You Can’t Fix Retention Without Understanding Financial Stress

Most businesses look at retention through the lens of performance, culture, or fit. But financial stress plays a much bigger role than people think. If an employee is worried about making it to payday, they are not focused on staying long term, no matter how much you invest in them.

Ancel Draai, Senior Director of Growth, HRP at TydeCo™, has seen this play out in real teams. Financial pressure shows up early in the data, in garnishee orders, advance requests, and absenteeism. But most companies do not connect those signs to the bigger picture.

In this interview, Ancel talks about what is being missed, why many financial wellness efforts do not land, and how tools like Sage 300 People can help businesses respond in ways that actually retain people.

Why Financial Well-being is Often Overlooked

Question: Employee financial well-being isn’t often a strategic priority. In your experience, why do businesses overlook it, and what practical difference does it make when they address it?

Ancel Draai: It is a touchy one for businesses because for most businesses in the past and present as well, they tend to look at what is the most profitable thing we can do for the organization to keep it alive. A lot of times we’re looking at how do we mitigate certain risks, how do we reduce our costs—especially if you’re coming from a finance perspective—or you might be looking from a sales perspective, how do we improve our growth in our sales and what we’re trying to put out there from a services perspective.

A lot of companies don’t tend to think about how the decisions that we make, how does it impact the employees from a financial well-being perspective? And that’s not really a priority of ours because our focus is generally towards income statement balance sheets. How does it affect, is this the right decision financially for us? When in fact, there’s a big part of an income statement that we tend to overlook and it tends to be the largest expense on an income statement, which is salaries and wages.

So companies, in my experience, tend to focus a lot on reducing certain costs and ensuring they have efficient tools. When in fact, looking at the employee and how we get the best out of the employee has very positive repercussions for our business. It means we can retain talent, we can attract talent to our business, and companies tend to overlook this.

How can we change it? From my point of view, it is important to understand the situation our society, and those we employ, find themselves in. We are a heavily indebted country where the majority of our employees and people live from paycheck to paycheck or on social grants month to month. It is crucial for us, as an organization, to bring our employees along on the journey we are driving our organization in.

Financial well-being is absolutely critical because most employee decisions on a day-to-day basis are around financial viability. It’s about whether they can afford the bus or taxi, ensure their children go to good schools. We invest a lot in the talent put into our organization. If we don’t address financial wellness, employees may leave us with skills and talent we’ve developed.

Employees who are financial assets within our organization indirectly drive revenue towards our business. We can think more strategically about growth or other products and attract new talent through satisfied employees. It is crucial for strategic planning to include employee financial wellness because the decisions they make inevitably impact their financial well-being.

So, going forward, it is important to address these things, determining if an employee is worth keeping because they’ve attracted customers to us. If an employee leaves with a customer or if market sentiment deteriorates because they leave, it impacts us. Business leaders need to understand how to manage costs, grow strategically, and ensure their employees are financially well-off enough to stay committed. It’s impactful for businesses to develop strategic plans for employee financial well-being, fostering an environment where employees feel valued, appreciated, and financially secure.

Financial well-being is absolutely critical because most employee decisions on a day-to-day basis are around financial viability.

Success Stories: Improving Employee Financial Health

Question: What have some companies done to help improve the financial well-being of its employees? And how has that changed their company?

Ancel Draai: Many companies tend to think about their survival. They’re focused on growing in tough economic situations. Yet, some companies have gone to the next level by seriously integrating financial wellness into their organizations.

There are companies I’ve engaged with that offered shareholding opportunities to employees. When employees had a stake in the business, their perspectives changed completely. Employees began to care more about the company’s financial well-being and made it a point that everyone performed up to standards.

For example, I’ve encountered a hotel in the Western Cape that gave employees a vested interest in the organization. Employees became shareholders, which motivated them tremendously. The area’s safety improved because employees ensured tourists felt secure, contributing to financial growth.

Companies offering more to employees, ensuring their wellness, see a return tenfold because of increased tourism. Employees knew that more tourists meant financial stability for future generations. It’s a high-impact strategy where the company gains loyalty, and the community thrives economically.

Employees became shareholders, which motivated them tremendously.

Why Financial Wellness Programs Fail

Question: HR teams sometimes introduce financial wellness initiatives that employees ignore. What’s usually missing in how they launch these programs?

