Three reasons why workplaces are uniquely positioned to improve employee financial wellbeing.
Australian employers have begun to acknowledge the significant role they can play in supporting the financial wellbeing of their people.
The positive impact to both employees’ lives as well as an organisation’s bottom line helps clarify the value of a workplace financial wellbeing program.
But what makes workplaces so well-equipped to deliver financial wellbeing programs?
Employers already support their employees’ financial wellbeing through providing wages, salaries and superannuation contributions. For seven in 10 Australians, wages and salaries are the main source of income.
Income is a top influencer of financial wellbeing, according to the research. Yet it’s not only how much someone earns that is important, but also how stable that income is and how regularly it’s received that ultimately shape employee financial wellbeing.
As behavioural scientist Nathalie Spencer told us the very design of how the workplace is set up to support employee financial decision making is important. “This could be how frequently you pay your staff or how you frame choices that employees need to make on important financial decisions like superannuation or other benefits,” she said.
More employees are looking for guidance from an institution they trust. Since 2001, the Edelman Trust Barometer has seen employees shift their trust from traditions institutions such as the government to ones they’ve seen they can rely on – such as their employer.
Workplaces that reliably pay wages on time and make the required superannuation contributions, prove their trustworthiness – in particular, around financial wellbeing. So, when employers offer benefits that further support employee financial wellbeing, they’re likely to see stronger uptake than another institution such as a government or bank might.
Encouraging peer support and a workplace culture that focuses on positive engagement with finances can create the perfect environment for employees to build better money habits. Strengthening money habits builds financial resilience and wellbeing.
Insights from behavioural science reveal that people prefer to listen to messengers who they think are like themselves. Peers – whether they be family, friends or indeed, colleagues – can have a huge influence over individuals’ behaviours, be that positive or negative.
When driven as part of a wider workplace culture, peer support can have a hugely positive impact to an individual’s financial wellbeing. Research found that asking people to use their social networks to help them with their finances results in an increase in loan repayments¹ and reductions in the likelihood of spending cash payments right away².
Harnessing the power of social connections in the workplace can encourage people to positively engage with their finances and create a culture where sharing goals is the norm.
The impact of a financial wellbeing program can be meaningful to both employers and employees. See our latest Impact Assessment to understand how earned wage access can transform your workforce.
¹ Karlan,D. S. (2007). Social connections and group banking. Economic Journal, 117(517), F52–F84
² Ashraf,N. (2009). Spousal control and intra-household decision making: An experimentalstudy in the Philippines. American Economic Review, 99(4), 1245–1277