3 steps to building a case for your financial wellness program
There are many humanitarian reasons to offer your employees or participants a financial wellness program. But does it make good business sense?
The answer is maybe. But if you want funding for a program, you’d better be able to answer the question with precision. Let’s start by learning how to evaluate the need within your organization.
We’ll begin with a little background; then, discover three steps to getting your assessment right the first time.
Are you confident that you’ll have enough money in retirement? Many of your employees or plan participants may not be. And there’s likely a clear reason: poor financial well-being.
I recently completed client research that found a strong statistical correlation between retirement plan participants’ financial well-being and their confidence that they would have enough money in retirement.
In short, the lower their financial well-being, the lower their retirement confidence. And more than 20 percent in this study fell into low financial well-being categories. While we looked at race, gender, age, and marital status, nothing else came as close to overall financial well-being’s association with retirement confidence.
Perhaps that’s intuitive. But, there’s a very human point here that we should let sink in: If you’re struggling financially, you live in day-to-day anxiety with a fear that it will only get worse when your health or other circumstances force you to retire. In short, the present is tough, and your future looks bleak.
It seems like a Catch-22 situation. Financially stressed employees are less likely to participate in optional retirement savings. And that erodes their prospects for a livable retirement.
And, there’s damage to the employer as well. Research in 2020 from the Employee Benefits Research Institute found that employee financial insecurity can lead to high turnover rates, employee absenteeism, and delayed retirement.
While our hearts go out to the poor and financially stressed, compassion alone may not bring you funding for an employee financial wellness program. To compete for those resources, you must demonstrate that it’s a promising investment.
National research may inspire you to consider wellness programs, but those who allocate resources at your organization are more likely to be moved by facts specific to your employees.
Is there a financial well-being problem among your employees? If so, which ones? Has employee financial insecurity led to negative consequences in your workplace? And, most importantly, how do you know?
To build a case for a financial wellness program, you must quantify the problem, its cost to your organization, the expense of the solution, and the potential return. Your return can be assessed both in dollars and improved productivity.
But it’s not enough to understand you have a problem. Suppose your data demonstrates a compelling reason to support an employee wellness program, and you get the resources. Should you use the funds to offer an off-the-shelf program or one tailored to fit the specific needs of your employees?
Unless there’s absolutely nothing unique about your employees, a generic financial well-being program is as likely to miss the mark as hit it. And, by that, I mean, will you be held accountable for simply launching a program, or launching one your employees actually use?
Tailor a program to your at-risk employees’ unique wants and needs, and you’ll likely spend less and get better engagement, not to mention making a real difference in their lives.
Employee research is the key to assessing the need for a wellness program, tailoring it to your unique needs, and demonstrating you’ve made a difference.
So, here are three steps to getting things right the first time.
1. Use a well-established financial well-being model
Measure the financial well-being of your employees using a well-established model and survey. This will allow you to compare your results with state and national data and perhaps other organizations like yours.
Don’t let your analysis begin and end with a handful of bar and pie charts. Assess the financial well-being of your employees based on demographics – such as age, gender, race, education, and income. Look at life situations, including marital status, kids at home, empty nesters, and the like. And use statistical driver analysis to learn what matters most.
2. Use choice modeling to tailor your financial wellness program
Which financial wellness services are your employees likely to use? Providing them with a list of possible services to rank is risky. Why? Because that’s simply not how your employees make choices in real life.
Inexpensive do-it-yourself survey platforms typically do not offer advanced choice modeling. But, for a modest added expense, you can clearly understand what services are most likely to be used, and which will be ignored.
You’ll probably only get one chance to get your financial wellness program right. Fail, and your budget will evaporate while your at-risk employees – and productivity – continue to languish.
3. Use annual or biannual surveys to measure your progress
In your financial wellness program’s first year, you’ll primarily measure success by volumes: How many employees utilized which services. And, you’ll keep an eye on absenteeism and turnover reports.
Once you’ve cleared the first year or two, you’ll want to measure success by learning if you’ve made a real difference in your employees’ financial well-being. A simplified version of your initial financial well-being survey will allow you to measure this progress.
Use the survey plus utilization and productivity reports to adjust your program to the evolving needs of your workforce. Then it will be much easier to demonstrate the importance of funding your successful program for years to come.
