Why Your DEIA Strategy Needs to Include Employee Financial Wellbeing
Your organization has formulated a well-intended Diversity, Equity, Inclusion and Accessibility (DEIA) strategy. Your DEIA strategy covers everything:
- An annual company-wide implicit bias training ✅
- Employee committee resource groups to help foster a diverse and inclusive working environment ✅
- An innovative Chief Diversity Officer to help identify weaknesses in your organization’s internal design ✅
- An action plan to address the issues ✅
But there might be one thing you haven’t considered: employee financial wellbeing.
What is employee financial wellbeing? And how does it fit into your DEIA strategy, you ask? Great questions! Let me help answer them and then some.
What is employee financial wellbeing?
According to the Consumer Financial Protection Bureau, we will summarize financial wellbeing as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.
While employee financial wellbeing is an essential consideration for your workforce, it may be less obvious why this has anything to do with your company’s DEIA efforts. I will explain in the next section.
Why is employee financial wellbeing at the core of DEIA?
The U.S. has had a long-standing history of economic inequality. According to a data survey done in 2019 (Survey of Consumer Finances), the average white family has eight times the wealth of the average Black family and five times the wealth of the average Hispanic family.
An NPR report discusses one reason America has a persistent racial wealth gap and how it crosses generations. Here in the United States, companies have the biggest influence on how people live which gives corporations a unique opportunity to directly impact some of the challenges society faces. Businesses can make a social impact while investing in the future of their employees, which ultimately leads to better business outcomes.
As a result of America’s tattered history with racial inequality, marginalized groups are more vulnerable to financial pressures. For example, only 42% of Black families own a home, and those homes are typically valued at around 35% less than other properties. This translates to more of your underrepresented employees having higher levels of financial stress.
The impact of employee financial stress can cause employees to experience health issues such as high blood pressure, insomnia, and respiratory issue. It can also lead to short-term financial thinking, such as high-interest borrowing. This can lead to an ugly cycle that becomes harder to escape.
As an employer, you have the unique opportunity to provide relief and break the pattern of financial inequality. Better financial security leads to happier, more productive workers and clear wins for your DEIA strategy.
How to make employee financial wellbeing part of your DEIA strategy
Employee financial wellbeing directly benefits employers, but how do you offer help to your team? The main elements of a financial wellbeing strategy are:
Offer equitable pay
Address salary equalities to make your employees whole. Employees can’t overcome financial inequalities if they are not receiving equitable compensation or any growth opportunities.
Build a culture of support
When employees feel supported as part of an inclusive and diverse community, the metrics on engagement and performance rise. Inclusive teams make better business decisions up to 87% of the time.
Offer the benefits that employees need
Most companies offer retirement benefits, but for employees trying to pay bills every week, saving for retirement is the last thing on their minds. Offer options within your benefits strategy that can meet the needs of a diverse audience and fine-tune your offerings from the feedback of your employee base.
A survey done by John Hancock Financial states that 75% claimed that an employer-sponsored financial wellness program would positively affect their financial stress. The data suggests employers can have a direct impact on the financial wellness of their teams beyond salary
Some of the benefits that can really help employee financial wellbeing include:
Savings plans, especially those that help with home down payment assistance.
Benefits that assist with paying off student loan debt. Either through direct payments or offering a 401k match for employees who pay their contribution toward student loan debt. Student debt has huge implications for DEIA:
- Women hold roughly two-thirds of all outstanding student debt in the U.S., with Black women carrying the higher student loan debt.
- Black college graduates owe an average of $25,000 more in student loan debt than white college graduates.
- Four in ten LGBT adults borrowed money in their education, 1.4 times more often than non-LGBT adults.
- Native American and Alaskan Native student borrowers have the highest monthly payments.
Wealth-building options. Deciding to work with partners to offer different resources and tools can be an efficient way to give your employees what they need. It is best to work with partners that can be flexible and work with the ever-changing needs of your business as it grows. We recommend choosing a partner that can provide scalable benefits over time.
- Approximately 69% of working Latinxs do not own any assets in a retirement account, vs. 37% of white workers.
Personalized financial literacy support. Show employees that you’re invested for the long haul by helping them prepare for the future with wealth-building options that serve all communities.
- LGBT households, including 4 in 10 Black LGBT households and 3 in 10 Hispanic LGBT households, are 1.25 times more likely to be unbanked or underbanked than non-LGBT households.
- Men pass financial literacy tests at a rate of two times their female peers.
Accessible benefits. Meeting face-to-face with a financial planner may not be feasible for everyone. Instead, think digital-first to offer more equitable access to financial education with apps and tools that provide a hybrid or DIY approach to managing finances.
Start making employee financial wellbeing a part of your DEIA strategy
Employees are increasingly looking to their employers for support. The same survey also found 90% of respondents saying it is essential for employers to offer employees financial wellness programs.
Adding financial wellness strategies to your Diversity, Equity and Inclusion programs will help increase employee engagement and retention. Outside of work, financially well employees can have ripple effects for generations as they build wealth, often for the first time in their families. Employees from underrepresented backgrounds should be given the same tools and opportunities as those from other backgrounds and get accommodations to leverage those resources with confidence.
It also helps with evening the playing field for underrepresented groups. Making major changes like this requires all hands on deck. Input from the CHRO, CEO, CFO, and Diversity & Inclusion staff is necessary. Most likely, these departments often work in silos, but for your plans to be successful, all C-level staff and below must collaborate and work together.
DEI&A isn’t just an HR thing. It is a cross-organizational movement to drive desired outcomes. It must start with getting key stakeholders to the table to address the needs of their entire workforce.
Need expert advice on DEIA? Book a no-obligation consultation call with Helios HR today.