The importance of financial wellbeing
Addressing and improving the ‘Wellbeing’ of employees is high on the people agenda of many organisations.
In reaction to immediate priorities created by the COVID-19 pandemic, initiatives have been launched in the areas of physical and mental wellbeing. However, there is a growing realisation that financial wellbeing is an area that should be a key component in the roll-out of any wider programmes.
There are clearly established links between low levels of financial wellbeing in the workforce and commercial implications for employers, such as: lower levels of engagement, higher absenteeism, higher incidence of stress and other mental health issues. Organisations are also recognising that having a focus on, and addressing, Wellbeing is just part of being a good employer.
What is financial wellbeing
There is no single accepted definition of financial wellbeing – different organisations will have different interpretations of what it means for them and how they intend to address the issues it brings. For those organisations just kicking-off on this journey of understanding, the following might be reasonable place to start:
“Helping employees understand their finances, be in control of their finances and build a resilient financial position”
Depending upon where the organisation is positioned on the financial wellbeing path, this definition could help highlight the areas of focus – helping employees to better ‘understand’ financial matters, providing benefits and support to allow employees be in ‘control’ and, finally, supporting employees to maintain a ‘resilient’ position in future. Encouragingly for employers, there is evidence that employees do want the support of the employer to help them to address their finances.
Building blocks
The question often asked is – what’s involved in delivering a financial wellbeing programme?
Given this is such a wide-ranging area, the answer to that question covers multiple areas. Depending upon the specific situation and the organisation’s priorities, particularly activities might be:
Six key areas involved in delivering a financial wellbeing programme
| Area | Summary | Activity | |
|---|---|---|---|
| 1 | Insights | Understanding the needs of employees, assessing the current state and keeping up to date with market developments. |
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| 2 | Strategy | Articulating ‘the why’ for the organisation to be involved in promoting and delivering financial wellbeing programmes to its workforce |
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| 3 | Design | Modernising reward and benefits to reflect organisational and external changes to the world of work |
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| 4 | Delivery | Making sure the employee experience reflects the values of the programme and delivers the expected outcomes. |
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| 5 | Engagement | Motivating employees to make best is of the programmes and benefits on offer |
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| 6 | Measurement | Updating the oversight and governance of the programme by relevant measurement and reporting |
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Modernising benefits
Developing and implementing an approach to financial wellbeing will be an important component of redesigning benefits to meet the future needs of the workforce and supporting the organisation’s wider purpose. Traditional benefits will still have a role to play but need to be aligned with employees’ wider wellbeing. It is, therefore, recommended that before launching a new benefit, or indeed a wider programme, some thought is given to the strategy – what are the objectives and outcomes that you wish to achieve?
To learn more, contact your Willis Towers Watson Consultant or Richard Sweetman.
