Previously I sat with Best Money Moves founder and CEO, Ilyce Glink, and General Manager of FlexPay by SAP Marcus Krug to discuss why so many employers are turning to financial wellness as their number one employee benefit in 2020 and how their solutions, which are both initially targeted at the US market, can help.
Marcus Krug explained how FlexPay by SAP, launching in January, offers a much-needed pay solution to help employees address their financial needs and to help employers tackle their turnover and recruitment challenges.
Ilyce Glink also introduced us to Best Money Moves, an award-winning financial wellness technology platform that helps measure employee financial stress and then uses artificial intelligence to send relevant and contextual information, tools, calculations and solutions to employees.
Read the first part of our interview in Part One of this series.
Now, FlexPay by SAP and Best Money Moves are joining forces to offer employers and their workforces one killer financial wellness combination. Here’s what Ilyce and Marcus have to say about the ROI of financial wellness for employee populations:
Q: Why has financial wellness become an issue for employers?
A: Ilyce Glink: If you ask employees what is the top stress they face in their life, they’ll tell you it’s financial stress. And, it isn’t just because they have too much credit card debt or student loan debt. It’s all of the financial stressors that build upon each other that cause that level of financial stress. With today’s extremely low unemployment rate, it’s important that employers improve retention and employee engagement. Financial stress reduces retention, engagement and productivity, while increasing turnover. It’s a problem employers now realize they need to solve.
A: Marcus Krug: According to a study performed by the International Foundation of Employee Benefit Plans, more than 30 percent of employers rated the financial stress levels of their employees as high or very high, another 50 percent rated their employees’ financial stress levels to be medium.
Financial stress impacts employees in many ways
An employee’s financial stress affects both job and company performance. Most organizations understand this connection. Almost 40 percent of employers rated the impact of financial stress to be high or very high, especially on the ability to focus on work (64%), absenteeism (34%), morale (30%) and physical health (36%). As a consequence, it is not surprising that an increasing number of employers are taking steps to help employees solve their financial issues.
Q: We know that ROI is important. If companies invest in the financial well-being of their employees, what can they expect to happen?
A: Marcus Krug: Employers investing in on-demand pay will see significant decreases in turnover and absenteeism as well as increases in engagement and morale with impact on productivity and customer service. While some of these benefits are difficult to quantify, there is a strong case to be made for turnover.
According to the Bureau of Labor Statistics, industries employing large numbers of hourly or lower-wage employees like Retail and Food Services are seeing average industry turnover rates between 30 to 80 percent. Turnover costs are typically estimated to be roughly 16 percent of annual salaries, such that turnover costs can easily cost thousands of dollars per employee. Correspondingly, employers are losing millions of dollars in turnover costs annually. Given that on-demand payment solutions can lead to significant turnover reductions, employers investing in these solutions can expect high returns on their investments with short break-even time frames.
A: Ilyce Glink: Best Money Moves has an average usage rate of 33 percent of the total population, which goes as high 73 percent, if the company runs regular contests on the platform. Our latest usage survey shows that stress levels are down 12 percent, and credit scores are up by 15 points.
Q: How do FlexPay by SAP and Best Money Moves complement each other and what is unique about this collaboration?
A: Marcus Krug: FlexPay by SAP and Best Money Moves are both built on the mission to end financial stress for employees, thus unlocking significant business impact for employers and their customers. While FlexPay by SAP helps employees address their short-term financial gaps, Best Money Moves helps them with financial education, budgeting, and managing their finances. Together, FlexPay by SAP and Best Money Moves allow employees to detect financial stress as it occurs, to see the bigger picture on expenses while using on-demand pay and to link both financial planning with income and spending. As a consequence, employees are considerably more likely to prevent financial stress and less likely to spend more than they have.
A: Ilyce Glink: According to research from the Pew Charitable Trusts, more than 5.5 percent of all Americans have taken out a payday loan in the past ten years. Those loans charge as much as 700 percent interest. And while it would be ideal if employees never needed those sorts of loans, access to cash at a point of pain is incredibly important. That’s where FlexPay by SAP comes in.
But just having the access to cash isn’t enough. Combining FlexPay by SAP with Best Money Moves allows employees to have access to their own earnings when they need it, without the huge payday lender interest charges, while having the information, tools, and live coaching to help them learn how to manage what they have more efficiently.
It’s a killer combination that helps employees reduce financial stress, while increasing productivity and retention. This is just one way to create unexpectedly exceptional experiences that make employees more engaged, more satisfied, and more fulfilled in their career, and, as a result, helping deliver more productivity, revenue, and improved performance to the business.
To learn more about SAP SuccessFactors Human Experience Management Suite (HXM) tap in the HXM Digital Summit for on-demand webcasts, research, articles, and more.
This post is part two in a two-part series about the way FlexPay by SAP and Best Money Moves are revolutionizing financial wellness for employers and their workforces. Catch up with the great work Best Money Moves and FlexPay by SAP are doing to help employees everywhere by reading Part One.