check out this compliance strategy guide from ADP. It talks about how to take a proactive approach toward reducing manual-intensive processes.42