The Ripple Effect: How Employees—and Companies—Win When Employees Have Financial Breathing Room
Financial and personal autonomy are obvious "wins" for people with plans for their life. But they're also good for the companies who employ them.
Several years ago, a co-worker was suddenly laid off from her job. We weren’t particularly close, but it felt like we were at a group gym training session on a Tuesday, and she was dismissed on Thursday. Her departure was one of the most sudden I’ve seen, and a great reminder that jobs are only safe until the day they aren’t.
Said co-worker was distraught over the sudden loss of income, since it turns out that her expensive life couldn’t hum along for more than a week or two without it. Getting a new job, and stat, was critical.
I don’t know the details of her life and choices, and this article is not meant to be a criticism of her. It’s not actually even a piece about the absolute necessity of expanding your financial and personal autonomy to be more “insured” against this sort of thing. It’s rather a look at how everyone, including employers, wins when people like you and me have a degree of financial autonomy.
Right now employees don’t. The stats vary depending on the survey, but this 2024 MarketWatch survey found that more than 65% of Americans are living paycheck to paycheck. Some Americans are cutting back on essentials, including food, to pay for housing. And this PYMTS survey found that nearly half of those making over $100,000/year live paycheck to paycheck. That’s a lot of employees stressed about money.
A peek into employer benefits
Prior to leaving corporate for “the wild,” I worked for a healthcare data analytics software company. Our company had created a fancy software platform which helped major employers manage their employee benefits.
Because these large companies essentially function as the payor for their employees’ healthcare, they’re very interested in having healthy employees. They pay, globally, billions of dollars on employee benefits.1 Many of the company leaders and benefits administrators genuinely care about the well-being of their people. But at the core, the company is paying people in money and benefits to do the work they need done. And said company gets less bang for their buck, so to speak, if their people are stressed over something fixable.
So they do a lot to help employees fix as many things as they can—they offer benefit programs around things like smoking cessation, musculoskeletal health and mental health counseling to name a few. Know what else is fixable?
Money stress is fixable. Consequently, many companies are starting to offer financial wellness benefit programs to their employees.2 These involve coaching, teaching, and advising employees on topics like budgeting, saving, investing, tax planning, paying off student loans, etc.
All good things, all good things. It’s good for employers to have you less stressed about finances3 so you can be more productive at work. So they can get more value out of their investment in you. And it’s a win for you, too. If you’re less financially stressed, you can hopefully derive more satisfaction from your work.
It just won’t surprise anyone that I get much more excited about employees getting excited about creating as much health and thriving as possible for themselves4—independent of the company. If that sounds like good old-fashioned self-reliance, it is.
Intangible negative effects
How is it bad for all parties involved when so many employees (at all levels) of the organization are immediately dependent on each paycheck?
When employees have no financial margin of error or buffer, they are more likely to show up in the following negative ways:They may be hesitant to share innovative ideas.
They say “yes” to initiatives and ideas when they want to say what may be more helpful in the long run: “maybe” or “why?”
They tolerate dysfunction—think excessive Zoom calls or pointless meetings that happen simply because they’re on the calendar.
They stay longer than is good for both parties simply because it’s familiar, it feels “safe,” and they don’t know what else they’d be doing.
They overinvest in the company and what the company “should be doing.”
Essentially, financially-strapped employees have reason to maintain the status quo instead of bringing change, creativity, and a perspective of growth to the problems the company is trying to solve. As research by Sahoon Kim, Jack A. Goncalo, and Maria A. Rodas shows:
The ability to freely diverge in the creative process can trigger a range of reactions that we are only beginning to discover—feelings of liberation, self-disclosure, a sense of autonomy, and a fear of judgment—while restricting the ability to diverge in a creative task mutes these effects.5
That whole fear of judgment piece is an interesting and not positive benefit, but one which could positively be impacted by having more personal and financial autonomy. With some financial buffer in the bank and a bigger purpose to your life, you can literally and figuratively better afford to venture creatively.
Intangible benefits
How else is it good for all parties involved when people have more financial autonomy? What about the intangible benefits to both employee and employer?
When employees have higher levels of financial autonomy, everyone is served in the following ways:Employees at every level feel safer sharing creative ideas. Creative ideas lead to more interesting solutions.
You get more meaningful ‘yeses.’ As I learned in improv, ‘yes’ is meaningless if ‘no’ is not an option.
Employees leave when things are going well, instead of “phoning it in” for years on end.
They push back on dysfunction or processes that are no longer serving the company.
They have a healthy detachment, realizing this workplace is ultimately not their company and don’t expect it to provide the meaning of their life.
Maybe all this feels like a Pollyanna position, but I much prefer it to a dismal thought that things are just the way they are and nothing can be done about them. Or that we need to fix inflation before we can create any positive change. It’s a much more powerful, and resilient, thought, that each of us can absolutely do something to do more than live with the status quo. And that everyone wins when we do.
This is one of those exploration pieces on which I’d genuinely love your thoughts. What do you see missing from this discussion?
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https://www.grandviewresearch.com/industry-analysis/employee-benefit-broker-market-report
https://www.paychex.com/articles/employee-benefits/how-employee-financial-wellness-program-benefits-small-business
https://hbr.org/2024/01/its-time-to-prioritize-employees-financial-health
https://www.sciencedirect.com/science/article/pii/S0022103122001512?via%3Dihub