The cost of living and financial instability are the top sources of stress negatively affecting employee mental health, according to Calm research. Yet studies also have found that an employee can leave up to $1,000,000 on the table in unused company benefits throughout their career.
As an HR leader, how do you bridge the gap and move employees toward financial wellness? That was the subject of Calm’s recent webinar, “Tackling Employee Financial Stress at Your Organization,” featuring independent financial wellness expert Kelley Long, CPA/PFS, CFP. Outside of her experience at one of the leading providers of financial wellness benefits, Long has provided one-on-one financial guidance to more than 2,500 employees, giving her deep insight into employees’ financial challenges.
Here are some key takeaways from the webinar to help you implement a successful financial wellness program at your organization. For more insights and best practices, be sure to watch the entire webinar on demand.
1. To succeed, your financial wellness program needs a well-resourced champion
A limited budget isn’t the biggest obstacle you’ll need to tackle at the outset, according to Long. “The number one issue that I saw getting in the way of a successful implementation and engagement of employees was knowing whose job it is to make sure that it’s an awesome program,” Long said. “Any successful financial wellness program by default will increase benefits utilization and appreciation.” For that reason, she stressed, you need a person on the benefits team who has the time, authority and resources to help make the financial wellness program a success.
“The best financial wellness programs, the best financial wellness benefits, help employees use all of their other benefits better. So deciding ahead of time who’s going to be the champion and making sure that this person is supported in both time and resources is critical to the success of implementing a full-blown financial wellness program,” said Long.
2. Financial wellness is an ever-changing state of being
Long emphasized the importance of understanding what financial wellness is and is not.
“I think the most important thing to remember is financial wellness is not just financial education. We have financial literacy, which is knowing what a credit card is. Financial education is knowing how a credit card works. Financial wellness is using a credit card effectively.”
“They’re all different, and financial wellness is an ever-changing state of being. We can be financially well and then be financially unwell, just like we can be physically well and unwell…Financial wellness is not an end game but an ongoing thing,” she added.
Long recommends defining financial wellness for your organization to help you stay close to your mission and make it an effective program. Some definitions incorporate concepts such as carrying no high-interest debt, having emergency fund savings, and protecting your income/assets. (Watch the on-demand webinar for more on defining financial wellness.)
3. The first step is knowing the problem you’re trying to solve
The first step to finding the right financial wellness solution is determining the best approach for the problem you’re trying to solve, Long explained. She described three different approaches:
- A tools-based approach is great if you don’t have a lot of resources and can’t designate somebody’s job to it, but you want to offer some form of financial wellness solution. This is typically plug-n-play technology such as a budgeting app or an app to help employees pay off student loans. A technology tool can plug a gap for employees who are highly stressed and need some basic education, but “generally speaking, if you’re just offering some type of technology, you’re not going to see a big change in the overall financial wellness of your population,” Long said.
If you’re taking this approach, make sure you know what your employees need help with so that you’re buying something they’ll use. You may even find that you already have the right tool as part of your retirement plan.
For any technology-based tool, Long emphasized the need for data security, and most important, making sure that the vendor you’re working with is not trying to sell their product to your employees. “If you’re working with somebody who’s undercutting the competition on price significantly, they’re making it somewhere else,” she said. - A program-based approach enables you to target a specific problem on a time-limited basis if you don’t have the resources to invest in a full-blown benefit. This could take the form of a live workshop focused on taxes, budgeting, cash management, retiring, or other personal finance topics, for example, and could target a specific population if desired, e.g., employees age 55 and over. Similar to the tools-based approach, make sure you know in advance what employees really want and what they would attend. Also look for vendors that can show you proven results from past experience and can speak in a way that’s aligned with your culture.
