Why financial literacy is the key to employee retention and satisfaction

What are the links between financial stress and employee performance? How do employers enhance financial wellbeing and provide the right education? Here’s how financial literacy can boost your employee retention and satisfaction

Want to reduce absenteeism and boost retention and productivity?

Research shows that when employees are satisfied with their jobs, workplace culture and overall experience, they’re more likely to stay with the company for a longer period and are ultimately more productive.

But there’s a worrying trend among SA employees: 76% of employees live paycheck to paycheck while up to 70% can’t pay all their bills on time and the average household spends as much as 62% of its monthly income to repay debt.

Now, international research by Visa on employee finances shows that 84% of employees worry about finances while at work and PwC’s employee Financial Wellness survey found that over 56% of those say financial worries affect their sleep, impacting their physical health and placing major stress on relationships.

All of this indicates that financial stress can erode employee satisfaction. So the question is: can financial literacy help boost employee retention and satisfaction?

The Link Between Financial Stress and Employee Performance

Financial worries often take a toll on productivity, engagement and overall wellbeing. A Mercer study estimated that financial stress in a company of 10,000 employees could result in up to 1,922 hours of lost productivity per week – costing the company an estimated R533,000 every 7 days.

But the cost is not only financial. Employee distractedness also leads to:

• Lowered employee engagement
• Increased churn and lower retention
• Poor physical and mental health

It goes without saying that the cost and impact of these issues can add up quickly, leading to negative consequences for employees and the companies they work for.

We’ve already put together information on how financial stress impacts productivity. To see how much it costs to replace employees that leave, and how much you can save if you reverse the trend, use our employee turnover calculator.

How Financial Literacy Enhances Employee Well-being

Financial literacy is a vital tool for employee well-being. By teaching budgeting, debt management, and financial planning, employees gain control over their finances, reducing stress and enhancing confidence.

A new Indonesian study from earlier in 2024 shows that there’s a direct link between financial literacy programmes and high workplace satisfaction and engagement, proving that employees who are financially informed are better equipped to manage expenses, avoid high-interest loans, and make sound decisions about savings and debt.

Jem HR offers a unique solution by delivering free, accessible financial education via WhatsApp, allowing employees to access resources anytime and in their language of choice.

See all about getting financial education for your teams and how a special Jem product called Earned Wage Access promotes financial literacy.

Get Free Financial Education for Your Employees

Implementing financial literacy programs is easier than ever with Jem HR’s accessible, interactive education platform. Available through WhatsApp, Jem’s modules provide lessons on budgeting, debt management and financial planning, empowering employees with essential skills.

Here’s how Jem’s financial education program works:

1. Accessibility: Employees simply send a message to Jem’s dedicated WhatsApp number and access educational modules 24/7, in multiple languages (isiXhosa, isiZulu, English and Afrikaans are currently offered).
2. Engaging content: Lessons are structured as interactive stories, making complex concepts relatable and easy to understand.
3. Comprehensive topics: From budgeting and debt management to savings strategies, Jem’s program covers the essentials of financial health.
4. Employee privacy and flexibility: Lessons can be revisited at any time, helping employees reinforce their learning at their own pace and in a secure environment.

Through Jem’s user-friendly platform, companies can empower their teams to improve financial literacy, creating a positive cycle of knowledge, confidence, and satisfaction. And, as employees become financially empowered, they’re more likely to stay engaged, motivated, and loyal.

To get your employees access, contact Jem here.

Plus: Earned Wage Access (EWA), Another Step Towards Financial Inclusion

In addition to financial education, Earned Wage Access is a powerful tool that promotes financial stability and inclusion for employees by providing employees with immediate access to a portion of their earned wages before payday, helping them address unforeseen expenses without resorting to high-interest loans or payday advances.

Here’s how EWA contributes to financial stability and supports employee wellbeing:

• Immediate access to already-earned funds: EWA helps employees navigate unexpected costs by allowing them to access their wages as they earn them, reducing the need for expensive debt options.
• Reduced reliance on predatory lending: With EWA, employees can avoid loan sharks or high-interest payday loans, which often trap individuals in debt cycles.
• Building a savings buffer: By giving employees financial flexibility, EWA helps them preserve savings for true emergencies, fostering healthier financial habits.

Many South African companies are already seeing positive results from EWA. For example, Mukuru, a leading financial service provider, saw a 96% reduction in HR time spent on loan processing and a significant drop in absenteeism after implementing EWA.

Similarly, Lasec Group reported saving employees up to R45,000 annually in loan interest, demonstrating EWA’s role in improving financial resilience.

EWA through Jem, combined with valuable financial literacy programmes, empowers employees with financial flexibility and knowledge, creating a stable, motivated workforce.