What is the cost of poor employee financial education to your organisation? In amongst the day-to-day pressure of keeping your people on track, you may not have time to ask, let alone answer that question.
Yet, as David Skinner, partner in Financial Management of accountancy firm Baker Tilly pointed out in one of our recent Connected Webinars for HR practitioners, more and more research is showing that financial education, or a lack of it, can have an important impact on your employees and their ability to do their jobs effectively.
According to AXA 70% of people think about personal finance at work and 35% say it has an impact on their performance. Add in the fact that 5.5 million people say they lack financial advice at a time when pensions auto-enrolment will drive the most significant change to employee finances in a generation and there is good reason for employers to plan how they can support their employees.
So what should your organisation be doing to help your employees? Taken from the content of our webinar, here are five areas you should think about to help your planning:
1) Education or advice? The first thing to be clear on is the difference between education and advice. Any organisation is free to develop the financial literacy of the employees through education and training. This is very different delivering financial advice for which their clear guidelines and regulation. Because of this difference, financial education represents the most effective way of supporting your employees to make the right choices.
2) What do your employees need? The needs of employees who are five years from retirement will be completely different from those who are just starting out in their career or about to have a family. You need to understand the size and needs of these different groups and ensure the financial education you provide to them meets their needs. One size does not fit all.
3) How do they like to learn? While some people love planning their financial affairs, an equal proportion find it a turn off. Your challenge is not only to put a financial education programme in place but one which fits with the differing levels of knowledge and learning styles in your organisation. You need to assess both of these areas before you finalise your approach to financial education.
4) Is there enough choice? A good financial education programme will blend one-to-one sessions with managers explaining the support the organisation provides, group sessions targeted at different demographics and online learning. This maximises the opportunity to learn for employees.
5) Are you measuring the outcomes? As part of your plan you should measure whether financial education is having a positive impact on your employee. Changes in benefits choices and the kind of calls they are making to helplines are two ways of monitoring this. You should also be checking the programme itself is right for your people. That means using feedback forms, focus groups and surveys to check whether what you are doing is working for them.
These points should help any organisation of any size start thinking about how they can approach employee financial education. But before considering all of this, the most important decision any organisation is to ensure one person in the business – preferably in the HR team – takes responsibility for financial education. That is the best way of ensuring the issue is planned for and dealt with effectively – it isn’t something that you can afford to let slip between the cracks.
If you’d like to hear more about financial education you can still listen to our Connected Webinars here: http://www.edenred.co.uk/Landing-Pages-2013/connected-live-hr-webinars/
Andy Philpott is sales and marketing director of Edenred UK. You can read more blogs on http://www.edenred.co.uk/ehub/ or follow news on twitter @andy_philpott
