How to Measure ROI of Financial Wellness Programs
Financial wellness programs for employees certainly sound like a good idea. But can a client afford to add another program to the menu of benefits? Does the firm understand what it will get back from its investment?
EY (formerly Ernst Young) recently conducted a survey of HR professionals that found that 86% of their companies were considering adding financial wellness programs but only 16% of those “felt they could justify adding a financial wellness program without knowing the anticipated ROI.”
The first step to understanding the potential ROI is to understand the need for a financial wellness program.
“Of those who responded to the Employee Benefit Research Institute’s 2017 Retirement Confidence Survey, 30% said they think about personal finances while on the job. More than half of them said they would be more productive without such worries,” EY said in the paper “How Do You Know If Financial Wellness Is Paying Off for You and Your People.”
“These distractions will cost you, the employer,” EY adds. The Society of Human Resource Management reports that 83% of HR professionals say employee financial stress has a negative effect on job performance. “Beyond the inability to focus, financial challenges contribute to absenteeism, strain morale, impact physical health and lead to turnover.”
The EY survey of HR specialists “showed that those who offer financial wellness plans saw a direct correlation to employee well-being, retention and productivity.”
While it has been estimated that every dollar spent on a solid financial wellness program will return $3 in benefits, EY argues the beneficial effect on productivity, morale and retention means there is a better way to estimate ROI and ensure it is maximized: measure employee engagement with the financial wellness program instead.
“Changing the conversation from metrics-driven assessment to measuring levels of
healthy utilization will give leaders a new perspective on the value of their spend,” EY says.
To better ensure engagement, make sure you lay the groundwork for a program that will address the specific need of your employees.
“Maximizing ROI starts with knowing your employee base—age, career stage and income ranges,” EY says. “But fostering engagement depends on more than demographics. It depends on an understanding of workforce psychographics—how employees think and feel about money.”
The firm suggests starting a program by conducting an in-depth financial wellness assessment for each worker. It would ask such questions as “how satisfied are they with their current personal financial situation” and “do financial concerns affect their family relationships.”
To learn more about how to tailor a program to workers and how to sell financial wellness programs to businesses, see “Selling Companies on Financial Wellness Programs” from our July 2017 newsletter.comments powered by Disqus