From the Blog

7 simple ways to nudge employees towards financial wellness

There are dozens of reasons why companies should take an active interest in their employees’ well-being. Happy, healthy people work harder with more focus and clarity, promote a more collaborative work environment and, in the long term, save employers money in missed work, healthcare premiums, disability claims and elsewhere. This explains the exploding popularity of employee wellness programs. Most wellness programs focus on physical fitness, stress management, preventive care and chronic disease management, and ignore a factor that’s often the primary cause of stress and distraction in people’s lives – financial health.

There’s good reason to stay away: Employers wading into an employees’ personal finances is at the least awkward, and can be perceived as downright intrusive. But it’s absolutely an area where employers can and should offer help – as long as that help isn’t too heavy-handed. Some of the best employers offer small, fun rewards (ranging from wellness points to iPad raffles to premium parking spots) to encourage employees to avoid (or pull themselves out of) financial black holes.

Here are seven simple and relatively hands-off ways companies can offer financial health to employees.

1.    Know where you stand. Measure the levels of stress your workforce is under, and try to see the causes. Many Fortune 500 companies offer comprehensive assessments of personal, organizational and financial health – and the best assessments not only can be tailored to the specific needs of your company – but also are tied to goal setting and tracking and social support. Questions like “I am satisfied with my current financial situation,” “I live paycheck to paycheck,” or “Financial stress is taking a toll on me,” when reported in aggregate and even by region or department, allow a CEO to take the pulse of the workforce, and allow employees to feel heard.

2.    Educate, encourage and force choice about 401ks. Saving for retirement with 401ks is one of the most painless paths to financial health. 401ks (or their nonprofit proxies 403bs) are, for the most part, included as a benefit of employment. These benefits are a gentle way to broach financial health with employees, and teach key financial principles like tax-avoidance, tax-deferral, and the time-value of money. Most companies have a yearly meeting around enrollment dates that lightly touch on why people should invest early, but after that, it’s up to employees to invest. Do more: offer online challenges with short, sweet videos (and rewards) embedded, provide success stories from retiring employees, offer small incentives beyond matches for starting investing, and consider offering or increasing matching amounts. Most effective of all – research shows that 401k investments increase radically if you force employees to choose whether they want in or out. Don’t make your default “don’t invest.”

3.    Teach people how to invest. Again, most 401k vendors will offer yearly orientations, but a one-hour session with a financial salesperson isn’t going to do much to teach employees about the complex art of investing. Bring in an independent voice quarterly or bi-monthly who can explain asset allocation, risk mitigation, how 401Ks, mutual funds and exchange-traded funds (ETFs) work, how to avoid hidden fees, how to compare investment vehicles, and even how to speak the alien language of investing. How many of your employees know what dollar cost averaging is and how it relates to them losing money on their investments? This can be done cost-effectively using webinars or video conferencing.

4.    Offer workshops about financial basics. Bring in local or national experts to hold informal, fun workshops in-person or online. These sessions can walk the fine line between informational and invasive, but if they’re done well by credentialed professionals with transparent financial motives, they can change lives. It should also be noted that financial literacy is a business skill that employees can apply elsewhere at work. College professors are great at this.

5.    Introduce the IRS. Demystifying taxes helps employees avoid those stressful surprises that steal focus from work. The IRS as an abstract concept is terrifying – so bring in an IRS representative or other tax expert to tell people what they should do when they suddenly owe money to take the fear and loathing out of taxes. (HR should make sure to “lawyer up” on some simple disclaimers here, by the way.)

6.    Teach them stress management skills.  Without these skills (like those taught in wellness programs) employees can enter a dark cycle of despair. Which is a shame considering there are literally hundreds of free and low-cost services that offer a free hour or two with a financial counselor to get them started down the path to fixing their problems. In fact, most large employers already offer Employee Assistance Plans, many of which offer financial and related stress management counseling.

7.    As with any stressor, focus on HOW people deal. Let’s face it, life is stressful. You can’t just give everyone raises to reduce stress.  And even if you could, financial worries don’t vanish when wallets fatten. Stress, financial or otherwise, is a condition of life that can be addressed with simple, positive behavioral approaches – the kind wellness programs are built around. Help your employees do the following: Get support from friends, family and professionals if needed; set small, achievable goals; take daily walks with like-minded coworkers; reach out to the “internal experts” – who are often found discussing Star Trek movies near the accounting department water coolers.

While the concept of integrating financial wellness into broader wellness programs may be new (and therefore scary) to often risk-averse HR and Benefits departments, offering a wellness program that includes many financial stress tools, assessments, challenges advice and support can be a game-changer. The integration of all programs focused on a smart, energized workforce is a huge, and some believe long-overdue trend in HR. People are people, and are finally being treated as such. Connecting your bottom-line to that of your employees isn’t always easy, but it’s easy. And smart.