Financial concerns are Americans' number one source of stress. For employees, financial worries affect their focus and productivity on the job, leading to profitability losses for companies. Employers have woken up to this reality in recent years, and more and more companies are investing in HR benefits that aim to improve employees' financial wellness.
Most financial wellness programs consist of specific services or products that employees can use, but a less costly approach is to fundamentally re-think the role of employees' everyday interactions with HR processes as touchpoints to "nudge" employees toward greater financial health. Much innovation has occurred in HR processes, inspired by behavioral science, to help employees to save for retirement—e.g. 401(k) auto-enrollment.
But redesigning HR processes for financial health has not been fully explored in support of employees' other financial needs, such as smoothing volatile cash-flow, building short-term savings, and paying down debt.
The workplace is a central part of households' financial lives and a natural space in which to build financial health. Beyond its role as a primary source of wages and benefits,the workplace also plays a role in training workers, exposing them to new ideas, and setting social norms. At work, one might benchmark her decisions against those of others and turn to co-workers or HR for help in times of need. HR managers, in particular, are at the forefront of designing and directing processes in which workers make many choices that have broad implications for their financial health. These processes cover the gamut of payroll and HR benefits such as tax withholdings, paycheck preferences, retirement benefit enrollment and decision-making, rights to privacy, mental and physical health benefits and much more.
As a result, employers, benefits brokers, Professional Employment Organizations (PEOs) payroll system providers, and HR consultants are all, whether they know it ornot, powerful architects of employees' financial choices.
Neighborhood Trust's vision is to catalyze innovation at the workplace to help build a financially resilient and secure workforce. Simple changes and tweaks at key stages of the HR process can make a meaningful difference in the financial decisions that employees make. This creates an opportunity for employers to play a more impactful role in worker financial health by defaulting their employees into financial behaviors that help them improve their cash flow, reduce debt and build a foundation for long-term success. Tobring this vision to scale and impact the lives of workers across the United States, designing the workplace for employee financial wellness will need to become a mainstream goal across employers. And, only when employers, service providers and all stakeholders in the job quality movement invest in this vision will we see system-level change.