The relationship between investing in financial literacy and employee retention
Reviewed by: Fibe Research Team
- Updated on: 10 Apr 2023
- Published on: 29 Jan 2021
Reviewed by: Fibe Research Team
Every healthy company culture is mindful of including programs and initiatives to contribute towards their employees’ overall well-being, especially when it comes to upskilling and educating them regarding important subjects such as financial literacy. Investing in financial literacy programs and workshops can help organizations relieve employee stress and significantly improve retention rates in the long run. Here’s how:
The World Health Organization has declared stress as the ‘epidemic of the 21st century’ and it is already causing organizations across the globe billions of dollars every year. Stress is closely related to reduced productivity, and when it comes to financial stress, it can lead to a significant decline in the performance of your employees.
This is where financial literacy saves the day and conducting programs that educate employees about their finances can help them in making more wise and informed financial decisions. Getting rid of financial stress is crucial because if employees are under immense financial burden, they will feel the need to change jobs more frequently.
This can cause a significant drop in your company’s employee retention rate, as financial stress will drive them to look for opportunities and jobs that pay more and are outside of your organization. Moreover, it is essential for the well-being of your valued employees that they can successfully combat financial stress to perform better and lead healthier and happier lives.
When employees see that the organization they work for is allocating resources and conducting comprehensive training programs on important topics such as financial literacy, they feel more connected with the company personally. This also helps in building employee loyalty and creates a deeper and meaningful connection with the organization.
Conducting workshops for introducing, explaining, and encouraging healthy financial practices is a crucial step towards boosting the financial literacy levels of your employees. This investment promises long-term returns in terms of increased allegiance with the organization, and your employees will feel more motivated to do better and perform better than before.
A company’s relationship with its employees should never be just transactional. An organization should also be involved in every employee’s emotional and holistic development as it directly involves their performance and productivity. Investing in financial literacy helps make your employees more financially aware of different financial services they can levy in terms of emergencies such as quick instant loans and help them navigate tough financial situations. This is imperative as they will see your organization as more than just their workplace and associate it with a more positive, wholesome environment that cares about their needs and problems. They will see the value in working with your organization. which will help in boosting employee retention rates significantly.
Finally, when your employees are not preoccupied or losing sleep over money problems, their productivity is bound to improve. According to the 12th Annual U.S. Employee Benefit Trends Study, over 51% of employers agree that financial problems have contributed to the decline in productivity of their employees. Another study conducted by APA states that nearly 20% of employees feel that their financial stress negatively impacts the way they interact with their coworkers. These numbers show that financial stress can significantly impact how employees exist and engage in a workplace, and how crucial it is to implement financial literacy programs for their overall well being and peace of mind. How they cope mentally with their money problems will directly affect their overall productivity. Moreover, when organizations invest in programs to encourage and improve financial literacy for their employees, it also leads to increased workplace satisfaction, in addition to better performance at work.
Several other benefits come with financial literacy programs in the workplace, such as better employee business acumen, help and assistance with recruitment, and attracting new and improved talent for your organization. In addition to paying adequately, you can help employees gain better control of their finances via financial literacy programs that add value to your organization and improve employee relations.
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