The youngest segment of our workforce has a major financial problem. And guess what, employers…so do you.
According to a number of recent studies, Millennial employees are struggling with financial insecurity. As reported in the 2014 Wells Fargo Millennial Study, more than half of Millennials — 56% — are living paycheck-to-paycheck. Just under half — 42% — call debt their primary financial concern. And 39% consider this debt to be overwhelming.
Further, according to PwC’s 2014 Employee Financial Wellness Survey, 60% of millennial workers experience ongoing financial stress while 35% of this same employee population reports that their personal finances have been a distraction at work.
What Financial Wellness Means for Employers
Employing this strapped, stressed, and distracted generation of people leaves organizations with financial problems of their own. “Workplace stress costs U.S. employers an estimated $200 billion per year in absenteeism, lower productivity, staff turnover, workers’ compensation, medical insurance and other stress-related expenses,” says research by Farleigh-Dickinson University.
“Considering this,” adds the study, “stress management may be business’s most important challenge of the 21st century.”
Creating an Effective Response Strategy
Beyond the productivity losses associated with millennial financial stresses, there’s turnover. Simply put, these employees are looking for salary or other benefits to improve their situations. As reported by Beyond.com, 60% of millennial employees leave their jobs within 3 years, generating roughly $15,000 and $25,000 in costs to replace each one.
So how can an employer address this population’s financial wellness?
One strategy is to build a company culture that addresses the needs of millennial employees. We know that this segment of the workforce alludes to “good cultural fit” as a top reason they choose to stay with a company. So offering things like workplace flexibility, opportunities for growth, and internal promotion policies can have significant impact.
In addition, building a comprehensive benefits package that clearly addresses the needs of millennials is key. A good portion of millennial debt is student loans, with 37 million millennials currently managing such responsibilities. So supports that address student loan repayment are some of the fundamental pieces of the puzzle.
What Employers Stand to Gain
It’s critical to note what employers stand to gain. Our research shows these millennials are particularly focused on their financial health. They want to save like previous generations… and given the right opportunities, they’d prefer to stay with their organizations for the long haul.
For employers, that means responding to millennial financial health is not just an imperative, but an opportunity. Those who work today to engage the millennial employee population, to keep them productive, and to strengthen their commitment are the employers who are sure to stand out as tomorrow’s success stories.
Want to Learn More?
Want to learn more? Check out Employee Financial Wellness: Your $1 Trillion Problem to hear Neuberger Berman’s SVP for Benefits & Compensation, Wayne Klieger, and Bright Horizons’ SVP for Client Relations, Patrick Donovan, explore how employees are struggling with financial wellness; why employers are concerned; and what innovative solutions these employers of choice are utilizing to address the problem and achieve results.