Back in November, I talked with BenefitsPro.com reporter Paula Aven Gladych about some of the trends we were seeing with companies adding a financial wellness component to their existing wellness programs. Last year we saw more in this space than in any other type of financial education program, with over 80 percent of inquires specifically for these type of programs.
This could be the result of employers feeling the impact of employees’ financial stress on HR and company-wide initiatives as employees endure a bumpy economic recovery. A recent SHRM study found that 83 percent of HR professionals felt their employees’ personal financial issues affected them in some way at work.
But whether a company’s financial wellness program actually reduces costs to their bottom line is what ultimately determines whether it’s an effective strategy. Recently, one of our largest Fortune 500 clients evaluated their own financial wellness program to determine if it was actually achieving results.
The company followed many of the best practices imperative to achieving success (which I’ll talk more about next column) and found that their program saved the company significantly across multiple HR initiatives including cutting absenteeism, reducing turnover, boosting employee pay and benefits satisfaction, reducing health care costs, and reducing the risks of having employees who cannot retire when they want to. Here is a quick overview of the three key findings from their research:
1.) Reduced health care costs
The company saw savings of 21.57 percent for heavy users of its financial wellness program versus 4.19 percent for non users. In its first issue of Research Works, the Partnership for Workplace Mental Health cites several surveys that show financial stress as a leading cause of stress for employees. By reducing the number one cause of stress for employees, the company was able to reduce health care costs associated with stress-caused illnesses.
2.) Increased retirement plan participation and deferral rates
The company found that the more interactions an employee had with the education, the more they saved on average in their 401(k) plan. Participants who had one interaction on average deferred around 5.77 percent in their plan, but those who had five or more interactions deferred an average of 11 percent. This in turn reduces the company’s risks of having employees who cannot meet retirement income goals due to not having saved enough.
3.) Improved employee financial management
The most important aspect to any wellness program—whether it is physical or financial—is behavioral change. Do employees actually improve their behaviors as a result of the program? The company found that over the course of two years, employees made improvements in major areas of financial management including reducing debt, saving more for retirement, managing their day-to-day finances better and establishing an emergency fund.
Read the full study here. http://goff.im/Financial-Finesse-ROI-Case-Study