Financial Planning for Employees
One of my friend consulted me on switching his job. I was aware that his employment was quite good. I wondered why he wanted to switch his job. He said he was not happy with his compensation. I asked his compensation and found that he was compensated above par the industry standard. An in-depth discussion with him revealed that his problem was not in his salary but in his surmounting expenses due to his ‘Beyond his means’ lifestyle.
He and I had a debate on if there can be any SATISFACTORY salary at all. My past researches have shown that employees with all grades of salaries lament for more. A large number of employees are victim of “Consumerism” and “Poor Personal Financial Planning” and try to live beyond their means. They are always complaining about the low salaries, are less productive at job and more likely to swicth jobs frequently.
On other hand, financially stable employees are more productive, more satisfied with their jobs. Such employees are stable in their jobs and often an asset to the organization.
Our discussion ended with both of us agreeing that, salaries can never be satiusfactory if the financial planning is poor. The key to satisfaction lies in better financial planning. Employees who are good financial planner make more out of the same salary.
There is a saying in finance, “expenses will expand to cover the income“. So what ever be the salary, employees with poor financial planning skills always live under monetary pressures. They survive paycheck to paycheck and switch jobs to increase the cash flow. Adding to their woes is the ever- rising cost of living, increasing credit card dues, and impulsive buying behaviors.
Role of HR in Employee’s Personal Financial Plannings: What and Why?
While financial planning is an employee’s personal responsibility, however, this aspect impacts the productivity of the employee which is a concern for the organization. HR can have a proactive positive role in this, thus helping employees as well as organization.
A few activities that HR can do to improve the financial planning skills of the employees are:
- A positive cash flow is necessary for financial health. This can be maintained only when we expend less than what we earn. HR can take initiatives to encourage employees to do regular savings and investments.
- Most employees do not have any finanical training. If HR can conduct trainings on personal finance planning by an expert, employees will be better equipped.
- Overspending on the Credit Card is a major problem worldwide and I believe HR can play a big role in ti. HR can encourage employees to reduce credit card spendings by sending e-mails, putting posters on notice boards and via other channels of communication.
- If possible HR can tie-up with some financial advisor who can act as a helpline for employee to discuss their financial planning needs.
Financially sound employees = More productivity = Less attrition – Happy HR! Sounds a good financial equation!
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