Thursday, September 13, 2018

Financial Wellness: Measuring Value

There’s no easy way to calculate a return on investment from financial wellness programs. Survey respondents are clearly struggling to measure program value. This is especially challenging, since measurement of value is imperative for initiatives that require employer investment.
When deciding whether financial wellness is worth offering and how the program should be designed, any recommended course of action will depend on a detailed assessment of the workforce’s needs. During that process, some organizations will see value in such programs, while others are hesitant to make that commitment. In either case, HR professionals will need to work closely with c-suite executives to plot a course for measurable results. While there’s no guarantee that financial wellness will have a positive impact on any organization’s bottom line, survey respondents seem to agree about the potential benefits associated with achieving full engagement from their employees.

Asked about the reason they were initially motivated to offer a financial wellness program, several factors were cited by organizations with such programs. Leading the pack was a firm belief that it’s the right thing to do, with a weighted score of 4.6, followed by 3.7 for those wanting to improve employee productivity, 3.5 to recruit and retain top talent, 3.2 to reduce employee absenteeism, 2.8 because employees requested it, and 2.5 to decrease costs.

Several key benefits associated with financial wellness programs were noted. They included less-stressed employees, with a weighted score of 3.8, followed by less-distracted employees at 3.5, as well as improvement in employee productivity and staying competitive with the recruitment and retention of employees at 3.3 apiece. Rounding out the list was reduction in employee absenteeism (3.1) and decreased costs (2.8).

Respondents whose organizations do not offer a financial wellness program had similar weighted scores when asked what the perceived benefits might be. The category leader again was that it may result in less-stressed employees at 3.8, followed by it’s the right thing to do (3.7), may result in less-distracted employees (3.6), and requires significant organization resources (3.5).

However, organizations that have not adopted a financial wellness program clearly had different perceptions from those that offer them. These differences may explain why they have not been sold on the value of these programs. One potential driver of their skepticism may be the inherent difficulty in measuring the impact these programs have on employee behavior and the organization’s bottom line.

Those who don’t have a financial wellness program admitted they would begin implementing a financial wellness program immediately if it were expected to increase employee productivity, senior leadership mandated a program be implemented, or if it would reduce organization costs. This implies that more employers would be willing to invest in financial wellness programs if the benefits could be easily measured and the investment in resources justified.

To learn more, read our first two blog posts, Understanding Financial Wellness Programs, and One Size Doesn't Fit All, and download the full report: Assessing the Merits and Challenges of Financial Wellness. To begin talking to a retirement plan advisor, please get in touch by email or by calling (855) 882-9177.