Financial wellness programs, such as those that promote savings and teach household budgeting skills through online or group instruction, are proliferating as employers invest in efforts to help workers manage their finances. However, only 30 percent of employers measure the effectiveness of these offerings, according to a 2018 study of 657 employers conducted by Bank of America Merrill Lynch.
Without those measurements, employers may be missing out on opportunities to improve these benefits and may not even have a clear idea of what they want to achieve by offering them, such as reducing employees’ money-related stress so they can be more productive at work.
Finding the Right Metrics
The challenge in measuring such programs is defining what they mean for the organization. In terms of less employee stress, for instance, should employers focus on the financial return on the investment? Is financial wellness part of a larger strategy to enhance the organization’s brand in the view of current and prospective employees? Or is the focus on improving employees’ lives, whether or not that improves their job performance?
To help organizations answer these questions, benefits advisors recommend that employers focus on these six metrics.
1. Use and engagement.
Financial wellness programs won’t make much difference if employees aren’t using them. By relying on vendors’ data, employers can track the number of workers signing up for financial wellness offerings, completing tutorials and related activities, and taking measurable steps toward better financial management.
2. Benefits and payroll data—positive indicators.
Employers can use data from their employee benefits plans to check up on employees’ financial health. Increased enrollment in and contributions to retirement plans, automatic savings programs and health savings accounts (HSAs) can indicate that employees have extra money to save and invest for future needs.
The number of employees contributing the maximum to retirement plans and HSAs may indicate that financial wellness programs are having a positive effect, as can the number of employees taking advantage of employer-sponsored group life, disability and other safety net coverages.
3. Benefits and payroll data—negative indicators.
Payroll and 401(k) plan data on the number of outstanding 401(k) loans, the frequency of 401(k) hardship withdrawals and loan defaults, and the number of emergency or payday loans can help employers understand the level of financial hardship employees are experiencing. The number of, frequency of and reason for pay garnishments is also important. “People with manageable debt have fewer or no garnishments,” said Laurie Brednich, CEO of HR Company Store, a Chandler, Ariz.-based website that helps HR professionals find vendors. “If many of these garnishments are for medical expenses, perhaps a company needs to revisit their benefit plan designs.”
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It is difficult to draw a straight line between employee retention and financial wellness, but that doesn’t mean employers shouldn’t try to track the connection between the two. “While no single wellness benefit drives retention, holistically, wellness benefits show your company cares—and that does drive retention,” said Carla Dearing, CEO of Sum180, a mobile financial wellness services provider based in Louisville, Ky.
5. Absenteeism, productivity and health care costs.
Lack of financial well-being can increase employees’ stress and on-the-job distraction. Data on disability and workers’ compensation claims, as well as on health benefits claims for stress-related illnesses, can help employers measure the results of financial wellness benefits.
Similarly, “tracking absenteeism rates over 18 to 24 months among program participants versus nonparticipants can give employers a sense of how a particular financial wellness program is working to reduce employee stress,” said Chris Whitlow, CEO of financial wellness platform Edukate in Orlando, Fla.
6. Front-line feedback.
Employees and front-line managers can tell HR whether and how workers are benefiting from financial wellness efforts—if HR asks. Employees and managers can also help organizations understand how those programs may not be resonating with the workforce. “[HR could] reach out to supervisors and ask how many people are requesting overtime consistently,” Brednich said. “Employees who frequently request overtime usually want the extra money to pay down debt.”
Employers can gather some of this data themselves, but they should also request data from financial wellness vendors and, as appropriate, from health and retirement benefits providers.