People will always be our greatest asset, and we need them operating at peak efficiency if we are to maximise business performance. One way to achieve this is by having a happy and healthy workforce. We believe that understanding the interaction of reward on the physical and mental health of an individual employee is an essential component of a successful reward strategy. In our latest research we identify how businesses can improve employee wellbeing by helping people achieve – rather than worry about – financial goals.
We have summarised below the six key themes that came from the research, each of these are explored further in our report:
1. Stress Is Killing Your Business
Despite stress costing UK businesses 12.5 million working days a year and financial concerns often being a major contributory factor, reward strategies – and government policy – focus on long-term saving. This fails to address the financial needs of our changing society and will result in a financially disenfranchised workforce that is unable to achieve its financial goals. It has also become a huge drain on business resources and will derail long-term succession planning. It needs to be addressed now.
2. Financial Wellness Can Improve Business Performance
There is a mismatch between what employees consider important and what they are prepared to save. They also do not understand the value of benefits, so businesses must take the lead in order to determine what their employees actually need and take control of communication to provide employees with a better understanding, if they are to improve financial wellness.
Employers will be assisted by the fact that, after family and friends, they are considered the most highly trusted. However, many have been discouraged from offering guidance for fear of being seen to have offered ‘advice’.
With the advent of online services and ‘robo-advice’, face-to-face communication has been effectively removed and employees are left to navigate a course through the benefits maze.
3. Create A Generation Of Happy Savers
Businesses seeking to address financial wellness must be open to the range of financial goals their employees may have. Showing employees how existing benefits save them money is a valuable engagement tool but our research identified personal characteristics that influence individuals’ saving behaviour. Employees will range from ‘happy spenders’ through to ‘happy savers’ and understanding this insight will enable employers to help formulate strategies to improve employees’ financial wellness.
4. Be Radical – Think Small, Think Individual
Employees will need access to short-, medium- and long-term savings routes and flex has failed in its current form, because it lacks sufficient tailored engagement to address the needs of the individual. Therefore, employers should be prepared to drop benefit structures that are neither needed nor wanted, as they will never improve an individual’s financial wellness.
Partnership between the employer and employees is the best route to influence saving behaviour and improve financial wellness.
5. Education, Education, Education
Most employees do not have a good grasp of financial matters regardless of academic achievements. Employers should therefore focus on education, not just communication and avoid speaking about financial products but instead focus on employee objectives.
Segmentation to understand the needs of employees is important but a Financial Wellness Index indicating the relative happiness of employees will be more accurate than the traditional approach of banding employees by age.
6. Build The Sustainable Business Of The Future
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 in order to lead employees through this journey.
Financial wellness is not only a new way of doing things, but the right way of doing things and as it is not on the government’s agenda, businesses need to look to themselves and to take back control of their human resources process.
We need to understand what individuals need and lead them on a journey through targeted guidance and advice.