Companies across the U.S. are adding financial wellness programs in order to educate their employees about personal finance challenges. The reason for this push resides in the disarray employers find among their employees. For instance, the 2016 Employee Benefits survey report conducted by The Society for Human Resource Management (SHRM) found that 61% of HR professionals feel their employees' financial health is no better than fair.
"Financial issues ... cost businesses $5,000 per year in lost productivity per employee" - 2010 Federal Reserve study
PricewaterhouseCooper's (PwC) Employee Financial Wellness Survey in 2016 found that 40% of employees had difficulty meeting their household expenses each month, and nearly half of Generation Y workers had used some sort of advance loan in the past five years.
To make matters worse, the financial stresses of employees bleeds into the workweek, causing issues for employers. The same PwC survey found that 46% of workers spend at least three hours during the workweek dealing with financial issues, 17% said their work productivity suffered due to financial issues, and 8% missed work. Financial issues, according to a 2010 Federal Reserve study, cost businesses $5,000 per year in lost productivity per employee.
The benefits of adding a financial wellness initiative for employees to address financial stress are significant. However, not all financial wellness initiatives are created equally. That's why it is important to consider a needs assessment, create specific goals and performance assessments, and develop a 12-month promotional plan. By planning and executing a well-thought-out initiative, you can positively impact employee participation and end results.
Financial wellness is a broad term that can cover everything from savings to retirement to homeownership to credit scores. Employers who have successful financial wellness initiatives determine what their employees need and want so they can create a plan that covers these specific topics.
According to the "Financial Education for Today's Workforce: 2016 Survey Results" by the International Foundation of Employee Benefit Plans, conducting a needs assessment is a good indicator of a successful program. Thirty percent of employers with successful programs started with a needs assessment, while 0% of employers with unsuccessful programs had done so.
Too many employers provide general financial information rather than specific information aimed at groups based on age, income level, life stage, and goals. Plans with such general information lead to low participation and disheartening results.
To determine what your employees want and need in a financial wellness initiative, you can consider both subjective and objective measures. Objective financial measures can include such things as home ownership, debt, savings, and credit score. More subjective measures can include self-reported stress levels concerning personal finances and how an employee feels about saving vs. spending.
"Specific Goal" and a "Performance Assessment"
The point of the needs assessment is to help your company determine the goal of the initiative. The ultimate goal of a financial wellness program is to increase your employee's overall financial health. However, a balance of specific short-term and long-term goals are needed to help your employees balance today's stressors with tomorrow's needs. These goals need to be specific, as well as measurable.
An assessment should then be created to determine if the financial wellness initiative's performance is meeting the stated goals. The assessment should do two things:
- Measure the engagement level of employees
- Measure the progress toward the indicated goals
By assessing the financial wellness initiative, you can quickly determine any issues and make corrective changes to get your program on track.
"12-Month Promotional Plan"
Even the best financial wellness initiative will fail if employees do not know it exists. A recent Bank of America survey found that about 30% of employees of large companies were not sure if their company offered a financial wellness initiative. The same survey found that most initiatives also had low participation rates.
The way to combat this is to have a consistent promotional strategy that keeps the financial wellness initiative at the front-of-mind. However, most employees do not want to be flooded with new communications, so it is important to find ways to incorporate relevant content about the program into current communications.
When considering communications with your employees, be sure to add your own messaging to the campaigns. Employees that see vendor-produced materials only often view it as advertising rather than information they need in their own lives.
Most importantly, remember that adding a financial wellness initiative is more like a marathon than a sprint. The International Foundation of Employee Benefit Plans 2016 survey found that programs are more successful the longer they have been in place. In fact, for many programs, it can take up to five years to be successful.
Findings from Fidelity from data gathered through their online Money Checkup tool have found that 88% of users are not confident about their financial future and over half do not have good saving and spending habits. These numbers suggest that employees need help creating a healthy personal financial picture. As you create a financial wellness initiative to do so, keep these three points in mind. Doing so can help you produce happy, successful, financially sound employees.