How to measure the return on investment of financial wellbeing strategies

measure ROI

Need to know:

The links between financial wellbeing and employee health, productivity and engagement are increasingly well recognised by employers.
Hard and fast return on investment (ROI) for financial wellbeing strategies can be difficult to evidence, but employers can study employee engagement surveys, absence and presenteeism levels, changing take-up of financial benefits and access to supports such as employee assistance programmes (EAPs).
Employers may need to consider how to respond to any knock-on conversations around pay and remuneration levels that might arise as a result of increased financial education.

There is no shortage of evidence to illustrate the scale of the challenge around financial wellbeing currently facing employers. In the past four months alone, benefits provider Neyber found that financial worries and pensions are what most concerns employees, more even than health, in The DNA of financial wellbeing: book one, published in July 2018. Additionally, Neyber's 2018 edition: The DNA of financial wellbeing, our borrowing needs report, published in September 2018, reveals that chief executive officers are increasingly aware of the links between financial worries and employee behaviour, performance and relationships.

Insurance provider Aviva, meanwhile, called on employers in August 2018 to step up workplace support in this area, especially around retirement planning and saving, and Barnett Waddingham warned in its August 2018 report, Beyond pensions: pension and the provision of wider financial wellbeing, an employer’s perspective, that almost half of employers (49%) do not have a financial wellbeing strategy in place for their employees.

There are many options when it comes to financial wellbeing interventions and initiatives, such as mid-life financial MOTs, pensions, debt or savings talks and workshops, booklets, online or physical tools. But what of the evidence to show the impact and effectiveness of these approaches?

Building the business case

Research published by financial adviser Chase de Vere in September 2018 suggests that employers remain reluctant to invest in financial advice for employees, despite recognising the potential benefits. So, how can HR, benefits and reward professionals convince a possibly sceptical board or finance director? How can HR teams measure, and show, return on investment (ROI) so that those in charge of the purse strings feel they are getting value for money?

Heidi Allan, head of employee wellbeing at Neyber, says: “When it comes to making the business case, one of the main things, first of all, is for organisations simply to understand their workforce.

“The easiest way to do that is through employee surveys, but they do need to be short, sharp and meaningful, more pulse-like. More intimate focus group scenarios, where [employers] have a representative sample of people and a roundtable discussion, can also work well to get a sense of what is going on."

Employers can measure and benchmark data around employee turnover and absence rates, employee assistance programme referrals, gym membership registrations and take-up of financial products or benefits, or they might analyse more macro measures, such as employee productivity or engagement. These, however, can be harder to gauge.

Potential challenges

It is important to recognise and communicate that financial wellbeing ROI can be hard to evidence on a spreadsheet, notes Damian Stancombe, partner and head of workplace health and wealth at Barnett Waddingham.

“Finance directors, who are paying for this, like facts and figures,” he explains. "In reality, however, financial wellbeing is probably not something [that] can very easily translate into pounds and pence savings. [Individuals] can get a good gut feeling, but that also is not an easy thing to demonstrate. So, [reward professionals] have to be encouraging the finance director to buy into the sentiment. [Finance directors] see society around them, they are not immune to what is going on away from work."

A further challenge, according to Stancombe, is the potential for an increase in conversations around pay following financial education initiatives. “The pay aspect is a hard one,” Stancombe concedes. “But what [employers can do] is educate and engage with [their] people about how to make the pot of money they do have last longer. So, it can be things such as: how can we rethink or consolidate our debts? Or how can we get better at budgeting our weekly shop? These are things employers can help with, without huge costs."

Another valuable argument is that financial wellbeing can be a win-win for employees and employers alike, not least because it can enable ageing employees to actually exit the workplace, rather than having to be managed into old age, notes Sean McSweeney, project delivery manager, corporate advice at Chase de Vere.

“Because of pension freedoms, the over-55s now have an opportunity to make very poor decisions," he notes. "When [employers] are running a business and spending tens of thousands of pounds helping employees to build up a [defined contribution] pension pot, and then [employees] make a poor decision right at the very end and destroy that value for the sake of guidance that perhaps costs £500, is that sensible?”

Targeting messages

In an increasingly multi-generational working environment, segmenting and targeting messages for maximum resonance, is important, advises Richard Sweetman, senior consultant at Willis Towers Watson. However, it is not as simple as assuming someone in their 20s, for example, will be more interested in advice around debt, and someone in their 50s more receptive to messages around retirement.

“There are many different life stages, and circumstances can change within them," says Sweetman. "A younger person, who has perhaps started a family early, can have a similar profile to someone who is middle-aged. Whereas someone who is middle-aged, but perhaps divorced, may have similar priorities around cash and managing debt as a younger person.

“Ultimately, measuring ROI in this context is quite difficult. You can look at it generally, but I would caution against trying to put a percentage or firm numbers on it."

Rosemary Lemon: Does ROI have to be monetary for financial wellbeing strategies?