There’s a clear and meaningful correlation between employee engagement in their financial wellness benefit and retention.
For organizations struggling to keep their top performers, here are some daunting numbers that equate to costly turnover from a recruiting, onboarding, and retention perspective: 51% of employees are actively searching for a new job and 3.2 million U.S. workers leave their job each month.
Not included in these sobering statistics, yet equally impactful, is the loss in productivity while newly-hired employees get up-to-speed, and from existing employees, preoccupied by stress, who have mentally checked out long before they physically leave.
Stress is the number one reason for employee turnover, and with the economic impacts of the pandemic, a lot of Americans’ stress is related to their finances. 61% of Americans are going to run out of their emergency savings in 2021. With compounding challenges over the past year, employees are searching for the best way forward for themselves and their loved ones which for many equates to finding a new career path.
HR managers can spend hundreds of hours annually managing employee turnover. If they aren’t able to address retention and turnover, the morale and productivity of the entire organization is affected. Even satisfied employees start to wonder if there is something better out there. Are they missing out on better benefits? Employer-sponsored programs? Improved work-life balance?
With the exponential growth of virtual and remote work providing new opportunities outside the previous boundaries of locale, employers are facing even greater competition as employees consider a spectrum of viable career options no longer requiring relocation.
The pandemic has brought to light the importance of healthcare benefits; that alone is driving employees to seek more stable jobs with the best benefits they can find. 88% of employees would consider a lower-paying job with quality health benefits. Outside of the standard benefits offerings which are also gaining much more attention from employees, they’re looking for unique benefits that will improve their quality of life.
We know financial wellness programs can significantly impact not only an individual’s financial health, but their mental and physical well-being. Happier, healthier employees are more productive at work, able to focus on the task at hand, and have the mental capacity to make smart, informed decisions when it comes to big life decisions.
A recent research study conducted by FinFit produced some interesting data on payroll, employment tenure, financial transactions, program engagement, and behavioral modification, which showed a clear and meaningful correlation between employee engagement in their financial wellness benefit and retention.
The retention analysis was conducted with data from 2018-2020 using a random sample of more than 14,000 employees. Given the diversity of employment environments across industry verticals, further analysis was then conducted for all major NAICS codes. When organizations offered a financial wellness program, it was found that:
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18.8% increase in retention across salaried and hourly employees
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$1,855 annual turnover cost-savings per employee*
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Nearly $2 million saved annually for every 1,000 employees
Financial wellness programs have a direct impact on improved health and well-being, which leads to decreased stress levels, lower healthcare costs, and more employees focused on their work. 60% of employees say they are more committed to their employer and more productive at work when their employer demonstrates a commitment to employees’ financial wellness.
*The per employee annual turnover cost-savings varies by industry and is based on a percentage of annual compensation, modeled at 136% for salaried and 60% for hourly positions. This analysis is based on an equally weighted average of nine research models, proposed by HiringSmart, which include: Society for Human Resource Management, Coca-Cola Retailing Research Council, Cornell University (two separate studies), Alaska State Legislative Update, Hay Group Study, Workforce Magazine – Survey on Employee Turnover, Saratoga’s HR Financial Report, and Bliss & Associates Inc.
By David Kilby