How to measure your company’s financial wellness

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Devin Miller
October 24, 2022

Evaluating your business’s financial well-being helps you understand how your company is performing and what the future might look like. A big part of wellness is determining the financial stress levels of employees.

Part of supporting and caring for your employees is helping them succeed financially. It’s no longer enough to offer a competitive salary and provide retirement savings support. Today’s employees require more resources from their workplaces to ensure they’re setting themselves up for a stable financial future. Some will even leave their position to find that support elsewhere. And focusing on financial wellness for employees can help your bottom line, too.

Measuring your company’s financial wellness can help you assess how you’re performing as a business and where you might be headed. Another component of financial well-being, however, is measuring your employees' financial stress. This overview will discuss why minimizing stress is so essential for overall financial well-being.

How to measure a company’s financial well-being

In general, there are three important terms to familiarize yourself with when assessing your company’s financial well-being: profitability, liquidity, and solvency.

  • Profitability is a crucial determinant of a company’s financial well-being. Find your gross margin, or the percentage of total income after all expenses are accounted for. When there’s a high gross margin, the company is considered more profitable. Profitability assesses how the business is performing as a whole, which indicates the potential for future sustainability and success.
  • Liquidity is the difference between your current assets and current liabilities. Liquidity simply tells you if the business can meet all its current financial obligations in the near future. 
  • Solvency, on the other hand, helps you determine whether the company can meet long-term obligations. For example, solvency measures how healthy a company’s cash flow is related to all long-term debt, whereas liquidity is only concerned with short-term debt.

While coming up with profitability and solvency ratios can tell you a lot about the performance and success of a business, other factors play a significant role in the bottom line. Employee retention, engagement and satisfaction, and workplace culture all impact an organization's financial wellness.

Let’s dive deeper into another major component of financial wellness for a company: financial stress.

How and why to measure financial stress

Stressing over finances is a widespread issue affecting people of all income levels. A study from Salary Finance found that 45% of employees are financially stressed, 60% of employees who are looking for a new job are financially stressed, and 20% run out of money between their paychecks. 

Financial strain can cause people to delay getting medical treatments, save for their futures, pay for education, or get other help they need to improve their lives and well-being. When they can’t afford what they need, stress weighs on them as they wonder how they’re going to pay off debt or are forced to take on more debt than they already have.

Financial stress is a significant problem for employees, so it should also be an issue for employers. In fact, financial stress costs employers $4.7 billion per week, according to the Wellness Barometer Survey from BrightPlan, and causes 15.3 hours of lost productivity per employee per week.

Another study from the International Foundation of Employee Benefit Plans found that personal financial issues contribute to stress at work and an inability to focus, as well as an increase in absenteeism and tardiness.

So, financial strain leads to reduced productivity, lower satisfaction and engagement, and hits to the company’s bottom line. 

How financial wellness programs can help

Assessing your company’s financial wellness is the first step in making things better, both for the business and its employees. But how can you improve your employees’ – and therefore your company’s – financial well-being?

A financial wellness program helps you address critical components of your employees’ well-being. While general wellness programs typically involve lifestyle and health management, financial wellness targets employees’ financial concerns such as savings, spending, managing debt, budgeting, and planning for the future. Rand data has found that wellness programs have an ROI of $1.50 for every $1.00 the employer spends. 

When employees aren’t stressed about money and feel that their employer supports and cares for their well-being, they’re more likely to be engaged, satisfied, and productive at work. And these kinds of employees contribute to a better workplace and company.

Financial wellness programs go beyond offering a retirement savings plan. They help people understand the basics of personal finance and provide resources that help people succeed. The goal is to assist employees in establishing better habits that will lead to a more stable financial future. 

Start by educating workers with financial webinars, training, and even guest speakers. Encourage them to take on healthier practices. You could even create a monthly newsletter with finance tips and the latest statistics that impact them. Focus on areas employees care about most, like building credit, managing debt, building savings, planning for retirement, investing, and budgeting responsibly.

Consider offering emergency savings accounts 

Another critical component of a financial wellness program should be offering an employer-sponsored emergency savings account (ESA). The same Salary Finance survey mentioned above found that 68% of respondents don’t have any money set aside for emergencies, and 51% of those are anxious about that fact.

Offering a product like an ESA helps you encourage people to prepare for the unexpected, thus reducing financial stress and increasing productivity and engagement. When people have extra padding, they won’t spend as much time worrying about their finances or going into debt. They’ll have a resource to fall back on if the worst happens. And they’ll feel you’re committed to their well-being and success, even when they’re not at work.

ESAs effectively improve your company’s financial wellness and end up paying for themselves. They’re cost-effective and easy to manage and administer, especially with a partner like SecureSave.

Contact us to learn more about how an ESA from SecureSave can help you improve the financial well-being of your employees and of your company.

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Devin Miller

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