Benefits personalisation: how to build employee engagement through the personal touch
In January, the Money & Pension Service (MaPS) announced a UK-wide strategy to reshape the nation’s financial wellbeing over the next decade. Perhaps, in part, triggered by data outlined in MaPS strategy document suggesting the UK economy lost £120.7bn and 17.5m hours in 2016 to financial stress among individuals. And in 2018, 11% of UK workers reported a fall in their productivity in the previous three years due to personal finance issues.
Supporting financial wellbeing by helping employees build short-term cash savings will be discussed by Hargreaves Lansdown’s Nathan Long on 9September at 11:45 at REBA’s Employee Wellbeing Congress. Register here to attend.
Close Brothers’ Changing trends of financial wellbeing (2020) research sheds light on the sheer number of people whose financial situation has impacted their mental health – 42% of employees lose sleep due to money worries. Whether you’re a young person starting out trying to make your pay stretch for the whole month, or you’re trying to ensure you’ll have enough in retirement, no demographic is immune from these issues.
The transition from defined benefit to defined contribution pensions in the private sector has thrust more responsibility onto the individual to ensure they’re sufficiently prepared for retirement. What’s more, soaring house prices have made it more difficult for people to negotiate their way onto the first rung of the property ladder and a better understanding of the various government incentives on offer is clearly required.
Financial worries are personal and wide-ranging. There is an awful lot of information to sift through before people can start to feel confident. With tens of millions employed by companies in the UK, the workplace is an ideal environment to facilitate financial education and ensure specific and relevant learning outcomes are targeted which are mutually beneficial for both employer and employee.
How can you personalise your service to increase engagement?
Personalising benefits requires acknowledgement of the very diverse nature of your staff and putting them at the centre of the decision-making process. The concerns of 18–24-year-olds will be markedly different from those aged 55+.
This means you have to adapt the way in which you provide for them.
Generic personal finance information may struggle to capture employees’ attention, particularly if it doesn’t address their specific areas of concern. In the context of financial wellbeing, surveying staff to better understand what they value and what they will find relevant helps maximise the impact. For example, adopting a modular approach, where staff vote from a menu of different topics they would like to better understand, allows for a more tailored benefit that can help employees cut through the noise. A dedicated presentation/seminar where you can cover more specific details about a certain topic is beneficial as it cements their understanding. In addition, you get a room filled with individuals who all have very similar motivations and this helps to stimulate interaction, discussion and engagement.
For many people this might be enough to kick-start their new and improved engagement in their own personal finance. But you can go further than this to ensure no-one is left behind. Experts taking the time to have conversations with employees on a 1-2-1 basis will inevitably benefit those trying to build confidence. Questions that arise in a face-to-face environment can be resolved on the spot and any confusion ironed out. Sending a company-wide email to colleagues about how they can manage their money with a link to a useful website may provide too many barriers, while independent exploration is time-consuming and difficult for many. The aim should be to bring those barriers down and make things as easy and straightforward as possible.
How big of an impact can this approach make?
At Hargreaves Lansdown, we have several metrics which measure actions and behaviours, and therefore how effective our attempts to raise engagement are. Of our clients we found that 27% of those who had never had any face-to-face meeting with a financial wellbeing specialist failed to meet any of the engagement metrics. This figure drops dramatically to 6% for those individuals who have spent time with someone to discuss their financial position in more detail.
We can then take it one step further and isolate a particular metric of engagement such as pension contribution increases. Close Brothers’ research suggests that more than one quarter of employees believe that automatic enrolment means they don’t have to worry about saving for retirement.
Those people who work in the industry understand that minimum contributions are unlikely to be sufficient for most people, but this isn’t immediately obvious to everyone. Of the people we have met on a 1-2-1 basis, 64% increased their pension contributions. Whereas, for those who didn’t meet an expert, only 43% increased their contributions. The evidence suggests that financial education and engaging employees is mutually beneficial for both employee and employer. It’s in the employer’s interests to ensure effective financial wellbeing and benefit programmes are implemented rather than simply paying lip service to the idea.
With that in mind, a bespoke and personal programme that targets the various needs of employees is capable of achieving this.
This article is provided by Hargreaves Lansdown.
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