The ROI on employee financial wellness programs is three to one
The return on investment for employee financial wellness programs, says the Consumer Financial Protection Bureau and others, has been estimated at 3:1. Every $1 invested in financial wellness benefits returns $3 in cost savings and productivity increases.
It all makes sense. If three-quarters of working Americans don’t have $1,000 available for an emergency and they spend eight or more hours a day working, they are going to spend part of your work time trying to solve that problem. It’s not that they’re doing this for any personal reason. They just don’t have a choice.
It’s not just about not having the money. It’s about the stress, the health concerns. It’s about the absenteeism that creates this incredible loss of investment. It has been proven time and time again that healthier, happier employees yield better performance, creativity, teamwork and leadership, elevating the entire work environment.
Measuring the invisible lost productivity
The first step is to measure what you don’t have. In other words, you must determine how much invisible employee productivity you are losing because employees are using company time to resolve their personal financial issues. Obviously, you can’t put a productivity meter on each employee.
Alliant Credit Union, the seventh-largest credit union in the country produced a report titled “Financial Wellness in the Workplace 2015.” One of the key findings: Forty-six percent of employees spend, on average, two to three hours per week during work hours dealing with their personal finances rather than the work at hand.
Measuring the invisible productivity loss in your organization
If forty-six of every 100 of your employees is using an average of 2.5 hours a week in non-productive effort, your organization is losing 115 hours of productivity a week for every 100 employees. At the current federal minimum wage of $7.25 per hour, that’s $833 a week. Over 52 weeks a year that is $43,316 annually in lost productivity for every 100 workers.
Now do the math for your organization. You may be stunned.
You can’t see it. It’s invisible. And the wage rate we used to calculate the productivity loss is the minimum. Your actual productivity loss is, no doubt, much higher.
Financial stress increases other productivity problems, too
The same Alliant report notes that employee financial stress can negatively impact healthcare costs and absenteeism. According to the report employees without financial wellness benefits are:
- Three times more likely to have ulcers or digestive tract problems
- 44 percent more likely to suffer from migraines
- Five times more likely to experience increased anxiety and depression
- 200 percent more likely to have a heart attack
All of this means lost productivity and lost revenue for your organization. While it may be invisible to you now, there is a way to find, evaluate and recover it.
Another name for increased productivity and other benefits – financial wellness
If you could remove the onerous element of financial stress on employees by offering them a financial lifeline as part of their benefit package, what would you call it?
“I would call it financial wellness,” says author David Kilby in his new book, The New Productivity Engine. “Financial wellness programs not only offer employees financial peace of mind, the programs have tangible, measurable benefits for employers.” In addition to increased productivity, he cites benefits like fewer calls for 401(k) loans and wage advances plus a reduction in calls to the organization’s Employee Assistance Program for stress-related problems like theft, absenteeism, turnover and expensive health premiums.
Financial wellness and the road to increased productivity requires a three-level approach
Financial wellness programs must have three essential elements according to Kilby in The New Productivity Engine.
The first is an educational module that helps to teach employees how to manage their money today, tomorrow and in the future. This includes setting and meeting financial goals, as well as having funds available for the inevitable rainy day.
The second is a motivational module that encourages employees, through rewards, recognition, support and design, to pursue and reach their financial goals.
Both the first and second module require support from a robust toolbox of online and personal resources that allow employees to holistically manage their financial lives. In his book, Kilby shows several online “personal dashboards” that help with budgeting, goal setting, calendar and alerts.
The third essential element in a successful financial wellness program, Kilby writes, are practical and responsible solutions that employees can access quickly and easily to help solve their current and/or immediate challenge. Simply stated, Kilby tells us that no individual can focus on their future unless they have solved today’s problem.
Two productivity questions
In The New Productivity Engine David Kilby asks employers two pointed questions about their lost productivity.
- If you had the recovered productivity value in cash, what could you do with it?
- What would it be worth to you to recover that value?
The answers could change the face of American business.