Financial wellness: How HR can step up and ‘be deliberate’

In a new year that’s started with some grim predictions about the U.S. economy, and an era when viewers are blitzed by financial offers when they turn on the TV or log onto the internet, who can the American worker trust for advice about their money problems?

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How about their employer?

“[Employees] are being bombarded by ads—by outside financial advisers and planners, or maybe what their friends or relatives are advising,” says Fred Thiele, vice president for global benefits and mobility at Microsoft. “But let me tell you why I think corporations are uniquely suited for this task: I think it’s because of the credibility that we have with employees.”

Fred Thiele, Microsoft
Fred Thiele, Microsoft

Thiele says the Seattle-area-based tech giant has made it a priority for nearly a decade to view the financial wellness of its employees as equally important to their physical and mental health. It does so through an array of benefits packages—everything from retirement support to reducing medical bills and college loan payments to financial education programs and occasional nudges about ways to invest or save.

Many other companies are now catching up, especially after the drawn-out pandemic triggered a new wave of stress for the average worker—not only about their health but about their wallets. Predictions that 2023 could bring another recession—economists are mixed about the short-term forecast—have only heightened the need for HR to help make financial wellbeing an in-house corporate concern.

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Getting ahead of a crisis

Although price increases have cooled slightly, inflation still remains at its highest levels in roughly four decades, with sticker shock over the cost of everything from gasoline to eggs. Big-city rents have also soared to record highs, and student loan repayments are likely to resume this year.

Yet, more than 80% of U.S. workers have less than $500 in emergency savings, according to a mid-2022 survey by the firm Branch, with nearly half of respondents having no nest egg at all. That risk is causing more HR departments to amp up their efforts around financial wellness, amid a realization that anxiety over money too often creeps into the workplace. Some studies have suggested as many as 60% of workers link economic worries to reduced performance at the office—at a cost to corporations of as much as $300 billion.

Those impacts are driving home a broader understanding of employee health.

“We’ve looked at holistic wellbeing to cover three parts,” says Microsoft’s Thiele, who will present a session titled “Microsoft’s Template for Workforce Success: Holistic Well-being Support” at HRE‘s upcoming Health & Benefits Leadership Conference. ”That’s your physical wellbeing, which would be covered by the health plan; your financial wellbeing, which has several lanes; and then mental, social and emotional health.”

Hear from companies doing leading-edge work on financial wellness at the upcoming Health & Benefits Leadership Conference, May 3-5 in Las Vegas. Click here to register.

Although Thiele says Microsoft has “been at this [holistic approach] for a while,” the increased focus from HR leaders on the financial wellbeing of their workforce is something of a change from past thinking. Previously, it was seen as more appropriate for outside players like banks or—in a time of extreme crisis like 2020’s COVID-19 lockdowns—the government to assist employees during a personal financial crisis.

“Employers have these superpowers,” says Akesh Sarkar, the CEO of Salary Finance, a company that aids workers in both the U.S. and the United Kingdom with financial tools like paycheck-based savings plans or low-interest loans. He specifically singles out the ability of companies to reach the workforce through payroll service or other benefit programs that provide speedier and lower-cost help than the red tape of the outside world.

HR leaders acknowledge the best way to prevent workers from suffering a financial emergency is by offering the kind of benefits that help prevent a crisis from happening in the first place. At Microsoft, for example, Thiele says the company doesn’t only offer some of the best traditional benefits in the technology sector—a 50% corporate match for 401(k) plan contributions, health savings accounts and the like, for instance—but also provides an annual $1,500 Perks Plus account for personal matters like hiring a financial planner or paying down student debt.

See also: Stressed workers? Look to a financial wellness ecosystem

Increasingly, firms are also looking toward new technology to keep workers informed about such plans and to identify potential future pitfalls. Jennifer Kraszewski, vice president of human resources for HR tech vendor Paycom, says state-of-the-art tech “creates a sense of transparency, which is what people are looking for from their employers in today’s world of work. The right HR tech allows companies to meet and serve the needs of their employees to keep them engaged and motivated.”

Not surprisingly, she touts Paycom’s own Beti software, with a feature that allows employees to spot and hopefully correct payroll errors in advance, as a way of reducing stress. Microsoft’s Thiele says his firm is leveraging tech by targeting specific workers with email alerts when they’re not taking advantage of a benefit—for example, an over-50 employee not making “catch-up” contributions to their retirement plan—to make sure they know about all their options.

Embracing proactive leadership

In today’s financial environment, it’s critical for HR leaders to stay on top of new money-related issues as they bubble to the surface. Only in recent years have companies begun to pay more attention to the stress caused by America’s student debt bomb as it’s grown rapidly to a whopping $1.75 trillion, affecting some 45 million—mostly young—workers, At Microsoft, Thiele notes the company not only offers a program that can help eligible workers lower their interest and monthly payments, but it has also been stressing a recent tax-law change that exempts loan repayments through the Perks account.

Related: Why this accounting firm has rolled out 2 dozen benefits since COVID

HR is also best situated to connect employees to financial education, says Salary Finance’s Sarkar, either through in-house or online events like seminars or instructional videos, as well as through regular communications. Experts say these programs work best in tandem with a workplace climate in which workers feel comfortable discussing personal financial matters—with each other on in-house chat boards or even with their supervisors during a time of crisis.

“Two words: Be deliberate,” Thiele says. “Don’t be accidental about it. Don’t lay benefit programs out there and say, ‘We did our part. Let them figure the rest out.’ ” That, he adds, is because employee benefits that boost financial wellbeing help both the employee and the company. “You put benefits out there to be utilized, not for window dressing.”

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Will Bunch
Will Bunch is a freelance writer based in the Philadelphia region who writes on human resources and other business topics. He can be reached at [email protected]