4 tips for creating an effective financial wellbeing strategy
Economic uncertainties, stagnant wage growth and unforeseen events such as the Covid-19 pandemic have collectively contributed to a widespread sense of financial strain across the US, UK and Europe.
In fact, in its 2022 report ‘Financial Wellness: The Topic You Can’t Afford To Ignore’, Benify found that 56% of US employees felt stressed about their finances, while Standard Bank reported that almost 50% of UK employees are looking to cut their everyday spending.
Financial concerns can often seep into individuals’ professional lives, resulting in lower performance, heightened stress and potential absenteeism. But a well-crafted rewards and benefits strategy can help offset financial pressures, in turn improving overall wellbeing.
Integral to employee financial wellness, rewards and benefits can ease economic anxieties, ensure stable income and even provide comprehensive healthcare coverage to safeguard against unexpected costs. Moreover, performance-based rewards will encourage career progression, while flexible working and family oriented benefits will promote the importance of work-life balance.
Building an effective financial strategy
The notion that an employee’s financial concerns can have a substantial effect on a company’s bottom line might seem implausible. Yet 70% of professionals acknowledge that personal financial challenges have affected their employees’ performance. For an organisation employing 10,000 individuals, this dilemma translates into a substantial annual cost of $3.3m.
Whether you’re contemplating the creation of a financial wellbeing strategy, or looking to enhance your current approach, here are some guiding principles to consider.
1. Understand employees’ goals and needs
Financial wellness isn’t a one-size-fits-all approach. For instance, Benify found that 74% of Swedish employees are worried that their pension won’t be enough, while 28% of Australian employees admit to having no significant savings. That’s why it’s crucial to understand the unique requirements of all employees to adequately meet their needs.
An effective rewards and benefits strategy holds the power to alleviate employees’ financial burdens. This involves using data and insights to identify which current rewards that resonate most with specific demographics, and those that have faced difficulties in engaging the entire workforce. Poor uptake could stem from a lack of appeal to employees, or from a limited understanding of the potential advantages they offer
Likewise, as The Money And Pensions Service revealed that 81% of UK adults avoid talking about money, it’s crucial to acknowledge the discomfort some experience when addressing financial concerns. Working with HR teams to create an environment of open communication will help uncover valuable insights into your employee’s needs.
2. Empower financial literacy
A well-informed workforce is a more empowered one. However, in its ‘Working Lives’ report, Aviva found that three-quarters of UK employees had never talked to their line manager about financial wellbeing.
A good financial strategy largely relies on employees’ fundamental grasp of financial literacy. Whether this involves goal-setting sessions on how to save for a house, everyday budgeting tips or coaching soon-to-be retirees to plan for their departure from the business, investing in the growth and wellbeing of your workforce will ultimately foster a more engaged one.
3. Invest in the right fintech tools
As it’s estimated that 2.7bn workers are ‘deskless’, harnessing technology to improve your rewards and benefits strategy is pivotal. By segmenting your employees based on factors like age, income and goals, fintech tools will help you tailor messages. Automation ensures consistent communication and supports individuals in managing their finances, while interactive educational components can help goal track and budget.
Through an online app, employees can enrol in and manage their rewards anytime, anywhere. Similarly, employers can access real-time data to measure the success of their benefits and make any adjustments.
4. Increase compensation awareness
When evaluating new employment offers or present earnings, employees often focus on salary alone. But in a period of high inflation, limited awareness of a complete compensation package can lead to costly oversights.
While salary is important, it forms only one part of your employee’s total reward. Benefits, pensions, insurances, company shares and other perks like gym memberships collectively contribute to total compensation. Yet, Benify’s Employee Happiness Index survey revealed that 80% of employees still underestimate their total compensation.
It’s important to highlight all compensation and benefits investments via a digital experience such as a Total Reward Statement.
Measure success and keep communicating
Over time, and with the help of engagement metrics and input gathered through survey tools or collaborative sessions, you will be better placed to make well-informed choices that amplify your initiatives and offset the ever-changing financial pressures on your employees.
The key lies in maintaining consistency through a dedicated approach. Crafting an effective financial strategy is a continuous process of nurturing, evaluating and adapting to ensure that your efforts successfully address the evolving needs of your employees.
Supplied by REBA Associate Member, Benify
Benify offers the market's leading global benefits and total reward platform.
