Stop measuring what you give and start measuring outcomes
Reward professionals have never had access to so much data. Most organisations can tell you their benefit take-up rates, pension participation, salary benchmarking, flexible benefits selections, private medical insurance utilisation and the total cost of their reward package per employee. Many can also report engagement scores, absence rates and staff turnover.
However, ask one simple question to ask is: How financially resilient are your employees today?
That is reward's biggest blind spot.
Delivering value
For years, HR and reward have measured activity and total reward value rather than outcomes. They know what they provide, but rarely whether it has improved employees' ability to cope with financial challenges.
Ultimately, that's what matters. Employees who can cope financially are likely to be happier, more productive, less distracted and more resilient when life presents them with a financial shock.
Recent CIPD research confirms this point: It found that 22% of UK employers have no clear objectives for their employee benefits, making it difficult to judge whether they are delivering value. Even for the employers that do, fewer than one in three (31%) link their benefits strategy to productivity or business performance.
No other business function works this way. Marketing measures leads and conversions, not brochures printed. Operations measures productivity, not meetings held. Reward, however, often measures what it offers rather than whether it has made any meaningful difference.
At the same time, employers continue to invest heavily in pay, pensions and benefits despite rising employment costs and tighter budgets. Yet only 15% of UK organisations have a formal financial wellbeing strategy or policy, despite the well-established links between financial stress, engagement, absence and performance.
Perhaps reward have simply been measuring the wrong thing?
Withstanding financial shocks
For years we've talked about financial wellbeing, but wellbeing isn't the destination. Financial resilience is.
Financial resilience is the ability to withstand financial shocks, adapt to changing circumstances and continue making confident financial decisions. Two employees can experience exactly the same financial shock, one adjusts and recovers, the other spirals into debt, anxiety and distraction at work.
The difference isn't the financial shock, it’s their level of financial resilience.
Instead of asking, "Which benefits should we offer?", maybe reward professionals should first ask, "How financially resilient are our people, and where are they struggling most?"
Imagine being able to answer questions such as:
- Which departments are experiencing the highest levels of financial stress?
- Are younger employees less financially resilient than older colleagues?
- Is resilience improving after introducing new reward initiatives?
- Where should we focus support to achieve the greatest impact?
Those insights are certainly more valuable than knowing whether another 5% of employees have taken up a particular benefit.
Assessing financial resilience
This is where reward has an opportunity to become much more strategic. Rather than simply managing benefits, it can start measuring whether it's improving employees' ability to cope with financial uncertainty - an outcome directly linked to engagement, productivity, retention and absence.
The challenge though has always been, how to measure it.
To address that, Secondsight has developed a simple employee financial resilience assessment whereby each employee receives a personal resilience score, a tailored report and a recommended action plan. Employers receive an anonymised picture of financial resilience across their workforce, helping identify where financial stress is greatest and providing a baseline against which future reward initiatives can be measured.
It is not designed to replace engagement surveys or wellbeing strategies. Instead, it fills a gap that's existed for years.
If reward professionals are serious about demonstrating value, perhaps it's time to stop measuring what you provide and start measuring what really matters?
Employees don't ultimately want more benefits, they want to feel better - more secure, more confident and more in control of their financial future.
Surely that is the outcome reward has been trying to achieve all along?
Supplied by REBA Associate Member, Secondsight
We transform employee benefits and pensions into meaningful outcomes for you and your people.
