Making financial health part of your employee wellbeing program

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Once something of a taboo subject, employee financial health is now a growing concern for employers. As such, it’s a strategic HR priority, with HR professionals pivotal to steering health and wellbeing initiatives.  

While deeply personal, an employee’s financial worries tend to follow them from home to work. There, they create significant costs for employers in the form of lost productivity, increased absenteeism, and presenteeism.  

Healthy workplaces  

Back in 2016, the global professional body for HR and people development, CIPD, began a piece of research on employee wellbeing to stimulate the creation of healthy workplaces.  

The ensuing 2016 policy report, Growing the Health and Wellbeing Agenda: From first steps to full potentialmade the case for a new approach to how employers handle their employees’ wellbeing 

The report noted the importance of employee financial health, and recommended that it become part of an integrated and holistic approach to employee wellbeing. To do this, the report suggested employers needed to take a new approach. 

What is financial stress? 

Financial stress is a situation where financial pressures are causing an individual to worry about their finances, or where an individual cannot afford basic necessitiesConverselyfinancial wellness relates to freedom from stress and financial worry, allowing an individual to make choices to enjoy life. 

According to the Reserve Bank of Australia, most people don’t set out to put themselves in a position of financial stress:  

Sometimes people might choose to stretch themselves initially in taking out a loan, perhaps even putting themselves into mild, temporary financial stress. But they would typically be doing so on the expectation that it will become more manageable over time as their income rises. More serious financial stress often only comes about by a combination of what turns out to be excessive debt and changed circumstances. 

Financial health is a big factor in employee engagement 

According to the 2018 Employee Financial Wellness Survey by PwC, more than half of employees are stressed about their financial health. When asked what causes them the most stress in their lives, nearly twice as many say financial matters as opposed to job stress.  

Of course, those who are distracted by personal financial issues are typically less productive when they are at work. Even if it’s just an hour or two, when this is extrapolated over more than half of your workforce, that’s a serious amount of lost productivity. 

Employers need to shift from a reactionary stance in how they deal with these issues to become more proactive in helping to prevent the problem in the first place. While the PwC report indicates that employees want to make their own financial decisions, they also want financial wellness benefits. They want access to unbiased counsellors to help understand and use their benefits. 

It’s important to recognise that financial health and mental wellness strongly influence physical wellbeing, and an individual’s capacity to do his or her job.  

According to risk management company, Willis Towers Watson, employers have started to take a more active role in helping their people manage their personal financial health. 

Their2017 Global Benefits Attitudes Survey showed that 69% of employers  recognised that they need to take an active role in helping employees manage their personal financial health. More than half (56%) claimed that they would implement a financial wellbeing program for their staff within the next three years. 

When it comes to financial health, a number of social, economic, and cultural factors also come into play. With the coming of age of Generation Z, a new cohort of workers are fast streaming into the workforce, like Millennials before them, with little financial education or experience 

Add to this the economic reality that our capital cities have never been more unaffordable. Hotspots like Sydney and Melbourne are among some of the world’s most expensive cities. This, in turn, impacts recruitment and retention 

As an employer, you need to get creative about offering support for your people to cope with this reality. For instance, offering employee benefits around special rates for home loans, utilities, or loans to support key life events, such as getting married or starting a family, can make a big difference to employees By helping them stretch their incomes further, you can provide financial benefits that offer practical and direct support 

All too often, your young recruits face the financial pressure of living independently for the very first time, and having to cope with paying rent and bills without smart budgeting skills. It doesn’t take much for troublesome finances to escalate out of control, driving some young people into debt spiral which ultimately impacts their mental wellbeing. 

Disinterest in super 

Of course, superannuation is another factor adding to financial stress with renewed concerns around retirement savings sufficiency. Those fresh-faced Gen Zs will almost definitely have to work longer than any cohort before them. All without the security of a governmentfunded pension at the end of it. Knowing what kind of dollars they need to put away to provide a decent standard of living in the future makes financial literacy and knowledge absolutely critical.  

Given employee wellbeing is a key driver of engagement – which, in turn, drives productivity  anything that helps reduce stress and improve employees’ wellbeing is going to benefit the business in the long term. 

