Thinking Beyond Reward
29 June 2018
Linking people’s financial wellness to a company’s performance
STRESS IS KILLING YOUR BUSINESS
- Stress costs UK businesses 12.5 million working days a year and financial concerns are often a major contributory factor
- Yet reward strategies – and government policy – are focused on long-term saving, particularly since the auto-enrolment (AE) project began. This fails to address the financial
needs of our changing society
- It will result in a financially disenfranchised workforce that is unable to achieve its financial goals
- The huge drain on business resources will derail long-term succession planning and it needs to be addressed now.
FINANCIAL WELLNESS CAN IMPROVE BUSINESS PERFORMANCE
- Financial wellness can deliver improved business performance, but there is a mismatch between what employees consider important and what they are prepared to save
- Businesses must take the lead, build their own model and then embed the process within the culture in order to determine what their employees actually need
- They will be assisted by the fact that, after family and friends, employers are considered the most highly trusted institution
- However, employees do not understand the value of benefits and many employers have been discouraged from offering guidance for fear of being seen to have offered ‘advice’
- Businesses must take control of communication to provide employees with a better understanding of the value of benefits, if they are to improve financial wellness.
CREATE A GENERATION OF HAPPY SAVERS
- Most employees say they would save more, if they had more money to save. Showing employees how existing benefits save them money is a valuable engagement tool
- There’s more to reward than pensions, and businesses seeking to address financial wellness must be open to the range of financial goals their employees may have
- Even those who are content that they have made some provision for the future are woefully under-saving
- Our research identified personal characteristics that influence individuals’ saving behaviour, ranging from ‘happy spenders’ through to ‘happy savers’, who have the highest levels of
financial wellness. This insight can be used by employers to help formulate strategies to improve employees’ financial wellness
- Only a partnership model between business and employee will offer sufficient encouragement to boost confidence in saving in the workplace and drive up improved financial wellness levels.
BE RADICAL – THINK SMALL, THINK INDIVIDUAL
- In order to achieve greater financial wellness, employees will need access to short-, medium- and long-term savings routes
- Flex has failed in its current form, because it lacks sufficient tailored engagement to address the needs of the individual
- Employers should be prepared to drop benefit structures that are neither needed nor wanted, as they will never improve an individual’s financial wellness.
EDUCATION, EDUCATION, EDUCATION
- Segmentation is a powerful tool to understand the needs of your employees
- Focus on education, not just communication, and make no assumptions based on individuals’ academic achievements – most employees do not have a good grasp of
- Avoid speaking about financial products, instead focus on objectives
- A Financial Wellness Index can be used to indicate the relative happiness of employees, which then informs strategies to enhance performance.
BUILD THE SUSTAINABLE BUSINESS OF THE FUTURE
- Financial wellness is not only a new way of doing things, but the right way of doing things
- If financial wellness is not improved, businesses face a crisis among employees, increasingly concerned about their financial situation, and this is already having a
detrimental effect upon their health
- Technology alone is not enough. It will require solutions with a human touch, though not necessarily face-to-face human contact, in order to lead employees through this journey
- This is not on the government’s agenda. Businesses need to look to themselves and to take back control of their human resources process.