Employee financial well-being is a vague term, but it can be broadly interpreted in terms of well-being or comfort with money: the extent to which an employee perceives that, given their circumstances, there is a sufficient balance between the money they have, the money they earn and the money they need. This makes them feel reasonably well off financially, preventing friction in their daily life and their relationship with the company due to the economic factor.
What is employee financial well-being?
Financial well-being is a subjective experience that occurs when people perceive a correlation between the money they have and the money they need to meet their various needs.
Is employee financial well-being about having a lot of money?
Financial well-being is not exactly about having a lot of money. Wealth is relative depending on the individual and their situation. Furthermore, there are people who, without having a high level of wealth, experience reasonable financial well-being.
Can companies contribute to employees’ financial well-being?
Of course, they can and should. Through good working conditions, companies can contribute to employee financial well-being through different benefits that complement the salary and enrich the employees’ experience.
What is the company’s effect on improving its employees’ financial well-being?
Employees’ financial well-being contributes to their psychological health, improves their performance, strengthens their bond with the company, and enhances their internal and external reputation.
What does employee financial health depend on?
Employee financial well-being, as defined, is a critical factor in fostering a sufficient quality of life that comes from a healthy and efficient relationship with the effort dedicated to working. However, how is it possible to promote employee financial well-being, and on what elements does it depend on whether the economic well-being of the people who form part of the company increases, stabilizes, or is at rock bottom?
These questions should interest all the players involved in the labor ecosystem, not just each individual or private stakeholder. The reason is simple: employee financial well-being influences their well-being at work and, therefore, the success of the organization they work for.
Quantity and quality of money
It is easy to fall into the temptation of interpreting the financial health of workers only in terms of the amount of money: the more money available, accumulated, or in the prospect of arriving, the greater the well-being; therefore, the less money, the worse the financial health of employees.
However, this is not precisely the case. Employee financial well-being does not depend exclusively on the amount of liquid money available to them. We must bear in mind that once employees have a sufficient amount of money to cover their needs and fixed expenses, the amount they judge as abundant, desirable, or scarce tends to be very relative, i.e., it does not depend on the absolute and objective amounts of cash in the account or on the payroll.
So how much money do we need to have in our bank account to feel confident, secure, or satisfied? Some employees will be happy if they are not down to zero at the end of the month. Others will say they start to feel uneasy when they see their bank account go below a thousand euros, for example. More than one will go into a loop if they have less than ten thousand. It all depends on the use and subjective experience we have with money, the economic education we have received, and the prospects of stability or turbulence in our foreseeable short-term expenses or large disbursements that we intend or wish to make in the future.
Different experiences with money
As a result, a worker may have a relatively low salary compared to their peers and yet be in much better financial health than they are. It is rare for a person not to want to earn more than what they earn. Still, they may be satisfied with their salary, have an excellent capacity to save, lead a lifestyle that does not require a higher level of purchasing power, and, should an unforeseen event arise that requires a larger-than-usual financial outlay, have something to fall back on.
Therefore, practical money management but also the subjective experience of money (how they interpret their salary, what level of income they judge as necessary and not just desirable, and what level of threat to their finances they perceive in the future) are fundamental and complementary parameters in determining employee financial health.
Enhancing employee financial well-being
As long as it is possible to determine some indicators of employees’ financial health, this dimension can and should be considered a KPI for Human Resources.
Organizations can therefore adopt a strategic role in contributing to employee financial well-being. Many already consider this through an increasingly standardized policy of annual bonuses, salary reviews, or social benefits that boost savings and help build employee loyalty within the workforce. New compensation models that go beyond traditional flexible compensation are also becoming increasingly important, implementing tools such as salary on demand and training for employees to acquire good practices in their financial decisions and gain greater control over their pay.
Securing employees’ well-being at work
Employee financial health is essential to well-being at work and greatly influences the company’s results. At ifeel, we know this and want to help organizations find the most appropriate way to enhance this corporate aspect from the mental health perspective.
To help them achieve this and establish good communication habits within the organization’s processes, our team of psychologists, experts in well-being at work, has created an emotional well-being service for companies that supports the entire team of a company, including those responsible for Human Resources.
These managers must ensure that the company’s final results are close to the objectives set. This is why it is essential to support them in guiding the relationship between the company and the employee and to ensure that it is as beneficial as possible for both.
That’s why, through our service, you can receive personalized, data-driven advice on improving your teams’ psychological well-being. Are you part of your organization’s Human Resources department? Try our program now and find out how it could help you.
In addition, this program offers all employees a complete mental health care service that they can access in different ways depending on their needs. Those who wish can access an online therapy service with one of our psychologists, specialized in cases like theirs, or interact with one of our professionals to receive emotional support in a more specific circumstance that concerns them.
Of course, in our Resources section, you can find different materials, such as podcasts, HR Guides on various topics (e.g., employee experience or how to design a good HR strategy), or interviews with important HR positions. In addition, we have a Psychosocial Risk Factors Template, which you can use to comply with the requirements of the Labor Inspectorate.
We hope you found this post on employee financial well-being interesting. If you would like more information about our emotional well-being program for companies, ask us, and we will contact your team as soon as possible.