The financial wellness of employees is a hot topic. It’s hot for a reason. Employers are increasingly aware of how financial wellbeing impacts their business. But to improve the financial wellness of their employees, HR teams need effective ways of measuring it.
In business, we are all working towards key performance indicators, or metrics. These allow organisations to measure what’s important to a company to ensure it’s achieving in all business-critical areas.
Methods to measure profit, waste, and employee performance have been around for decades. In addition, businesses can measure the productivity of their employees as well as recording metrics like absence and retention rates. These last metrics are particularly relevant to financial wellbeing.
It’s relatively easy to monitor and record areas where there are tangible results.
But when it comes to the financial wellness of employees, this initially presents a challenge. Not least because for many employers, the concept of employee financial wellbeing is still relatively new.
Invariably, HR managers will play a major role in any financial wellbeing initiatives. This means that it’s necessary to lead from the front and for HR managers to educate their teams.
Understanding the concept, therefore, is the first step. Once this is fully understood, then it becomes clear that there are key business impacts that can be recorded and measured.
Before measuring financial wellness, it’s necessary to understand what financial wellness is.
In contrast, employees that are not financially well may:
Identifying employees who are struggling with their financial wellbeing is not always simple.
This is because it’s too easy to assume that employees in higher positions and therefore on a higher salary will be financially well. Conversely, the assumption is that those receiving a lower wage will struggle financially.
The reality is that financial wellness varies across all pay scales. In fact, you are just as likely to find a highly-paid employee struggling with their finances as you are a lower-paid one.
Understanding that poor financial health can affect anyone, however much they are paid, is vital. This will ensure that employees at all levels are given adequate support.
Monitoring financial wellness requires an investment of time and employers want to see a return on this investment.
It may not be immediately obvious what the business case is for companies to promote financial wellbeing. But business leaders need to see metrics that clearly demonstrate that investing in employee financial wellbeing is worthwhile.
Here’s the key take-away: Once businesses understand the impact of poor employee financial wellbeing, it becomes clear that this is already having a detrimental effect on existing levels of performance.
There is strong evidence that shows that employee financial wellbeing is connected to many other areas in the workplace. Now, let’s look at these:
Employee financial wellness impacts several areas of HR, all of which are usually monitored by HR teams. That’s why understanding how each of these areas are impacted by employee financial wellbeing is the first step towards making improvements.
When an employee is under financial stress they are more likely to be absent from work. This could be because they need time to deal with their financial situation, like talking to their bank or a loan provider.
However, more worrying is the link between financial stress and mental health. Worrying about money can have a negative effect on our mental health. Poor mental health can make managing money even harder. This creates a cycle that can be hard to escape.
Someone absent from work that is under financial stress could be facing mental health challenges. Research shows a clear link between finances and mental wellbeing.
86% of respondents to a Money and Mental Health survey with experience of mental health problems said that their financial situation had made their mental health problems worse.
Financial stress can be extremely distracting in the workplace. Being distracted makes it harder to concentrate, and this has a negative effect on productivity.
Missing targets and can have far-reaching impacts, for example customer retention. Understandably, employers are keen to maintain and even increase productivity levels.
A study by Warwick University found that happy employees were 12% more productive. It’s clear that financial worries severely impact our happiness, so tackling financial stress facilitates increased productivity.
Benefits packages that promote physical and mental health can help employees enjoy a better work-life balance. But what about their financial health?
Providing some sort of financial wellness support to employees can help employees feel valued and cared for by their company. This can promote loyalty among employees and have a dramatic impact on retention.
In summary, when employees feel that their needs are being met, then they are more likely to stay with their employer.
The very best talent has always been able to choose the company that they work for. As a result, while the salary on offer is a key consideration, talented individuals look well beyond this.
Today’s workforce is now firmly focused on a great workplace culture and a clear path for career progression. However more recently, employees are closely comparing benefits packages on offer. This can be a deciding factor when choosing which job to either apply for or accept.
That’s why offering the best possible benefits package should already be one of your priorities. Financial wellbeing perks are growing in popularity and can really help your company stand out.
Simply acknowledging your employees’ financial wellness is not enough. HR teams need to clearly show that they are taking this aspect of their employees’ lives seriously.
A financial wellbeing strategy can take many forms, but here are some of the main elements to consider including:
Read our previous article for more ideas on tackling financial wellbeing at work.
With a financial wellness strategy in place, the results need to be measurable.
Here are 6 key ways that HR teams can measure financial wellness. Using them in combination can create a highly detailed picture of how successful your financial wellbeing strategy is.
A strategy to increase financial wellbeing cannot be forced on employees. There needs to be buy-in from them to make it work. Getting employee buy-in will boost take-up and that’s a great metric to measure.
This is because measuring the number of employees who participate in initiatives or access resources allows you to assess whether your strategy is on target.
For example, HR teams can monitor how many employees access online training. Or how many choose to book time with an impartial financial advisor or counsellor organised by the company.
When it comes to using Openwage to access earnings before payday, monitoring take-up becomes a breeze. Monthly reports show (anonymously) how many employees access their pay, and how much they transfer.
Satisfaction surveys provide a snapshot showing how employees feel about your business at one particular moment.
Looking more closely, surveys can give insights into how happy your employees are and how they feel about the organisation. HR teams can also use surveys to assess engagement, by asking questions around passion and commitment.
Of course, happiness and engagement directly affect each other and the ideal is to have employees who are both satisfied and feel connected to your company in multiple ways.
Surveys conducted in the right way asking the sensitive questions can provide a measure of how your employees are feeling. You can then draw out insights relating to their financial wellness.
While surveys can give a formalised view of how your employees are feeling, an informal chat can often reveal far more.
Encouraging a workplace culture where your employees are comfortable talking to both HR and the management team is important. This means you can promote open conversations about financial health.
With the right guidance, managers can feel confident having informal discussions with employees about financial wellness. But you may want to consider offering training sessions for managers. Training could help them have supportive conversations about money and offer tools to help them.
As we have already explored, employees experiencing financial stress tend to be less productive.
If productivity levels start to increase after implementing your financial wellness strategy, then it could be a sign that it’s having a positive effect.
On the other hand, if productivity drops or plateaus, then perhaps it’s time to review and tweak your financial wellbeing strategy.
Employees experiencing a financial crisis are stressed. Sometimes that stress can become so overwhelming that the very thought of work is too much.
Stress has serious consequences on physical and mental health, as well as the impact of lost working time for businesses.
Absence rates can be a good indicator of the effectiveness of your financial wellbeing. However it’s important to drill down into the data to uncover the most common causes of absenteeism and tackle those specifically.
Employees who are struggling with their financial wellbeing will have different priorities. This may include increasing their take-home pay or even securing a pay advance.
If your company isn’t meeting these needs, then there is an increased chance that that employee will leave your organisation. This is because they may be focused on securing a higher-paid position or joining an organisation that offers financial wellbeing initiatives.
Offering fair rates of pay is a given. However, offering financial wellbeing initiatives as part of your benefits package is a great way to both attract and retain talent.
For those who do leave, exit interviews are critical to exploring the reasons why. If this flags issues with your current strategy, you have the perfect opportunity to tweak it.
“Wealth is the ability to fully experience life.”Henry David Thoreau
Financial wellness leads to better overall health. Being financially well brings many benefits, not least the ability to enjoy life more.
Measuring financial wellness doesn’t have to be complicated. But it is important if your organisation genuinely wants to effect positive change. There’s no point implementing a poorly-thought out strategy that simply gets ignored.
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