How anxious are your employees about their financial well-being? NCMM Executive Director Tom Stewart examines how financial anxiety can impact business. Includes special guest, Brian Nelson Ford, Financial Well-Being Executive at SunTrust Bank.
Transcription
How anxious are your employees about their financial well-being? Here's why you should know, why you should care, and what you can do about it.
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Welcome to "The Market That Moves America," a podcast from the National Center for the Middle Market, which will educate you about the challenges facing mid-sized companies and help you take advantage of new opportunities.
Middle market companies pride themselves on having close productive relationships with employees. An often forgotten part of that is how anxious are they about their own financial well-being? Turns out, that can have a big impact on how the company does as well. I'm Tom Stewart, the Executive Director of the National Center for the Middle Market at the Ohio State University Fisher College of Business, We're the nation's leading research outfit studying mid-sized companies, which account for a third of private sector employment in GDP and the lion's share of economic growth. It is the market that moves America.
The National Center for the Middle Market is a partnership between Ohio State and SunTrust Banks Grant Thornton LLP, and Cisco Systems. With me today is a special guest, Brian Nelson Ford, who was the financial well-being executive of SunTrust, one of NCMM's sponsors. Brian, welcome to "The Market That Moves America."
Thank you. It's good to be here with you.
Let me begin with a couple of points to just set the stage, and Brian you're going to run with a lot more of this, but we've been looking at some research that was conducted by NPR'S Marketplace and Edison Research that points out that, like, 44% of employees feel stuck in terms of career advancement, and that's 10 points higher for women. 26% feel financially insecure, and that's not just the unemployed. 20% of employed people feel financially insecure. 21% of them are frequently anxious, and 60% are anxious at least sometimes.
Brian, what do you make of those numbers?
Those numbers don't surprise me. I've been in the workplace financial wellness space for a long time now, and that's what we're seeing out in the marketplace, that's what we're seeing with individuals and with companies. You know, I find it amazing that, you know, half of Americans, they're living paycheck-to-paycheck, and by the way, that's regardless of income. Sometimes we are quick to say, well, you know that's the lower end of the workforce, right, and it's not. And, you know, a third of us have no savings whatsoever. So those stats don't surprise me.
No savings, a third of us have no savings whatsoever.
That's right.
And probably that third has access to credit but has a pretty substantial credit card balance as well.
Yes. Absolutely. There's no problem, debt's a problem in the country as well.
So are-- so why is this-- I mean, you know, I hire you. I pay you. How does this show up as a workforce issue?
Yeah. I mean, if you think about it, people are feeling stress, and they're not leaving that at home. They're bringing that into the workplace. Research is pretty clear. It's one of the number one causes of workplace stress, at these financial issues are. We know that employees, they're spending about 28 hours per month worrying about, stressed over, calculating their finances, and it's costing companies about $5,000 a year in lost productivity, that's $5,000 per employee in lost productivity.
And you know, I was talking to a CEO of a company-- this is just a couple of weeks ago-- and he knew that these were issues within the workplace. He knew this wasn't just a personal thing that was going on. In fact, he kind of, he joked with me, and he said, Brian, I'm pretty sure our employees, they're not just-- you know, those 28 hours that they're stressing out, I'm pretty sure that's not just on Saturday morning. And I agreed with him. And I mean, it's a simple way of saying, look, this is spilling over into the workplace, and it's causing issues within the workplace. It's not just a family or a personal thing.
But I've got to-- I've got to assume also that when I think about that, it may not be my own personal anxiety but it could also be anxiety about my spouse, about my children, about my mother. I mean, there's sort of an extended family issue as well and that all of that can be pulling me away from the grindstone or away from really focusing on-- focusing my best attention on what I want to do at work.
Absolutely. There's no doubt about that. Relationships are impacted by financial illiteracy. Again, research is very clear that fights over money is one of the number one causes of divorce in this country. When we're struggling with any type of a relationship, whether you're married or not, whether this is an issue with an adult child, you're bringing that stuff to work. It's impacting productivity.
So you guys were-- I mean, I want to talk a little bit about middle market companies, or a lot about middle market companies, but I know you guys started out at SunTrust Bank with presumably financially literate employees and sort of looked at some of the situation with your own employee base and discovered, I mean, what did you-- what did you guys learn about how this shows up even with well-paid people working for a bank?
Yeah, well, we actually assumed what you did, which is we are a bank, and our employees should be doing better. And that's what we thought about three years ago, but really, through an employee engagement survey, we found that we were wrong. And in many areas, our employees weren't doing any better than the national averages, and those national averages, by the way, they're not acceptable.
Yeah. They're grim, yeah.
We just talked about a bunch of those statistics. And so, you know, this just was not a good thing, but it certainly was a wake-up call. And so we decided to implement the Workplace Financial Wellness Program, we actually call it Momentum On Up, and we launched it a couple of years ago. We've got over 16,000 of our 24,000 teammates actively participating in the program, and we've seen some really nice results. In fact, they astounded us. We knew it would be good. We knew it would help. We know education is important, but I mean, really we found some pretty neat things. I mean, you know, let me kind of share a few of those with you.
