The Power of Financial Stability in Boosting Employee Productivity

According to the SoFi 2024 Work Report, an alarming 86% of employees report heightened financial stress, marking an increase of over 10% from the previous year. This growing concern has led many to face challenging decisions, from budgeting for essential expenses to sparing funds for personal celebrations. Finances serve as a critical, yet unseen, barrier that delineates the feasible from the aspirational.

For employers, this issue is a double-edged sword. While recognizing the significant influence of financial incentives on employee motivation, companies must also confront the reality of finite resources. This raises a pivotal question: How do we alleviate the financial burdens on today's workforce without increasing fixed expenses, while also ensuring employees view your company not merely as a necessity, but as an organization they are proud to work for? Addressing this dilemma is essential, not only for enhancing financial well-being but also for boosting overall productivity.

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"Employees devote approximately 20.5% of their work time, or 8.2 hours weekly, to financial stress, equating to a full day lost each week."

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What is Employee Financial Wellness​?

Employee financial wellness refers to the state of an individual’s financial health and their ability to effectively manage both short-term and long-term financial responsibilities. It encompasses employees’ capacity to handle day-to-day expenses, save for future goals, and remain resilient during financial emergencies—all without undue stress or anxiety.

Employee financial wellness programs are initiatives designed to support employees in achieving these goals by providing resources, tools, and incentives that improve financial literacy, savings habits, and overall financial security. These programs often include features like savings matching, budgeting tools, debt management support, and personalized financial advice.

When employees experience financial wellness, they are less distracted by monetary concerns, leading to higher engagement, productivity, and satisfaction at work. Conversely, financial stress can lead to absenteeism, decreased focus, and poor health outcomes, all of which negatively impact both the individual and the organization.

By investing in financial wellness, employers not only improve their employees' quality of life but also foster a more motivated and loyal workforce, ultimately driving better business outcomes.

The Cost of Employee Financial Insecurity to the Workplace

Financial insecurity significantly impacts employee focus and productivity, as highlighted in the SoFi 2024 Work Report. The report finds that employees devote approximately 20.5% of their work time, or 8.2 hours weekly, to financial stress. This equates to a full day each week spent distracted by personal financial concerns rather than work tasks. Furthermore, one-third of employees report that financial worries impair their concentration at work, with nearly 25% attributing a decline in productivity and confidence to financial stress. This issue not only affects individual well-being but also leads to a substantial decrease in overall company performance.

Conversely, when employees feel like their employer cares about their financial well-being, employee engagement has been show to increase as much as 38%, allowing companies to experience significant benefits, including an average of 21% increase in profits, lifted customer service ratings, reduced employee absenteeism and shrinkage, decreased health benefit premiums, and more.¹ Addressing financial insecurity among employees is therefore not only vital for their personal well-being but is also crucial for improving workplace engagement and organizational success.

The Link Between Financial Wellness​ and Productivity

Imagine being stressed every day and understand the impact that it had on your overall wellbeing. Perhaps you can relate to a time when you were high stress. Well this is often what people who suffer from lack of financial stability or wellness face.

• Absenteeism: Financial stress can cause employees to miss work due to health issues, family problems, or other personal issues related to money. This can lead to increased absenteeism and reduced productivity. The link between financial stress and workplace absenteeism is clear and significant.
• Reduced productivity: Financial stress can also cause employees to feel distracted or overwhelmed, which can lead to reduced productivity and poor job performance.
• Health problems: Financial stress can lead to health problems such as high blood pressure, anxiety, and depression, which can result in increased healthcare costs for employers.
• Additional jobs: Financial stress can result in employees taking on additional jobs to afford the cost of living. This can lead to employees not having the energy and quickly burning out with the added responsibilities of managing multiple jobs.
• Lack engagement: Financial stress can result in employees disengaging within the workplace, due to feeling of resentment, quiet quitting, and downright actively disengaged. This has high costs to an organization, resulting in loss productivity, innovation, profitability, and so much more.  
• Decreased mental health: Financial stress can create employees with psychological distress which can be associated with several adverse health outcomes, such as emotional exhaustion, reduced immune response, heart disease, and increased mortality. This has can have an increased cost to healthcare costs and short and long-term disability claims, resulting in employees not functioning at peak performance.²‍

The 2023 Workplace Benefits Report by Bank of America indicates that 76% of employees feel employers are responsible for their financial wellness, and 96% of employers agree. Yet, only 2 out of 5 employers offer financial wellness programs. Recognizing that this has a large impact on employee engagement, productivity, and overall wellbeing, it is a no brainer to have a financial wellness program in place to help support employees through their tenure at your organization.

Motivation to Achieve Company Objectives

Connecting individual or team goals to company-wide objectives through milestone-based incentives ensures alignment and drives engagement. These goals could range from hitting sales targets or project deadlines to completing upskilling certifications. By tying these achievements to meaningful rewards—such as cash bonuses, savings matches, or personalized perks—employers demonstrate their commitment to recognizing employee contributions.

