Financial literacy is the latest campaign for corporate America. Why do the companies care?
American Express is among nine winners of the first annual award for excellence in workplace financial education, an award that recognizes companies that sponsor programs promoting a high level of financial literacy among employees.
Financial literacy is one of the latest employee wellness issues to be taken up by corporate America, according to the Society for Human Resource Management which yesterday announced the “Workplace Leader in Financial Education” awards.
The award was co-created by the society and the American Institute of Certified Public Accountants (AICPA) to highlight the importance of “financial wellness” in the workplace. Winners provide state-of-the art financial education programs that improve the personal well-being of employees.
“As CPAs, we know that financial security brings peace of mind,” said Barry Melancon, a certified public accountant and head of the AICPA. “Employers who commit to improving the financial understanding of their employees improve the lives of these individuals as well as the financial well-being of communities where they work.”
Others winners are the New York Stock Exchange Euronext, the Therm-o-Disc Inc. division of Emerson Electric, based in Mansfield, OH, and UA Healthcare of Tuscon, AZ. The winners were picked by judges from the President’s Advisory Council on Financial Literacy and the National CPA Financial Literacy Commission, as well as human resource professionals and CPAs.
“The winning companies stood out because their financial education programs showed results, innovation, effective tactics, and a significant scope in increasing employee financial wellness,” said a joint announcement from the two groups sponsoring the award. The organizations define financial wellness as “skill and knowledge for making sound decisions about personal finances, such as saving, budgeting, using credit wisely, education, tax and retirement planning, investing and choosing company benefits wisely.”
Concepts such as the time value of money, the effects of inflation on savings, compound of interest and investment gains are key elements of financial literacy. Low financial wellness can create stress that affects both an employee’s well-being and performance. Negative impacts can include an increased number of work hours spent on personal business. Employees who are financially stressed are more likely to arrive late and to miss partial and full days of work. Financial problems are also linked with higher turnover, conflicts among workers and a high number of workers taking part in credit counseling, according to the websiteWorkLife. Financial concerns have escalated due to the recession and prolonged economic downturn.
“It’s no secret that the economy is weak and individual financial security is top mind for many workers – now is the time to educate employees about personal finance and financial well being,” said Henry Jackson, head of the Society of Human Resource Management, advocating increased financial literacy for workers.