There is kind of how the teammate is benefiting, and then there's how SunTrust is benefiting. But what's cool is 73% of our teammates are better prepared to handle a $2,000 unexpected expense. Because the national statistic is 40% of people could not come up with $2,000.
Which means-- which means a fender bender and you're in deep trouble, right?
That's exactly right, yep. 86% of our teammates are now making progress toward their financial goals. 62% feel less financial stress, and so that's a nice thing. We love that our teammates are benefiting, but also, at SunTrust, we're benefiting as well. And then a few other things is, you know, 76% of our teammates are now more likely to refer others to work at SunTrust. You know, 69%, so almost 70%, feel more confident about building a longer career at SunTrust.
And you know, one of my favorite stats, I'll share this with you. In corporate America, if you ask employees, you know, does your employer care about you? I mean, personally around your personal finances, does your employer care about your personal financial journey? Only about 40% of folks will say yes to that, and again, we weren't much better than the average. Now, two years later, 82% of our employees believe that SunTrust cares about them and their personal financial well-being, which is exciting for us.
So a couple of things-- one thing-- I mean, one of the-- I mean, you've got this program. What are the, you know, pillars of it? I mean-- I mean, you know, we don't need to go into a lot of detail, but, like, what are the big-- what are the big elements?
Yeah. Well, you know, I will say that we followed kind of this three-tiered structure. Education is always important, but sometimes that's where we jump right into. And we said, you know, why are these types of programs failing? So we stepped back and we said, there's got to be something more than just education. So our three-tiered structure really is inspire, educate, and then equip. We've got to start with inspiring employees, capturing their hearts.
I've got to have hope, right? I've got to think it's going to work.
Well, you know, sometimes we jump right in and start talking about budgeting and half the room falls asleep, and we wonder why our financial wellness programs don't work.
I'm about to snore right here. Yeah, exactly.
(LAUGHS) Oh-oh. That's how my wife is, by the way. She has trouble--
She's right. All sensible people think budgeting is boring.
I'm telling you, when she can't sleep at night, I just start reading from my book, and we start talking about our net worth, and five minutes later, she's snoring. And anyway, so we've got to inspire people. Then we can educate them, but we've got to go beyond that, and we need to equip them so that they've got the tools to make this sustainable.
But I think your question specifically was around the education. So just very quickly, I want to mention that the education that we provide our teammates, it's research-based, even though I was one of the lead authors. And we follow something called the eight pillars. And all we did, we studied folks who are happy with their money regardless of their income, and we said, how did you get here? What are you doing different? And we backed out these eight pillars.
A few highlights, pillar one is about establishing a confidence account. I mean, that's a fun, fancy way of saying you need to have some emergency savings. And then in pillar two, we organize and we automate the finances. Pillar three, we help people get out of consumer debt and understand their credit score. Pillar four is insurance and estate planning, and then we go into investing and home ownership.
Pillar seven is about career development. It's about really managing your income source, not just the money that you make, but, you know, can you make more money? And then we round things out with pillar eight. Pillar eight is about giving back. It's about getting perspective and giving back and helping our communities be a better place. So in essence, that's kind of our program in a nutshell.
So I want to think a little bit about this with smaller companies. I mean, SunTrust is not the world's biggest company, but you do have 24,000 employees. And one of the things I think about when I think about mid-sized companies-- or two things, one is work force and the productivity of the workforce is absolutely critical.
One of the things that we learned is that 77% of middle market executives are at least somewhat concerned about whether their employees are financially concerned, 40% are very or extremely concerned and in retail, more than half of them are. And at the same time, one of the things we know is that mid-sized companies are the most aggressive hirers, and they feel the talent shortage and the talent pinch more acutely than anyone else. So four out of 10 middle market executives say that a lack of talent is constraining their ability to grow.
So what I'm hearing from you is that programs like Momentum On Up can help me retain employees, because they're more likely-- you know, your SunTrust data, and I think you have data for other companies too that show that these people are more likely to stay. So it's easier to keep a bucket full if it's not leaking, right? And I'm also more likely to be able to get more productivity from them, because they're not pulling their hair or losing sleep or whatever it is. So I can make some pretty significant improvements in some of those workforce challenges.
Absolutely.
How do I do it light? I mean, you know, you guys have-- you guys are big. You know, you've got a big HR team. What if I've got five? How can I do this with a smaller outfit?
Well, I can tell you, Tom, I've been doing this for over a decade. I've rolled out over 200 workplace financial wellness programs. In fact, I was the founder and CEO of the company that SunTrust purchased in order to create their own internal program. And so I've been doing this, not just for large companies but for small and mid-sized companies as well.