What makes this approach particularly effective is the integration of personal financial motivators. Employees often have unique savings aspirations—whether it's funding guitar lessons, buying an engagement ring, or reducing debt. When companies acknowledge and support these personal goals through milestone-based recognition programs, they create an environment where employees feel understood and valued. This dual alignment of company objectives with personal aspirations fosters a deep sense of purpose, improving performance while enhancing financial well-being.

By blending professional targets with intrinsic motivators, organizations can cultivate a motivated workforce that thrives on achieving both business outcomes and personal dreams.

Financial Habits Across Generations

Each generation brings a unique approach to managing money, shaped by distinct economic realities and personal priorities. From Gen Z's cautious stance on debt to Baby Boomers' reliance on Social Security, financial behaviors highlight both shared struggles and tailored solutions. Understanding these patterns not only sheds light on their challenges but also unlocks opportunities to address financial wellness effectively across diverse age groups.

Gen Z

Cautious and debt-averse, Gen Z faces challenges building credit and mastering financial basics, with many expressing only a beginner's knowledge of managing taxes, debt, and savings.

• Gen Z individuals are often extremely hesitant to take on any debt at all, which hinders their ability to build credit history.³
• Though Gen Z feels the most confident about consuming and saving, nearly one-third feel they have just a beginner's knowledge of financial management basics like paying taxes and borrowing/managing debt.⁴

Millennials

Juggling student loans, credit card debt, and limited retirement savings, Millennials actively seek guidance on financial topics, prioritizing retirement planning, vacation budgeting, and debt repayment.

• They are more likely to carry student loans and credit card debts, along with having little to no retirement savings.⁵
• 94% of Millennials are interested in some kind of personal finance information, such as savings priorities for retirement (60%), planning a vacation (51%), and debt repayment (38%).⁶

Gen X

With the highest average debt among generations and low retirement preparedness, Gen X struggles to achieve financial security despite significant purchasing power for premium goods.

• Possesses significant purchasing power for high-end purchases
• Highest average debt of any generation, at an average of $135,841.⁷
• 39% feel they will never have a secure financial life as their parents.⁸
• 55% are unprepared for retirement.⁹

Baby Boomers

Facing modest retirement savings and heavy reliance on Social Security, Baby Boomers are navigating a future of uncertain financial stability as funds are projected to deplete.

• As of 2020, only 58.1% of Baby Boomers aged 56 to 64 had any retirement account.¹⁰
• The median value of retirement savings is estimated at $289,000.¹¹
• 41% of Baby Boomers anticipate Social Security as their main retirement income source, while projected depletion of Social Security funds by 2033, limiting payouts to 77% of current benefits from ongoing worker contributions.¹²

Evolve with the Needs of the Employee

What is great about financial wellness as a method of rewards and recognition is that is changes with the tenure of the employee. Through various life stages of an employee, their needs change. As a new grad, they might be focused on paying off student debt, someone who is in their mid-career may be saving for a wedding or a home or new child, or late-career cashing away money for retirement or a vacation. Whatever those stages are, employers have an opportunity to motivate employees with financial wellness, but also make deeper connections that go beyond the workplace - but make measurable and impactful rewards they care about. These moments can be used to help managers connect with their employees more deeply, building stronger bonds that create a sense of belonging, helping to deliver more meaningful results for the company.

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"Milestone-based recognition programs create an environment where employees feel understood and valued."

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Building Financial Wellness Through Smarter Employee Recognition

Modern employee recognition should do more than acknowledge effort—it should support long-term financial well-being. By pairing personalized financial wellness employee benefits with automated savings, this innovative approach helps employees grow their financial security alongside their professional achievements. Features like card connectivity, cashback from thousands of vendors, and automated discounts make saving effortless, turning every transaction into a step toward financial goals. This savings-focused model not only boosts engagement but also reinforces a deeper sense of value and appreciation in the workplace.

‍Automated Employee Savings Beyond Employee Rewards

Beyond enabling employers to provide cash incentives for personalized financial wellness employee benefits, Tenure's platform also gives automated savings, amplifying the impact of employer contributions. With our card connectivity feature, employees can effortlessly contribute to their savings goals, benefiting from both employer contributions and automated personal savings through Tenure. This accelerates employees' savings growth towards financial wellness.

Some of the automated savings features include:

• Connect Cards: Employees register by linking their debit and credit cards to our secure system for spending tracking.
• Marketplace Automated Cashback: Over 16,000 vendors in our system enable employees to receive automated cashback, no need for coupons or discount codes, just channeled savings directly toward their goals.
• Automated Discounts: Purchases automatically apply discounts based on the employee's connected bank cards.
• Employer Discount Integration: Employers can incorporate their merchant discounts, further enhancing employee savings without the need for code tracking or coupons.
• Automated Round-Ups: Employees can set up round-up parameters for each transaction during registration, optimizing savings with every purchase.
• Employee Rewards: For outstanding achievements or milestones, companies can easily send hyper-personalized rewards set by their employees and acknowledgment messages to employees, fostering recognition and appreciation.