Ancel Draai: When HR launches programs, they often tend to be generic and don’t resonate with employees. It’s important to understand the audience—our employees—and how best to communicate with them.

Often, internal communications like emails don’t reach employees effectively because they’re inundated with emails daily. It’s essential to figure out what resonates with employees. If a large portion of your employees comes from disadvantaged backgrounds, tailor the message to align with their needs, like financial stability or familial support.

Understanding employee demographics helps craft messages that resonate and engage more effectively. Poorly targeted initiatives may fail to address employees’ real financial situations. Instead of ticking an HR box, offering relatable and useful guidance can make all the difference.

It’s important to understand the audience—our employees—and how best to communicate with them.

Effective Communication: Beyond Emails

Question: How can organizations shift from ineffective emails to more impactful face-to-face communication for delivering key messages like HR or financial wellness updates?

Ancel Draai: Face-to-face communication is generally ideal. However, many organizations operate in hybrid formats now. Video calls are better than emails as they allow interaction and feedback. Understanding employee struggles before delivering content increases relevance and impact of communications.

Face-to-face meetings, virtual or physical, gather insights directly from employees, which helps tailor financial wellness content effectively. Direct communication prevents assumptions about their needs, leading instead to solutions that resonate. Employees better learn about financial wellness this way, fostering better financial decisions due to a more personal connection with the information.

Video calls are better than emails as they allow interaction and feedback.

The Case for Financial Literacy

Question: Should companies invest in financial literacy for employees, and why is it important?

Ancel Draai: Financial literacy is critical for organizations. Many people don’t receive financial training, leaving them unprepared to manage money wisely. Companies should play a role in offering basic financial literacy, not necessarily becoming finance teachers, but providing enough understanding for employees to manage their finances better.

Educated employees face less financial pressure and improve their workplace focus and productivity. Companies teaching financial literacy promote better employee wellbeing, benefiting organizational success. Understanding taxes, retirement savings, and investments contributes to financial security, reducing employees’ need to work beyond retirement age.

Financial stress can lead to absenteeism and decreased performance. Financially literate employees feel supported and tend to give back more to the organization. It strengthens loyalty and promotes a culture where staff is motivated to make a difference, leading to an enriched workplace environment.

Financial literacy is critical for organizations.

Leveraging Sage 300 People for Financial Wellness

Question: From what you’ve seen, which Sage 300 People features can HR departments use more effectively to support employee financial wellness?

Ancel Draai: The Employee Self-Service tool is very important for organizations. It enhances communication between employee and company, providing easy access to pertinent content. Developing finance-related content available via self-service systems allows employees to peruse at their convenience, optimizing financial education.

Self-Service systems facilitate training requests, including financial wellness training. Employees can explore saving strategies, risk management, and avoid scams. Sage 300 People configurations support optimal use of such tools, boosting engagement by encouraging informed, self-driven financial wellness efforts.

The Employee Self-Service tool is very important for organizations.

Spotting Financial Stress in Payroll Data

Question: Financial stress impacts workplace productivity directly. What specific signals from payroll data should HR look for to catch these issues early?

Ancel Draai: Many employees experience intense financial pressures, manifesting as frequent salary advance requests, reliance on ad-hoc loans, and similar indicators logged in payroll systems. Such patterns suggest potential financial distress. Organizations should notice and address recurring financial aid requests as warning signs of underlying issues.

Monitoring garnishee orders is another significant indicator of employee financial struggle. Recognizing and proactively supporting employees through financial literacy and wellness programs can minimize these patterns, creating avenues to correct and prevent future financial instability within the workforce.

Organizations should notice and address recurring financial aid requests as warning signs of underlying issues.

The Future of Payroll Technology

Question: Payroll systems like Sage 300 People continue to evolve. How do you see payroll technology changing to support employee financial health more directly in the next few years?

Ancel Draai: Job costing is insightful, enabling employees to understand profitability and the cost-related decisions within their roles or departments. By sharing this data, employees learn the rationale behind business decisions, fostering transparency and fiscal responsibility.

Payroll technology can optimize resource allocation, ensure fair compensation practices, and facilitate financial literacy as part of employee development. Over time, enhanced systems will offer deeper analytics and tools around financial wellness, aiding companies in maintaining a financially secure and motivated workforce.

Payroll technology can optimize resource allocation, ensure fair compensation practices, and facilitate financial literacy.