There’s no debating that employees are stressed when it comes to their personal finances. One-in-four are financially distressed and spend more than an hour every day at work dealing with their personal finances. A recent survey by the Employee Financial Education Division found that 45% of employees feel their level of financial stress today is high to overwhelming.
Why should companies pay offer financial education? Here are three reasons.
- Financial education improves productivity. With 25% of the workforce spending up to 250 hours a year at work and dealing with their personal finances rather than their job, this lost productivity is a huge cost. By providing a comprehensive financial education program to help all employees deal with most aspects of their finances can significantly improve the overall productivity of the workforce.
- Financial education increases employee engagement. Nine out of ten employees want their company to provide financial education. This key benefit can help to reduce the anxiety many have around personal finances making them happier employees. Many will associate the company as the one that helped them reduce this anxiety and more committed to the company. This will also translate in higher retention rates and positive word-of-mouth making it easier to attract new employees.
- Financial education improves employee health. Studies and surveys going back to 1985 have ranked personal finances as the top stressors among individuals. This high to overwhelming stress causes a myriad of health problems from headaches to heart attacks. In some instances personal finances have been linked to depression, substance abuse and addiction.
Here are three steps employers should take to ensure the implementation of an employee financial education program is successful.
1. Obtain senior level support. Once you have the support for the program it gives everyone (HR, managers, employees) permission to set aside their work and engage in the program. To get the support make the case of how it can improve the company’s bottom line. Highlight how it can improve the other areas of the business like absenteeism, productivity and engagement. Lastly add a personal component to it by linking it back to their family and children in how much better all our families would be with great financial literacy.
2. Identify the wants and needs of the employees. Before being able to launch a program you need to evaluate the wants—but more critically—the needs of the employees. This should be done in two stages.
First, do a survey to gain insight and understanding of the overall concerns. Follow this up with a few group and/or individual interviews. With this data you can then start to build a relevant and desired financial education program.
Many employees may be reluctant and skeptical of the company wanting to help them with their personal finances. Trust and confidentiality will be critical attributes of a financial education program. To achieve these, work with an independent, third-party to provide the security employees need to feel confident to engage and participate.
3. Outline what program success looks like. To protect your investment in the program from arbitrarily or intentionally being cut at the next budget meeting, define and measure the success of the financial education program. Try to measure the change in the financial wellbeing of the employees. Participation, engagement and satisfaction scores should also be measured. With this data you should be able to make a compelling case as to why the program is one that will make the company money over time.
Frank Wiginton is the CEO of the Employee Financial Education Division and the author of the book: How to Eat an Elephant – Achieving Financial Success One Bite at a Time.