With the current recession likely to add to pressure on household budgets, it’s no wonder more organisations are recognising the importance of financial wellbeing in their employee value proposition. But what sort of objectives can HR leaders steer towards to demonstrate value, both to the business and their financially stressed employees? Discover some common approaches used to measure success and which metrics could serve you best for a strategic approach to workplace financial wellbeing.
There can be no doubt the COVID-19 pandemic is putting many Australians under greater financial stress. In their July 2020 update, the ANZ Roy Morgan Financial Wellbeing Indicator reported the largest ever drop in their index. Since the beginning of the pandemic, their financial wellbeing score based on responses from 50,000 Australians has fallen from 60.7% to 56.5%, its lowest point since this data series began in 2014.
Together with the current salary freeze environment, these rising levels of money stress are highlighting the difficulties for HR leaders in making a positive impact on their employees’ financial wellbeing. But, as with other programs, a strategy that can deliver genuine value relies on having clear objectives and a way to measure progress towards these defined goals.
“40% of employers surveyed by the Employer Benefits Research Institute (EBRI) in 2018 said that lack of data to determine value is a major challenge in delivering financial wellbeing program.”
Employee Benefits Research Institute (EBRI) 2018 Employer Financial Wellbeing Survey
Match the scope to your organisational culture and goals
While senior leaders may be clear on the business case for boosting financial wellbeing and fully support HR in their endeavours, they need to consider how involved to get in their employees’ finances. The answer to this question will very much depend on the money attitudes and behaviour of employees as well as the existing culture of your organisation.
Moving forward with confidence in planning and rolling out your financial wellbeing program takes a ‘Goldilocks strategy’ – one that doesn’t promise, or attempt, too much or too little for your business culture and context. One objective might be improving the overall mental health of employees and another could be reduced absenteeism, for example. Coming up with objectives that are the right fit for your organisation is the first step in managing and meeting stakeholder expectations and demonstrating value.
The means to measure financial wellbeing
In determining what your objectives might be, it’s important to consider metrics you could use, or introduce, to assess the impact of financial wellbeing initiatives. In general, HR teams are becoming more experienced and adept at measuring the impact of strategies and programs. According to the Maxxia 2018 Employee Experience Report, 95% of organisations undertake some form of survey and/or program to seek employee feedback. However, measurement is often the X-Factor missing for employers exploring the relatively new territory of financial wellbeing.
“80% of organisations with financial wellbeing programs in place are not monitoring their impact.”
AON Global Financial Wellbeing Study 2018
Few employers measure impact for their financial wellbeing programs. And those that do are typically using measures of success that can be affected by other factors. According to the Employee Benefits Research Institute (EBRI) 2018 Employer Financial Wellbeing Survey, overall employee satisfaction is the top measure of success for financial wellness initiatives (39%). But financial wellbeing is unlikely to be the only contributor to this particular measure. Other conditions and activities in the workplace could be having their own impact on changing levels of employee satisfaction over time.
For employers seeking a more relevant metric to demonstrate the success of financial wellbeing, data on potential tax savings from salary packaging, for example, can offer clear indicators of improved outcomes for employees’. With stronger metrics on the impact of existing programs that support financial wellbeing, you have the data needed to make a stronger business case for introducing new solutions.