Spot Bonus: Surprise Applause for Going the Extra Mile

One of Tenure’s most favourite bonus structures is spot bonuses. These can have immense psychological benefits to employees, giving them a sense of surprise applause for doing their job well. They give them the instant feedback they seek and align well with creating a culture of recognition and appreciation. Be it creating an amazing presentation, being a positive presence within the workplace, or staying late to help a team member, there is always an opportunity to give a spot bonus.

Tenure vs Other Rewards and Recognition Models

Tenure adopts a savings-to-rewards approach, contrasting with the prevalent spend-to-reward model. Our platform empowers employees to select rewards that hold personal significance, supported by automated savings and employer contributions, to achieve their financial goals efficiently. Unlike other platforms that promote consumerism and may inadvertently encourage further debt among employees through gift cards^13,14, points programs, and experiences, Tenure's model is designed to positively impact employees' financial health, steering clear of fostering detrimental spending habits that lead to debt and poor financial wellness.

‍Companies Succeed with Employee Financial Wellness Programs

Companies that prioritize supporting employees in achieving personal milestones and managing debt often report increased employee satisfaction, heightened morale, and, ultimately, a more productive workforce.^15,16

The connection between financial stability and employee productivity is undeniable. As organizations recognize the importance of addressing the financial well-being of their workforce, they not only create a more supportive and compassionate workplace but also unlock the potential for heightened employee motivation and productivity.¹⁶ By assisting employees in saving for personal milestones and managing debt, employers contribute not only to the financial health of their workforce but also to the overall success of the organization. The path to a more productive and engaged workforce begins with a commitment to the financial well-being of employees.

Financial wellness is more than a benefit—it’s the foundation of a motivated, engaged workforce. By empowering employees to achieve personal and financial goals, companies foster loyalty, reduce stress, and enhance productivity. At Tenure, we make financial wellness and recognition seamless and impactful, helping employees feel valued while achieving what matters most to them. Ready to elevate your approach to employee engagement? Discover how Tenure’s tailored solutions create a workplace where everyone thrives.

‍Article References:

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2. Ryu, S., & Fan, L. (2023). The relationship between financial worries and psychological distress among U.S. adults. Journal of family and economic issues. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8806009/  
3. Staples, A. (2023, June 13). Nearly 80% of gen Z and millennials are trying to improve their credit, yet most don’t know where to start - here’s what they can do. CNBC. https://www.cnbc.com/select/how-gen-z-and-millennials-can-improve-their-credit/
4. Lauria, P. (n.d.). Generation Z: Stepping into Financial Independence. Investopedia. https://www.investopedia.com/generation-z-stepping-into-financial-independence-5224362
5. Heisz, A., & Richards, E. (2019, April 18). This article in the economic insights series examines economic well-being of millennials by comparing their household balance sheets to those of previous generations of young Canadians. Economic Well-being Across Generations of Young Canadians: Are Millennials Better or Worse Off? https://www150.statcan.gc.ca/n1/pub/11-626-x/11-626-x2019006-eng.htm  
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7. DeMatteo, M. (2023, November 14). The average American has $90,460 in debt-here’s how much debt Americans have at every age. CNBC. https://www.cnbc.com/select/average-american-debt-by-age/  
8. Khalfani-Cox, L. (2015, November 3). Financial facts about generation X. AARP. https://www.aarp.org/money/credit-loans-debt/info-2015/gen-x-interesting-finance-facts.html  
9. Simpson, S. (2023, September 21). For gen Z and millennials knowledge is power as they ... IPSOS. https://www.ipsos.com/en-ca/gen-z-and-millennials-knowledge-power-they-look-increase-their-financial-literacy-amid-high-levels  
10. Bureau, U. C. (2022, August 31). New Data Reveal Inequality in Retirement Account Ownership. Retrieved March 20, 2024, from Census.gov website: https://www.census.gov/library/stories/2022/08/who-has-retirement-accounts.html
11. PARKER , T. (2024, February 27). Retirement Savings by Age: Where Do You Stand? Retrieved March 20, 2024, from Investopedia website: https://www.investopedia.com/articles/personal-finance/011216/average-retirement-savings-age-2016.asp
12. Transamerica Institute. (2023, July). Post-Pandemic Realities: The Retirement Outlook of the Multigenerational Workforce. Retrieved March 20, 2024, from Transamerica Institute website: https://transamericainstitute.org/docs/default-source/research/post-pandemic-retirement-realities-multigenerational-workforce-report-july-2023.pdf
13. Reinholtz, N., Bartels, D. M., & Parker, J. R. (2015, August 27). On the mental accounting of restricted-use funds: How gift cards change what people purchase. OUP Academic. https://academic.oup.com/jcr/article-abstract/42/4/596/2572228
14. Helion, C., & Gilovich, T. (2014, October). Gift Cards and Mental Accounting: Green-lighting Hedonic Spending. Journal of Behavioral Decision Making. https://onlinelibrary.wiley.com/doi/10.1002/bdm.1813
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