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In today’s competitive work environment, the well-being of employees is more important than ever. Employers are continuously looking for innovative ways to foster the financial stability and satisfaction of their workforce. Many forward-thinking companies are now adopting workplace emergency savings programs as a strategic initiative to address rampant financial stress among employees.
There are many advantages of emergency savings account (ESA) programs for organizations, including reduced employer costs, enhanced employee retention and engagement, achieving a recruitment advantage, and enhancing brand image.
Emergency savings programs have the potential to significantly reduce employer costs in areas including employee turnover and absenteeism. When employees have access to emergency savings, they're better equipped to handle financial stressors without the added worry of finding immediate funds, helping lead to a more stable and focused workforce.
Recruiting and training new employees is considerably more expensive than retaining existing ones, with the average cost of turnover per employee as high as 33% of their annual salary.
Emergency savings programs directly contribute to employee retention by providing financial stability, one of the key factors in job satisfaction and loyalty. SecureSave found that their emergency savings program customers had a 13% average turnover rate, compared to a 33% national average — leading to a notable decrease in the costs of recruiting new employees.
Financial worries are a leading cause of stress-related absenteeism. A PwC study found that 63% of employees report their financial stress impacts their productivity at work. By mitigating this stress through ESAs, organizations can reduce absenteeism.
One study from Virginia Tech found that employees with high levels of financial wellness had lower rates of absenteeism and were less likely to manage personal finances during work hours. With employees more present and productive, an organization enjoys reduced costs associated with temporary workers and lost productivity.
Organizations that offer emergency savings programs have experienced notable savings as a result. A University of Pittsburgh research study of logistics company Pitt Ohio, which implemented an emergency savings program with its truck drivers, found that the most financially precarious drivers experienced improved driving safety as a result.
Pitt Ohio drivers who experienced financial setbacks were able to avoid additional financial stress by dipping into their emergency savings; and these participants exhibited improved driving performance. This led to reduced accidents and associated damage costs — all while the company spent less than $100,000 total ($119 annually per employee) for the emergency savings program in a year.
Employees who feel financially secure are more engaged and have higher morale. A NFWS study showed that companies providing holistic financial wellness programs containing a savings component experienced a 43% increase in employee engagement.
When employees are engaged, they become more productive — and businesses with high employee engagement levels are 21% more profitable than those with low engagement. Emergency savings contribute to this sense of security and engagement by helping alleviate immediate financial pressures.
When employees experience financial distress, in contrast, it significantly impacts their productivity. PwC found that the majority (53%) of financially stressed employees spend three hours per week on average dealing with personal finances at work—contributing to reduced productivity.
Organizations that support holistic employee financial wellness through initiatives like emergency savings can improve work productivity by up to 40%. When employees feel financially secure, their focus and productivity improve, directly benefiting the employer's bottom line.
Forward-thinking employers are recognizing the importance of offering comprehensive benefits packages including workplace ESAs that prioritize the long-term stability and security of their employees. Emergency savings programs provide a significant recruitment advantage for companies looking to attract candidates who value financial wellness.
Offering an ESA as part of a benefits package signals an employer’s commitment to supporting an employee’s overall well-being, not just their immediate financial needs. Prioritizing employee financial health is especially appealing to younger generations, including Millennials and Gen Z, who face significant financial stressors like student loans and high housing costs.
SecureSave research shows extremely high demand for ESAs, with 90% of employees willing to participate if such a program were available. Plus, 41% said that when looking for a new job, an emergency savings program with employer matching would be more important to them than an employer-matched 401(k).
By offering ESAs, companies position themselves as employers who understand and address workers’ concerns around financial stability and economic uncertainty, making them more attractive to prospective employees. Highlighting financial benefits to job candidates — including ESAs but extending beyond that to financial education, access to financial planning tools, and debt management assistance — can position organizations more desirably in the marketplace.
A company's commitment to the well-being of its employees plays a critical role in shaping its brand image. Workplace ESAs demonstrate an organization’s dedication to employee financial wellness and help position the company as a socially responsible employer. This in turn helps foster a positive workplace culture and influences public perception, attracting potential employees, customers, investors, and partners who prioritize corporate responsibility.
A corporate social responsibility study found that 87% of consumers have a more positive image of a company when it supports environmental or social issues. By prioritizing employee financial well-being through ESAs, companies align themselves with the values of socially conscious consumers and job seekers, enhancing their brand in the competitive market.
From an investment perspective, workplace emergency savings programs can contribute to an organization’s environmental, social, and governance (ESG) scores (with the “S” standing for social) — which are closely monitored by investors. These standards include how a company manages relationships with employees, and an ESA is a tangible demonstration of a company’s commitment to such social commitments.
A company's reputation as a caring and responsible employer can also lead to positive media coverage and enhance its relationships within the community and industry. When an employer introduces a new ESA program, this creates opportunities for positive stories in the media, showcasing the company’s innovative approach to employee benefits and helping cement its reputation as an industry leader in employee welfare.
Understanding the return on investment (ROI) for workplace emergency savings programs is crucial for employers looking to justify or expand such initiatives. Here’s how organizations can measure the ROI of these vital programs.
Turnover is a significant expense for companies, which encompasses costs associated with the recruitment, training, and the lost productivity of unfilled roles. To calculate cost savings from reduced turnover attributed to ESAs, companies can use the formula:
Savings from Reduced Turnover = (Turnover Rate Before ESA − Turnover Rate After ESA) × Average Cost of Turnover per Employee
For example, if a company’s turnover rate decreases by 2% after implementing an ESA, and the average cost of turnover per employee is $15,000 (considering recruitment, training, and lost productivity costs), the savings for a company with 1,000 employees would be:
(0.02) x (1,000) x ($15,000) = $300,000
This calculation provides a clear financial benefit of implementing an ESA, contributing to the overall ROI.
Surveys are an invaluable tool for gauging employee satisfaction and the perceived value of ESAs. By conducting surveys both before and after ESA implementation, employers can measure changes in employee satisfaction, financial stress levels, and their correlation with retention intentions. Questions can address:
A significant increase in employees reporting reduced financial stress and higher job satisfaction after enrolling in an ESA would indicate a positive ROI, as these factors are directly linked to higher engagement and retention rates.
Another method to quantify the ROI of ESAs is by tracking changes in employee engagement and productivity levels. This can be measured through performance metrics, project completion rates, or qualitative assessments from managers. An increase in these metrics post-ESA implementation can be attributed, at least in part, to the program’s financial wellness benefits.
For example, if a department sees a 10% increase in project completion rates 6-12 months after ESA implementation, and no other significant changes were made during that time, it’s reasonable to attribute this improvement to the financial security provided by the program.
Finally, comparing turnover rates, employee satisfaction scores, and productivity metrics with industry standards can provide an external benchmark for the effectiveness of an ESA. If a company outperforms its industry peers in these areas after implementing a program, it serves as strong evidence of the program’s positive ROI.
Investing in employee financial wellness through workplace emergency savings programs transcends immediate benefits, paving the way for long-term advantages that bolster both individual and organizational success. This impact is far-reaching, from enhancing workforce productivity to strengthening organizational resilience during economic downturns.
Perhaps most importantly, by implementing ESAs, employers underscore their commitment to the financial wellness of their workforce, fostering a culture of care and support that resonates deeply with current and prospective employees and creates a more positive brand image.
Quantifying the ROI of these initiatives is a crucial step in recognizing the true value these programs bring to an organization.