So long employee engagement – hello financial wellness
We’re now more than three years into Auto Enrolment and being a member of a pension scheme isn’t headline news any more. So rather than thinking about employee engagement, it’s time for employers to consider financial wellness, writes Susie Logan.
What is financial wellness?
Simply getting staff to engage with their pension to the extent of knowing how much they have in it is no longer very ambitious. Pensions are now both common and topical, and people are more aware of them. So instead of simply repeating what we have been doing for years now, let’s start talking about financial wellness – which delivers value for both employees and employers.
While employee engagement is about knowing what you have in your pension pot, financial wellness takes things a step further by ending the anxiety associated with it. If you’re engaged, you might know you are saving £50 a month into a pension and that it’s not going to be enough for you to retire on. But if you are ‘financially well’, you are engaged, you have the knowledge, you are doing something about it – and you’re not anxious any more. Which sounds a lot healthier, doesn’t it?
Is it really goodbye to employee engagement?
No. Employee engagement is a good thing for the employer because employees can understand how much the benefits they are being given are worth. But financial wellness goes beyond this, with the aim of engaging people to make positive changes to their saving and spending habits that will help them in the long term. This can involve more personalisation than an employee engagement programme, which tends to be fairly limited when it comes to personalisation. In contrast, financial wellness speaks to the employee as an individual, as it aims to offer guidance based on their personal needs and circumstances. So it ends up benefiting both the employer and the employee.
Is a financial wellness programme right for my business?
All this doesn’t mean to say that a financial wellness programme is suitable for all employers. So how do you work out whether it’s right for your business? The first step is to understand the maturity of the workforce of your organisation. Are they already engaged? What level of opt outs are you getting for Auto Enrolment, and are people signing up to the maximum available matching pension contributions?
If all these factors point to a workforce that’s mature in terms of financial engagement, then it’s time to move the bar and set more challenging goals through financial wellness. On the other hand, if your business has only recently staged, then moving straight to financial wellness – and skipping over employee engagement – could be too much of a stretch.
It’s worth taking into account the impact financial wellness has on benefit selection. Implementing a programme of financial wellness involves thinking beyond the products themselves. Of course, they’re important. But so is understanding the needs of a workforce and particularly the key people – the individuals who are pivotal to the long-term success of a business. It is vital to ensure that any benefits package recognises their needs.
So, you’re sold on financial wellness – and your organisation is engaged enough to be ready for it. What do you do now? And how much work does it involve? Putting material on a website is not the end of the story. We know that a lot of financial education material is available that is not actively used. Face-to-face time and guided online journeys are much more successful in leading good outcomes for employees. This requires the employer to be more proactive, have an active plan and allocate more ‘people-time’.
So know your workforce, be prepared – and you could be ready to start your journey to financial wellness.