And I can tell you, people are people. You get a person, and if you can solve a problem or an issue or decrease a stress, that's going to help productivity in the workplace. But I will say at SunTrust, we did measure turnover. We looked at new hires in a one-year period, and we found that those who did not participate in the program, we retained about 60% of them. But those who did participate, we retained 92% of them. There was a 32% difference in retention.
Now, we're not going to say, you know, complete causation there, but there's definitely a correlation. Something's going on there. We're making a difference. And I would say the same is true for middle and small organizations.
How do I do it light? You know, if I've got-- if I've got an HR team of five, how can I-- how can I do this?
Well, most companies are outsourcing it. It is something you can do internal. I mean, if you're thinking of more of like a light version, I would say start with your current benefits and making sure that if there are some of those benefits that have to do with financial literacy or wellness that you're highlighting those, that people know about them. And so maybe it is if you do have a retirement plan, maybe it's having your plan sponsors come in and provide something, kind of like a light version.
But I would say that's more of a I want to check the box. What we're finding is, if you really want to create long-term behavior change, which that results in greater productivity and lowering turnover, that's a more expensive, strategic thought process. You can do it with a small team. You just need to outsource it with folks that know exactly what they're doing.
You know, it's interesting, another one of these data, pieces of data that we just collected, we asked companies about their overall employee value proposition, so that's pay and benefits and everything else that goes with it. And we asked them, do you do the minimum, just pay them as little as possible? Do you pay to, like, meet an industry standard? We want to be-- you know, we want to be right there with our peers. Or do you pay and reward-- you create a value proposition to create competitive advantage, to be the kind of place that attracts the best talent?
And so we gave that choice. I guess we gave others, I suppose. But basically, the pie divided itself almost equally in thirds. About a third of people say we reward employees as little as we can get away, about a third said we want to be competitive in our industry, and about a third said we want to knock the ball out of the park. And what's interesting is that that last third was also the best performing third.
(LAUGHS)} That does not surprise me. Not surprising at all. Really when you look at some of the employers of choice, you look at some of the best places to work, they're often some of the most profitable as well. Again, I was meeting with another executive of a very profitable organization. They have been recognized as an employer of choice, and, you know, we were grabbing a bite to eat together, and he said, Brian, you know, I don't think I could imagine calling ourselves the best places to work while ignoring one of the number one issues on the minds of our employees and that's financial stress.
And they believe-- this is a company, again, that's won awards in customer service and customer satisfaction. They believe that if they treat their employees well that their employees will treat their customers well, and that's led to good business outcomes. It just simply makes sense.
So one of the interesting things is that, from what I'm hearing from you, is that the solution to this is not just to throw more money at it. I mean, it's not just, like, give everybody a raise, and they'll be happy. In fact, you give them a raise, and the anxiety-- they just may have the anxiety at a 20% higher level or whatever it is. But it really is this combination of inspiration, education, and tools, and that's where the solution is. The solution is not just cut a bigger paycheck.
There's no doubt about that. The research is clearly stating that you can't just give people raises. Yes, satisfaction with pay will spike for a little while, but then give it a few months, and people, again, will be paycheck-to-paycheck, asking for more money. And so you're spot on. It really is, it's a combination of financial education, and then shining more light on your existing benefits as far as the tools that will help them.
I mean, look, one thing I will say is, after doing this for a while, I'm very confident that, you know, financial issues, this is not a new problem in our country, and financial education is not a new solution, but workplace financial wellness is different. It's making a difference. It made a difference at SunTrust, and we were kind of blown away. And then we said, wow, we've got to offer this to other companies, and that's exactly what we're doing now.
We've gone beyond our own teammates. We now have over 50 companies that are using Momentum On Up as a way to differentiate themselves in the marketplace. And, you know, once you really do this, it makes sense that workplace financial wellness is working, because it's coming through a highly-vetted source, the company. It's at the source of where they get paid. It's the source of their benefits. And so now they can better understand, appreciate, and utilize those benefits, and it just all makes a whole lot more sense. So it's kind of an exciting frontier that we're seeing in the workplace.
It's pretty cool, and when you think about it, you know, you wouldn't-- your human capital isn't for most companies, it's not on the balance sheet, but it's the most important asset, and a little bit of care and feeding of it and helping to get it smarter and smarter so that you don't just plug it in, right? It's not just-- you know, human capital is like any other kind of machinery or anything. You don't just plug-and-play. You actually have to work carefully to develop it, improve it, and get the most out of it. And plus, as you said, people are people.
Well said.
Yeah. So Brian, thank you very much. Brian Nelson Ford, from SunTrust, the financial wellness executive. And you can learn more about that program at their website, which is momentumonup.com. And you can learn more about the National Center for the Middle Market from our website, which is middlemarketcenter.com-- middlemarketcenter.org, excuse me.
Thank you so much for listening to "The Market That Moves America." Never miss a new episode, you can subscribe to this podcast on iTunes, Google Play, Stitcher, or wherever fine podcasts can be found, or you can subscribe and learn more about us at our website, again, middlemarketcenter.org. Thanks very much.
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