As the workplace evolves year after year, we see that quality employee engagement is essential for maintaining a balanced workplace. Financial wellness has been defined as a state of well-being where an individual has achieved minimal financial stress, established a strong financial foundation, and created an ongoing plan to help reach future financial goals.[i]
The goal of financial wellness can differ slightly depending upon who you are speaking with. For Employers, financial wellness is a program, or set of programs, designed to help employees pursue improved financial behavior and outcomes while also driving business impact. For employees, financial wellness is holistic and defined by health, not wealth. It is important to remember that the goal of financial wellness programs is to improve overall financial health.
In the workplace, there are many repercussions of stress that may have ripple effects throughout your company, one in particular is productivity. In fact, 83% of HR professionals believe personal financial challenges have a large impact on employee work performance.[ii] Personal finances can be a big distraction, and nearly half (46%) of employees say they spend three hours or more thinking about or dealing with issues related to their personal finances.[iii]
The process of helping people pursue important financial life goals does more than help out individual employees – it also helps the organizations they work for. Companies have a vested interest in promoting financial wellness initiatives because they have been linked to higher worker productivity, reduced absenteeism on the job, and reduced health care costs. In fact, workplace financial education programs can have a higher return on investment for corporations implementing these programs with some estimates indicating up to a 3 to 1 return on investment.[iv]
So how exactly can we measure a return on investment?
As it relates to financial wellness programs, return on interest (ROI) can be broken down into several components. For this article, we will steer our focus to the savings related to increased productivity and reduced absenteeism. For a complete analysis, you could include health care costs before and after the program. These factors will vary based on your unique situation, but calculating the ROI based in these components will help you gauge the success of implementing such a program. So how can you, as an employer help your employees better manage their financial lives? There is no one right way, but offering financial wellness programs are a step in the right direction.
What type of services does the program offer?
At the most basic level, they could include financial education materials either available in print or online. More advanced financial wellness programs offer in-person workshops, webinars, and telephone counseling.[v]
A company can have an important role when offering financial wellness to their employees; and if done correctly, they can do more than just educate. Successful financial wellness programs should motivate people to take steps toward improving their financial lives.