09 Jul 2021

Financial wellbeing: A global problem needs a global solution

There is no denying that the global health epidemic has significantly impacted our global economy.

The World Bank forecasts GDP contractions in almost every country and region, with Europe expecting a decline of 4.7%, LATAM 7.2%, South Asia 2.7% and the US 5.6%.

Put into context, this will be the most significant challenge for the global economy since at least 1945, and potentially the Great Depression of the 1930s.

The impact will be widespread, with the International Monetary Fund predicting $9 Trillion in lost output in 2020, and the United Nations stating that 430 million enterprises face “serious disruption”, putting 1.6 billion jobs at risk. The International Labour Organisation also worries that women will be disproportionately affected, “setting back gender equality by years, if not decades”.

Governments have intervened on a huge scale, with $11 trillion of stimulus. This leaves many countries in debt, running low on ammunition to fight our current circumstances and future crises.

The situation is set against a troubling backdrop of structural and cultural issues:

an ageing population, particularly across Europe and Asia, means governments were already struggling to afford their long-term commitments to citizens
money worries are the largest contributor to poor mental health, which the World Health Organisation says costs the global economy $2.5 trillion a year
there is a lack of trust in financial institutions, according to the Edelman Trust Barometer
there are serious conflicts of interest between financial advisers and product providers and the consumers they are meant to serve.

For billions of people, this means hardship, hassle and lost opportunity.

A silver lining

Citizens around the world have historically looked to their government and/or local bank for support with their finances.

However, with governments less able to pick up the slack, and trust in financial institutions in sharp decline since the 2008 global financial crisis, people are increasingly turning to their employer for support.

These trends have coincided with the growth of the wellbeing industry. The global wellbeing industry now accounts for 5.3% of total global economic output (Global Wellness Institute). Wellbeing in the workplace was already worth $84.5 billion a year and growing 7% annually (Grand View). Covid-19 will accelerate this trend, with the physical, mental and financial wellbeing of the workforce now a major C-Suite topic, spoken about as “their utmost priority” by CEOs ranging from Alan Jope of Unilever, to Marc Benioff of Salesforce.

There is an incredible win-win opportunity for organisations to act now.

Why take a global approach?

There are four key wins for organisations implementing a global financial wellbeing programme.

1. Understand your people, wherever they are

Perhaps the most exciting opportunity in delivering a global financial wellbeing programme, is truly understanding your people’s wants and needs wherever they are. Real time insight enables organisations to make evidenced based decisions on how to support their people in different countries and regions.

For example, you discover that your Millennials in the Middle East are focused on positive areas such as saving and investing, but their peers in LATAM are worryingly focused on debt. Using that intelligence, you can channel information on your EAP to the affected group, again driving more value from your existing spend. Being able to benchmark against organisations in your sector, also allows you to spot trends and act.

2. Create a globally consistent employee experience

We often hear employees say “they only get that in the US, the UK and our bigger locations”. Where an organisation has a desire to support the wellbeing of their people, every employee deserves the same experience, whether they are in Nigeria or Nicaragua.

Global mobility also provides opportunities. Traditionally global mobility teams offer welcome support on areas such as housing and schooling, but personal finances are often over-looked. What are my rights with my landlord? How much should I be spending on my utilities? What do I do with my pension? How do I build my credit score? What’s the best way to transfer money to my family over-seas?

For example, a global tech client at nudge has 1,500 people in Ireland representing an incredible 94 nationalities. Providing financial skills and knowledge enables employees to make the best decisions on how to manage their pay checks.

3. Optimise your workforce

A financially well workforce helps employees, but also adds value to the bottom line.

Culture: “Companies with an emphasis on culture have 34.5% lower staff turnover,” according to the Institute for Economic and Social Research & Policy, Columbia University, 2019.
Engagement: “Highly engaged teams create 21% extra profit,” found Gallup in 2019.
Productivity: “90% of employer’s agree employee financial concerns impact performance at work,” revealed the CIPD in 2018.
Wellbeing: “89% of workers at companies that support wellbeing initiatives are likely to recommend their company,” according to the American Psychological Association, 2016.

4. Maximise return on investment of existing reward, benefits and tech spend

Educating employees on how make the most of their pay, benefits and share plans ensures organisations drive maximum awareness, understanding and utilisation. In addition, a leading financial wellbeing solution should be able to plug into existing global technologies such as Workday, SuccessFactors, Slack, Darwin, OneHub, Teams and Facebook Workplace. Integration reduces implementation overhead and helps drive further value from this existing spend.

When it comes to global financial wellbeing – the time is now!

This article is provided by nudge.

View the original article: Financial wellbeing: a global problem needs a global solution.