How Payroll Can Improve Employee Financial Security

Remote work has caused a blurring of the line between professional and personal life, leading HR leaders to prioritize employee well-being and mental health. This is understandable as the corporate well-being industry in the US is valued at $20.4 billion and is expected to reach $87.4 billion by 2026. Additionally, 80% of employers believe that financial stress negatively impacts their employees' performance, costing around $500 billion annually. HR leaders should prioritize the well-being of their team members by providing competitive compensation packages, opportunities for career advancement, and keeping pace with inflation. Employers should also explore ways that payroll can promote financial wellness throughout the organization.

What is financial well-being?

Financial well-being is the state of financial security and control, not only in the present but also in the future. Employers serve as the primary source of income for their employees, making them a critical factor in promoting financial well-being. However, only 11% of employers with health and well-being strategies actually focus on financial well-being. Companies have adopted a carrot-and-stick model that provides short-term solutions to their employees' financial difficulties rather than supporting the establishment and growth of long-term assets. 72% of employees say they would be attracted to another company that cares about financial well-being. The economic impact of the pandemic has highlighted the importance of financial stability for today's workforce, with rising levels of household debt, employees are increasingly turning to their employers for support through expanded financial wellness initiatives and comprehensive benefits packages.

Why is financial well-being important?

Financial wellness is a critical factor in promoting employee retention and engagement, and it can also attract top talent. 84% of employers say financial well-being can aid in reducing employee attrition, while 81% say financial wellness tools help attract higher-quality employees. Employers must work together with their workforce to understand their needs, identify the areas of support, and develop appropriate solutions while aligning with the organizational revenue goals. Companies that provide financial coaching, loan repayment programs, immediate credit, cashback, allowances, incentives, employee discounts, and other perks are more likely to attract enthusiastic and skilled workers who are committed to the growth and advancement of the company. Companies that provide adequate financial wellness benefits, including wealth creation schemes, healthcare coverage, retirement benefits, and travel expense coverage, create a sense of appreciation and loyalty among their workforce, encouraging them to remain committed to the organization's goals. Companies offering individualized financial coaching services alongside mental health resources can boost motivation, productivity, attendance, and overall engagement, positively impacting the bottom line.

The Role of Payroll

Companies should prioritize providing comprehensive financial education and resources to enable their workforce to make informed financial decisions and take control of their financial future. Payslips serve as a starting point for workers, and payroll processing can play a crucial role in positively impacting their financial well-being. Employers can take simple steps through their payroll processing to assist workers in gaining a better understanding of their financial situation and available choices, such as providing clear and concise pay stubs that break down deductions and taxes. By prioritizing financial literacy and education, employers can help their workforce build long-term financial stability and security.

Ways payroll processing can help promote financial well-being

• Help employees understand their payslip

Payslips are essential for employees to understand their income and taxes, as well as deductions, rates, and calculations. Payroll processing professionals are a valuable resource for employees seeking to enhance their financial literacy, as they have the expertise to interpret payslip information.

• Encourage engagement with existing supports

Employers can promote financial literacy and engagement with existing benefits by reminding employees through payslips, using blank spaces on payslips, and organizing educational sessions to understand deductions and social contributions.

• Obtain employee feedback

Companies should ask their workforce for feedback to determine the most effective strategies for promoting financial wellness. This can be done through suggestion boxes, feedback forms, surveys, and payslips, even if initial participation rates are low.

Employers can take proactive measures to encourage their employees to manage their financial well-being. Global payroll processing teams play a vital role in assisting their colleagues. Employers who invest in understanding and supporting their employees' financial wellness are likely to benefit from their investment in the long run. Exela HR Solutions, a market leader in HR and payroll outsourcing, can help employers create a strategy to promote the financial well-being of their employees. Contact Exela HR Solutions today to start the conversation and take the first step towards a more financially healthy workforce.

To read more: https://ehrs.exelatech.in/blog/most-common-recruitment-process-challenges-hindering-business-growth