Employee engagement is all well and good but it is financial wellness that delivers real value for employees and employers alike says Susie Logan, head of business marketing and communications, Standard Life
Q. Should we be looking beyond employee engagement?
A. Yes. We are more than three years in to auto-enrolment and membership of a pension scheme is now commonplace. So we should be moving to a more aspirational goal in the shape of financial wellness, rather than simply repeating what we have been doing for years, which is targeting employee engagement.
Pensions are now both common and topical, and people understand more about them. So getting staff to engage with their pension simply to the extent of knowing how much they have in it is not very ambitious. The next step is financial wellness.
Q. How does financial wellness differ from employee engagement?
A. While employee engagement is about increasing awareness of the benefits on offer, financial wellness takes this further by driving positive behaviour in employees to help them become free from financial anxiety.Employee engagement is a benefit for the employer in that the employee understands the value of the benefits they are receiving. But although they may know they are saving £50 a month into a pension, they may also be sufficiently engaged to know that that amount is not enough. So they are engaged – but in a state of anxiety.
Financial wellness is about removing that anxiety. The aim is to engage people to make positive changes to their saving and spending habits that will be of benefit to them. And that ends up benefiting both the employer and the employee.
Q. So is this a more holistic approach?
A. Exactly. While employee engagement relates only to the benefits package being offered by the employer, financial wellness involves talking to employees about the entirety of their needs and helping them identify ways of achieving their personal goals. This can involve more personalisation than is typical with an employee engagement programme. They tend to be fairly limited in their personalisation but financial wellness speaks to the employee as an individual because it aims to offer solutions for their personal needs and circumstances.
Q. Are financial wellness programmes suitable for all employers?
A. The first step is understanding the maturity of your workforce. Are they already engaged?What level of AE opt-outs are you getting? And are people signing up to the maximum of available matching pension contributions? If all these factors point to a workforce with mature financial engagement, it is time to raise the bar and set more challenging goals through financial wellness. But if an organisation has just put in an AE scheme, moving straight to financial wellness could be too big a stretch.
Q. How does financial wellness impact benefit selection?
A. Implementing a programme of financial wellness involves thinking beyond the products themselves. They are, of course, important but so is understanding the needs of the workforce, particularly the needs of the key people – that part of the population that is vital to the business’s long-term success. It is important to ensure that the benefits package recognises their needs.
Q. How much work does it involve and where does financial education fit in?
A. We know that a lot of the available financial education material is not actively used. Putting material on a website is not the end of the story; face-to-face time and guided online journeys are much more successful in leading good outcomes for employees. Yes, this requires the employer to be more proactive, have an active plan and allocate more people time, but our experience shows it is worth it.
For example, in the run-up to the changes in pension allowances, we ran seminars for HNW individuals. This required a lot more work: identifying which parts of the organisation should be invited, contacting them, arranging the seminars and delivering them. But the impact on the staff who attended was worth the effort.
Often the outcome was for individuals to contact their financial adviser. The feedback showed that people had learned something they had not been aware of, and it saved them a lot of money. This made them feel very positive towards their employer.