Financial Wellness vs. Rooftop Tiki Bar
Business owners spend a great deal of time implementing innovative (and occasionally outrageous) solutions in an attempt to increase revenue and minimize costs. My grandfather’s solution back in the 70’s for building productivity? Bark at his employees to work harder and faster. His solution for cutting expenses? Turn off the heat. Never mind the firm was located in northern Minnesota…
I think times have changed. John Waggoner wrote a report for USA Today outlining the strong positive correlation between companies who treat their employees well and rising stock prices. For example, Whole Foods, Marriott and American Express were 3 of the companies named “Best Companies to Work For in 2013.” All saw returns nearly twice that of the S&P 500 or more.
Why is this? Employees who are happy in their positions stay with their respective firms longer, and they are more engaged in their daily jobs.
The cost of turnover is often underestimated. Consider the costs of recruiting, interviewing and training. Then estimate how much you might spend correcting the inevitable errors made in an employee’s first few months. Is your brand new hire as productive as the experienced employee that he/she replaced? Most likely not. How is turnover affecting the culture in your office? Will more employees follow? Depending on the skill level, the cost of one employee leaving will range from 9 – 24 months’ salary. For an executive paid $100,000 annually, you’re now looking at a $200,000 expense or more.
The problem is that companies can’t all offer free hotel stays to their employees, like Marriott does, as an incentive to stick around. (If that were the case, I’d be spending quite a bit more time in California.) So, the question remains, what is an alternative and cost efficient way to keep employees happy and engaged while at work?
Additional benefits are always great. I certainly wouldn’t say “no” to any more free perks myself. However, donuts every Friday and weekly Happy Hour may not be as impactful as you’d like to think.
Recent surveys are showing the impact that personal financial stress has on people in the workplace. 46% of people reported spending 2-3 hours/week dealing with their personal finances while at work. Annualize that expense, and it’s easy to see how expenses sky-rocket. Not to mention some other adverse effects resulting from personal financial stress are absenteeism, tardiness, and a lack of commitment to the task at hand. People dealing with stress tend to suffer from poor health, fatigue and irritability which all have a direct impact on their productivity. Lastly, no matter how competitive an employee’s pay may be, they will be dissatisfied with their compensation if they are experiencing financial stress, thus more inclined to leave the firm.
What is the best way to solve this problem? If you’ve got several extra piles of money lying around, one option would be to give everyone a 30% raise. A cost-efficient method? Many companies are beginning to offer various financial planning resources as part of their benefit plans. This could include money management, access to a financial advisor, or simply financial wellness seminars. The services are all relatively inexpensive, especially considering the cost savings opportunity they provide. This is likely more manageable than offering a company-wide pay raise. (Although I wouldn’t say no to that, either.)
Your employees will begin to feel comfortable and maybe even excited about their debt repayment plans. Maybe their nerves are calmed, having established a strategy to retire at 60. Regardless of what the source of stress was, your employees will come to work in a different mind-set. Having been able to provide financial stability to their families, your employees will feel a renewed sense of loyalty to your firm. People will be more engaged in their work as their personal finances are no longer such a distraction on a daily basis. With personal finance being one of the greatest sources of stress in our society, financial stability is one of the best benefits that you can offer as an employer (second only to building a rooftop pool and tiki bar).
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