With this approach, you can educate employees about all the benefits you already offer but employees aren’t aware of or aren’t taking advantage of fully. For instance, your 401K might have an auto escalator calculator that employees could set to increase by 1% every year. “Before you know it, you’re saving to the max and you don’t even notice the pinch,” said Long. At the end of the workshop, employees walk away with “knowledge and, hopefully, a greater usage and appreciation for their benefits.” - A benefits-based approach is for you if your financial wellness program is part of your company culture and maybe you want to enhance or change your culture. “You might be using it for talent retention, or you have a population that is in general super stressed and on the lower end of the financial wellness scale,” said Long. “You recognize that helping your employees just move up one step can make a significant difference in their lives, their mental health, their physical health, and then therefore you save money as an organization. Less absenteeism, less turnover, less distractedness at work.”
In this case, Long said, the benefit is ongoing, multi-channel, and available to everyone. It’s the approach that’s “most likely to produce measurable behavioral change.”
To see significant change, however, the initiative is going to take three-to-five years, she emphasized. “Putting it in place for one year and then saying…we haven’t seen a big change in our retirement deferrals, or we still have high absenteeism, you’re not really giving it a fair shake.”
Long stressed the importance of choosing an unbiased vendor who assigns you a customer service person who gets to know your organization and can help you with resources, communication, and best practices. You’ll need to fully integrate the new solution into your benefits and make it part of your culture and part of your recruiting brand.
For example, vendor representatives should be so ingrained in your company culture and benefits that your employees could believe they work for the company and not an outside organization. You’ll also need to leverage your internal marketing resources to the fullest extent to make employees aware of the new benefit.
4. Not all employees are ready for behavioral change
Employees are at all stages of financial wellness: while some are just learning the basics of personal finance—like creating and managing a budget or learning how a credit card works—others are ready to advance. They might be maximizing savings and using credit cards strategically by earning points and paying off debt every month.
In the same way, employees are at different stages of readiness for behavior change, Long explained, which will affect the effectiveness of your financial wellness program. For example, if you have a high rate of employees borrowing from their 401K plans but they’re not aware it’s a problem or they’re not ready to change, your efforts to support them could backfire. They might not be receptive to calling a financial coaching line but instead resentful or untrusting of your motives. In this case, “it’s going to be a longer investment to get them to change their behavior and see a return on investment from your program,” said Long.
By contrast, if you have employees further along the readiness scale, who are ready to accept help or even take action to make change, you can rest assured that “they’ll use any benefit you give them.”
Ideally, Long says, your organization would offer three tiers of support, from a self-directed online tool to live group webinars or workshops and one-on-one coaching, to meet the needs of employees at all stages of financial wellness and readiness.
5. Trusted voices are vital for effective communication
Maximizing employee utilization of your tool, program, or benefit depends on communicating effectively with employees. To start, your communication needs to align with your culture, Long said. If you’re working with the right vendor, you’ll be able to rely on them for a foundation of resources so you can focus on customizing your communications to your organization’s culture and employee populations.
If you’re an email culture, use email, but if your employees are working on a factory floor and not accessing email, you’ll need to find another vehicle. In this case, Long suggests finding trusted voices in the organization who can deliver your message. They don’t need to be in formal leadership roles, she explained. They can be people who others listen to because they’ve been there a long time or because they have strong personalities. “Identifying those people and having them understand what this is could make a huge difference in appreciation,” she said.
Finally, you’ll need to proactively address employee concerns about privacy, especially if your population is skeptical about their employer helping them with personal finance. Make sure your communications emphasize that whatever information they share—whether they’re putting it into a technology tool or talking about it with a coach one-on-one—it’s not going back to you, the employer.
Alleviating financial stress is critical for productivity
Research has shown that about half (48%) of knowledge workers experiencing financial stress have about 8 hours of lost productivity per employee per week, which translates into nearly $200 billion in lost productivity. By addressing financial stress, and helping employees manage their emotions associated with financial stress through resources like Calm, you can improve employee well-being, productivity and engagement, boost retention, and foster a healthier workplace. To get started, watch the on-demand webinar today.
For more information on proactively supporting employee mental health and well-being, check out our pricing or connect with a Calm specialist today.
