At a time when meeting candidate expectations is a critical part of any recruitment campaign, dedicated employee financial education programmes are now more meaningful than ever before. Yet, despite data supporting this fact, the uptake by companies across Ireland and the UK remains slow.
According to research carried out by Employee Benefits and Close Brothers earlier this year, the number of UK companies that offer a financial education programme to their employees – a critical element in promoting financial wellness at work – has fallen to 28% from 32% in 2015.
Meanwhile, another survey – conducted by Thomsons Online Benefits – revealed that, although 65% of employee respondents in the UK identified financial wellbeing in the workplace as important to them, just 7% of employer respondents were providing at least retirement planning advice to their staff.
The popularity of financial advice and education amongst employees is very high, so it is perhaps surprising that so few companies have initiated programmes to address the issue. It can be argued that good financial management is a matter for employees themselves to master, and does not need to be the responsibility of employers.
But while providing employee financial education programmes can be at least seen as an act of ‘good citizenship’ by employers, there are also genuine benefits for companies themselves to reap.
Benefits of Providing Employee Financial Education
The main benefits include greater productivity, higher morale, increased loyalty and lower healthcare costs, with some estimating the ROI in organizing employee financial education programmes to be between 300% and 400%.
But while exact figures vary, the overall benefits can manifest themselves in 5 main areas:
- Higher Productivity – It is no secret that a happy employee is a more productive employee. By reducing their financial stress levels, employers can improve the productivity levels in their operation, allowing employees to focus on work rather than fret over financial matters. According to research carried out by US insurance firm MetLife in 2010, 65% of employers said employees are less productive at work when worried about personal financial issues, while 45% of employers agreed that employee financial education programmes are effective in improving productivity.
- Lower Absenteeism – Offering financial education and other forms of advice plays a key part in building a positive relationship with employees. When the relationship is strong then engagement is higher, and this in turn leads to lower levels of employee absenteeism.
- Higher Employee Retention – If employees are engaged and happy, this also means they are less likely to wish to leave. The inclusion of a dedicated employee financial education programme galvanizes the idea that a company values their staff. After all, why bother to offer them financial guidance, if they don’t?
- Lower Employer Costs – There are several ways in which financial education can help to lower overall operation costs. We have already mentioned reduced absenteeism and increased productivity, but another is the reduction in employee stress levels. Because financial wellness initiatives can reduce employee stress over their financial futures, they achieve a higher level of personal health, thus lowering overall healthcare costs.
Also, by educating staff on financial issues, they become better equipped to make decisions for themselves, which can lead to them opting for independent medical and pension coverage. According to a 1998 survey in the US, this translated to almost 8% savings in employer Social Security and Medicare costs contributions.
- More Fruitful Recruitment— With such a high percentage of employees identifying financial wellbeing in the workplace as being as important to them (65%), it is obviously an attractive carrot to dangle when seeking to recruit the most talented candidates .
What should an Employee Financial Education Programme Include?
There are several aspects to financial wellbeing that an employer can provide, and a number of ways to deliver them. The most basic is simple money management and budgeting, but it can extend to more complex areas like market intelligence.
Just how comprehensive an employee financial education programme should be is down to the company to decide, but the principal goal should be to help employees learn personal finance skills that will make a difference, such as:
- Saving and investing
- Borrowing money
- Dealing with debt
- Retirement Planning
And how do you impart this wisdom? Many companies offer half-day seminars, but of much greater value are one-to-one sessions with a recognized financial planner.
Alternatively, a series of 4 or 5 half-day or full-day seminars, each dealing with a particular aspect of financial wellness in detail, shows a clear commitment to your employees. It also allows employees time to build financial confidence from the series. And in the end, that is what an employee financial education programme is designed to do.