Empowering the Worker Empowers The Business: How Leaders Can Support Employee Financial Wellness

By Michelle Young, VP of Operations -- Employee Financial Solutions, ADP Ventures, and
Jeanniey Walden, Chief Innovation and Marketing Officer, DailyPay

As the new world of work continues to take shape, employees are reassessing their priorities and we are seeing the dawn of a new era in employee engagement. Impacted by the pandemic, employee expectations have evolved. As they reflect on their needs, employees are reevaluating their priorities and demanding a workplace experience that embraces and supports them. To meet these evolving talent demands, employers are reassessing the culture and benefits they offer. Among those offerings is the financial guidance they provide, a benefit many employees have grown to expect and value as they focus on financial wellness.

Employees today, especially younger workers and those with flexible work schedules, are looking for financial wellness tools, including flexible pay options. As businesses and people look to move forward, it is in the best interest of leaders to invest in their team’s financial wellness – and to provide tools to promote financial confidence.

Financial Stress Is Bad for Business

More than 70 percent of people say they worry about personal finances at work. One in three say they worry more than once a week. These concerns were top-of-mind even before the pandemic – imagine how employees are feeling now with the costs of goods and services reaching new heights.

In recent years, about 34% of Americans are either unbanked or underbanked – sometimes by choice, but most often not – limiting easy access to basic financial options many take for granted such as affordable credit, bill pay, online purchases, ATM access, and more. This results in friction and fees for those who can often least afford them. Paying more than $1,000 a year in check cashing fees, payday loans, and other predatory financial products only worsens financial stress. And these realities are having an impact on business.

Financial Wellness Tools Can Make a Difference

Financial wellness has a profound impact on employee productivity, engagement and turnover. According to ADP Research Institute research, employers believe that companies should take an active interest in the financial health of their employees. And employees agree, with 78% of employees stating that their employer should take an interest in the financial wellness of their workers, and 79% saying they want to work for a company that cares about their financial wellness. This leads directly to improvement in hiring and retention- which can be so critical during a tight labor market.

Offering financial wellness tools to employees is not just the right thing to do, it’s good for business. Help is needed, and employers are in a unique position to provide valuable resources. Employers have a real opportunity, especially in this current environment, to show employees that they’re looking out for them.

New Technological Solutions Are Changing the Game

Too often, money is not in the right place at the right time when it is needed. Fortunately, new technological solutions have been developed to change the way money is moved. When we think about a better future and stronger financial wellness, the source of pay can be a strong avenue for fostering financial confidence. By leveraging technology to make the pay process simple, seamless, and turn-key, employers can make it easier for employees to access their pay when and where they need it.

Offering digital methods of pay for underbanked and unbanked employees is vital – for their primary jobs as well as a vehicle to receive gig income, government benefits or tax refunds -- to help avoid fees such as check-cashing fees. Digital budgeting tools that provide real insights on how to reduce expenses and save more can also be extremely helpful. Flexible methods of pay – outside of standard pay cycles to align unexpected expenses with income -- can eliminate the need to spend money on overdraft fees, late bills, and payday loans, further increasing an employee’s ability to save and reduce financial stress.

DailyPay recently partnered with Aite Novarica Group to dig deeper into the impact of the financial wellness benefit of demand pay:

• 95% of those who were previously reliant on payday loans in any way stopped using payday loans.
• 97% of those who said they had overdrawn their bank account prior to using DailyPay now rarely or never incur overdraft fees.

Knowledge Is Power

True financial confidence starts with access to information – knowing your net worth as you create it. In a traditional environment, workers often have to wait until payday to see how much money they have earned, but with new technological advances such as the DailyPay app or ADP Wisely paycard, they can see their pay as they earn it. This helps build confidence as employees begin to see how they can save for the future. For employers, it’s a cost-effective benefit that can be so influential in a person’s life.

As unemployment continues to drop, and consumer demand continues to rise following uncertainty from the pandemic, the American worker finds themselves in a position of strength with a tightened job market. To keep business running efficiently, it is important for employers to listen to and address their employees’ needs to maintain a strong and engaged workforce. And there is no better way to demonstrate your commitment than by giving your team members the tools and support they need to reach their fullest potential.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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