Potential changes to super 

In the wake of the Productivity Commission report, recommending how our superannuation system could deliver better outcomes for Australians, big changes may be on the way. 

The report identified two major problems with superannuation in its current form. First, having superannuation attached to an employer, rather than the employee means that many employees have multiple accounts as they switch jobs, paying multiple fees. Second, for employees who choose their employer’s default option, it can be a bit of a lottery as to whether it’s a good fund.  

The Productivity Commission wants to change this so that employees default into a good fund, which stays with them from job to job, unless they actively decide to change funds. 

With the potential of a big shake-up in superannuation, use this as your catalyst to renew your focus on employee financial health and wellbeing. 

Solutions for financial health 

1. Wellbeing strategies 

Wellbeing strategies need to be tailored to your organisation’s unique needs and characteristics. As we’ve discussed previously, when you create your Employee Financial Wellbeing Program, it’s important to recognise that not all employees have the same financial wellbeing needs.  

According to the PwC survey, when asked about what financial wellness means to them, the top responses by generation were: 

  • Millennials: Being debt free  
  • Generation X: Not being stressed about finances  
  • Baby Boomers: Having enough savings to allay worries about unexpected expenses. 

2. 4 ideas for a robust financial wellness program 

To make sure your financial health and wellness program hits all the right notes, consider the following practical steps: 

a) Gather feedback

Rather than making an educated guess, gather feedback from employees about financial wellness. Use a survey to explore their needs, and interests, so you can refine your program based on the real needs of your employees. Be sure to ask about: 

  • Getting the most out of their retirement plan 
  • Superannuation and planning for retirement 
  • Investment planning 
  • Saving and budgeting 

b) Tailor communications 

Use the survey to find out how your employees would like to receive financial wellness communications. Use multiple channels such as live seminars, online webinars, email and social media; whilst making communications simple and meaningful. Stay away from financial jargon that can be offputting to many employees. The more employers can encourage employees to use their financial wellbeing services on an ongoing basis, the more positive the outcome.  

c) Keep it private, but available 

Another major consideration is your employees’ need for privacy in their financial matters, and keeping your people’s highly personal financial data secure. Using a financial wellness solution that gives you company-level data, while keeping the financial needs and personal information of employees anonymous is an absolute must.  

At the same time, you need to ensure your people can access the financial wellbeing content from their desktop or mobile devices, so they can manage their finances when it’s most convenient for themanywhere, anytime. 

d) Assess progress

To determine whether your program is working, you need to be able to measure its effectiveness in terms of positive financial behavioural changes. Use quantitative measures, complemented by more qualitative data, such as individual success stories. You’ll definitely need to run reports about participation and ongoing progress with individual goals:  

  • Participation 

The number of employees signing up for the program is a good indication of need. If participation stays high, you’ll have a good sense of how well it’s working. 

  • Engagement  

A great program should allow your people to access it when it’s most convenient for them. Online platforms allow anytime access to materials, whilst allowing you to easily track progress. 

  • Debt paid off / Savings accrued 

It’s important for you, and your people, to see their debt vanishing or their savings growing. This is a real measure your company can use to find out how much behaviour is really changing across your company. 

A clear case for taking action  

Financial concerns have been proven to have a huge impact on employees. If your staff are worrying about money, they can’t truly focus on their jobs.  

Research shows that financial stress not only negatively impacts employees, it costs you as their employer. Stressed employees are likely to be less productive, take more time off to deal with financial matters, and are more likely to suffer from health issues caused by financial stress. 

An effective financial health and wellness program in your workplace can deliver mutual benefit to people, businesses, economies and wider society. 

By making financial health and wellness an integral part of creating a healthy workplace, your people will be able to reach their true potential, and make a significant contribution to your company’s performance.  

Company performance aside, helping your employees with their financial health is also the right thing to do. 

Support for your employees’ financial wellbeing, with Flare

Join top employers who are intent on helping employees reduce the burden of financial stress.  

Using Flare’s Financial Wellbeing services, you can launch financial awareness and education programs, and provide practical financial support. In doing so, you’ll enhance your employee’s financial health, whilst promoting good financial habits. 

With Flare, you can also give your employees access to financial products with attractive rates, and help them better manage their overall financial health.  

 See for yourself how our platform can help you improve your employees’ financial wellbeing.  

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