Employees’ personal finances are a sensitive subject. The reality is that looking into your people’s financial well-being not only helps them, but can actually improve your business.
Increasingly, employees are looking to employers to provide access to financial advice and education. In a 2008 study on Singaporeans’ understanding of financial planning, commissioned by ipac, more than 70% of respondents felt that employers should provide financial advice as an employee benefit, with the majority saying that “financial planning advice is as important as other employee benefits” and that this “shows that the employer cares for the employee’s well-being”. This was indicated by 73% of respondents who had financial planners, and 84% of respondents who did not have financial planners.
The same study revealed that more than 90% of the 310 respondents said that financial stress had a negative impact on work productivity. This was indicated by 93% of respondents who had financial planners and 88% of respondents without financial planners.
Employers are presented with an excellent opportunity to engage employees in tough times. Encouraging financial empowerment and providing access to quality financial advice are a low-cost yet high-value way to demonstrate your commitment to their long-term well-being and entrench their loyalty within your organisation.
Why it makes sense
1. Financial stress can impact employees’ physical health and lead to increased absenteeism and higher corporate healthcare costs.
2. Employees who are physically at work may have their minds elsewhere: they may spend office hours dealing with their money woes.
3. They are often more easily distracted and make more mistakes, leading to problems with their supervisors and co-workers.
According to a US study, Successes in Workplace Financial Education, the potential return on investment in employees’ financial well-being for employers is at least three to one. (Source: Consumer Interest Annual Volume 46, 2000). It promotes:
• Better financial wellness and health
• Positive performance ratings from their employer
• An improvement in their financial situation over time
• Increased confidence in a financially secure retirement
• Higher satisfaction with personal savings
• A greater number of employees initiating or enhancing their contributions to their retirement plan
This does not mean that you need to increase salaries and bonuses to enhance the financial well-being of your employees. There are less expensive and more effective ways of doing this, such as conducting financial talks, seminars or workshops.
One size does not fit all
Here are some recommendations for effective results in raising financial awareness among employees:
• Segment your audience: Segment groups of employees by gender, age, rank or career stages. For example, you could host workshops for female employees to focus on issues specific to women and provide an environment in which they are more comfortable airing their views.
• Engage them with topics of interest: Organising seminars and content that is relevant to employees’ personal situations is more likely to encourage participants to take action. If your HR department is getting an increasing number of requests for salary advances, why not organise a seminar on budgeting and debt management? This helps employees curb the urge to splurge and to manage their cash more sensibly.
• Tick the boxes: Find out more about your presenters and facilitators from their qualifications and testimonials from previous clients. Find out what the programme looks like. The last thing you want is an investment or product-sell disguised as a financial-planning seminar.
Financial coaching: one-on-one financial advice
You can make personal financial planning available to employees as part of their benefits, with the organisation subsidising the fee, paying for it in full or including financial planning in a flexi-benefits programme. If it is a challenge to provide this to all employees, financial coaching for those in critical career stages can be very rewarding for both the individual and the organisation.
• On-boarding: Get your new hires off on the right foot by making financial health checks part of the on-boarding process. Leverage the financial adviser as a mouthpiece to communicate the full value of their compensation and benefits, explaining how it fits into their overall financial situation. Not only will they start the job financially confident and in control of their future, they will have a clearer understanding of the full value of their package.
• Positive exits: It may seem counterintuitive but financial check-ups for exiting staff can do wonders for your employer brand, particularly when employees are made redundant. They face incredible stress when trying to address immediate financial issues, such as managing cash flow and avoiding wrong decisions about their severance packages. Financial counselling provides some comfort and allows them to focus on the next step in their career. It also sends the right message to both the market and the “survivors” in your organisation.
• Mature-age workers: A financial review can help pre-retirees determine if they have enough money for life after work. For those with insufficient funds, there can be a conversation about delaying retirement or even a transition into part-time work instead of full retirement. For those who have financial peace of mind, they may still be keen to keep on working (and pass their corporate knowledge on to the next generation) – these are people you really want to keep!
• Relocation process for expats: Relocating expatriates can be an expensive exercise. Helping them make the most of their overseas stint financially will improve the chances that they will complete the assignment. Many expatriate families leave prematurely when they are not properly taken care of. Even before they leave home, make sure your expatriates address immediate financial issues both at home and in the host country. When they complete their assignments, make sure they are financially prepared for the next chapter in their lives.
• Financial coaching for senior executives: Most senior executives live and breathe their company’s business plan, but many do not devote adequate time to ensuring they achieve the same amount of success in their personal aspirations as they do in their careers. In recent times, we have seen many senior executives watch their retirement plans fade away, simply because their investment portfolios largely constituted their company shares and options. With the recent plunge in the stock markets, their portfolios have significantly dropped in value. These executives may have to delay their retirement plans by several years, which causes considerable stress.
Employee engagement has never been more important. Aside from keeping employee morale high, you want to ensure that there isn’t an exodus once the job market heats up again.
According to Towers Perrin’s Global Workforce Survey 2007-08, the top engagement driver cited by employees surveyed, across the globe and across generations, was “senior management sincerely interested in employee well-being”. The survey’s number-two retention driver was “satisfaction with the organisation’s people decisions”.
When the going gets tough, doing the right thing will position you as an employer of choice in both good and bad times.
Cheok Mei-ing
Head of corporate consulting services
ipac financial planning Singapore
corporate.solutions@ipac.com.sg
