Most of the Indian population falls under the category of “aspirers”. They make 90,000 and 200,000 rupees per year and often struggle to deal with crises, medical expenses, and other financial struggles. While this takes a toll on their personal lives and mental well-being, it is also detrimental to the organizations they are associated with. A study by Warwick University concluded that companies that invested in employee wellness witnessed a 37% increase in productivity.
But for the longest time, employee wellness has been measured in metrics like work environment, pay, benefits, and growth opportunities. While these factors significantly improve employee satisfaction, they do not paint a holistic picture.
Financial wellness is no longer just an auxiliary function; and has become necessary for businesses to address. It is observed that employees who are burdened by financial stress are more likely to experience mental health issues. By proactively supporting employees’ financial well-being, companies can contribute to a healthier work environment and improve overall mental health. Organisations can enhance employee satisfaction, increase retention rates, and foster a more productive and stable workforce by implementing financial wellness programs.
How to Measure Employees’ Financial Wellness?
Measuring employees’ financial wellness requires a holistic approach encompassing various dimensions of well-being. There are both direct and indirect metrics that can provide some insights. Companies can place primary focus on financial aspects and combine them with specific indirect indicators of wellness mentioned below:
1. Employee Satisfaction Surveys: These surveys can cover various topics, including work-life balance, job satisfaction, and stress levels. Concurrently, engagement surveys that measure employees’ level of commitment, motivation, and emotional connection to their work should also be conducted.
2. Retirement Plan Participation Rate: Tracking the participation of employees in retirement plans and their contribution towards these services can provide insights into an employee’s financial state.
3. Employee Turnover Rate: High turnover rates can indicate employee dissatisfaction or wellness issues within the organization. Monitoring the rate of voluntary and involuntary turnover can help identify potential problems and areas for improvement.
4. Absenteeism and Sick Leave: Tracking employee absenteeism and sick leave can provide insights into employees’ overall health and well-being. Frequent or prolonged absences may indicate physical or mental health issues that need attention.
5. Employee Feedback and Suggestions: Encouraging employees to provide feedback and suggestions through mechanisms like suggestion boxes, focus groups, or regular check-ins can give insights into their needs, concerns, and potential areas for improvement.
More direct indicators of financial well-being are metrics like average credit card balance and loan balances. They can offer insights into employees’ financial well-being. However, combining them with other comprehensive measures is crucial to get a complete picture of how financial complications affect the employee’s wellness.
What are the components of a financial wellness program?
Once you’ve assessed the need for financial education and additional support amongst your employees, the next step is setting up a comprehensive financial wellness program. Such a program typically consists of various components addressing different aspects of employees’ financial well-being. Here are the key components often included in such programs:
1. Crisis Preparation: This component focuses on helping employees prepare for unexpected financial emergencies. The program may guide building an emergency fund, understanding insurance options, and creating contingency plans.
2. Financial Goal Setting and Planning: Assist employees in setting and achieving their short-term and long-term financial objectives.
3. Awareness and Education: Financial wellness programs should enhance employees’ financial literacy and knowledge. It includes educational workshops, counseling, and access to online resources or tools.
4. Retirement Savings or Long-Term Planning: This component explicitly addresses retirement planning and savings such as contribution strategies, investment selection, and retirement income planning.
Each component of a financial wellness program contributes by addressing different aspects of their financial lives. These programs aim to empower employees to make informed decisions and improve their overall financial health by providing comprehensive resources, education, and support.
How to set up a financial wellness program for your organization?
Financial wellness programs need to be tailored to suit your organizational needs. With frequent surveys and a comprehensive understanding of metrics like pension contributions, absenteeism, etc., an organization can evaluate the key areas to focus their efforts. Setting up a financial wellness program involves systematically assessing employees’ needs, developing strategies, and implementing practical solutions. Here’s a step-by-step guide to help you establish a comprehensive financial wellness program:
1. Assess Needs: This component focuses on helping employees prepare for unexpected financial emergencies. The program may guide building an emergency fund, understanding insurance options, and creating contingency plans
2. Define Program Objectives: Assist employees in setting and achieving their short-term and long-term financial objectives.
3. Determine Program Depth: Financial wellness programs should enhance employees’ financial literacy and knowledge. It includes educational workshops, counseling, and access to online resources or tools.
4. Segment Demographics: This component explicitly addresses retirement planning and savings such as contribution strategies, investment selection, and retirement income planning.
5. Engage Employees: This component explicitly addresses retirement planning and savings such as contribution strategies, investment selection, and retirement income planning.
6. Implement Resources and Support: This component explicitly addresses retirement planning and savings such as contribution strategies, investment selection, and retirement income planning.
7. Set Metrics and Measure Success: Establish key metrics to evaluate the effectiveness of your financial wellness program. These metrics may include employee satisfaction, participation rates, changes in financial behaviors, and improvements in financial knowledge. Regularly track and analyze these metrics to gauge the program’s impact and make necessary adjustments.
8. Continuous Evaluation and Improvement: Financial wellness is an ongoing process, so regularly evaluate the program’s effectiveness and use the insights gained to refine and enhance the program over time.
Financial literacy is low among Indians and with limited resources, an average employee is sure to struggle with financial woes. Creating a comprehensive financial program is the need of the hour. It fosters goodwill and faith in the organization, increasing both productivity and retention rates. Take the step towards your organization goals with a financial wellness program.
