Financial wellbeing and employee productivity
June 24th, 2013 by admin
With changes to superannuation looming, Alisdair Barr looks at why financial wellbeing has a significant impact on employee productivity and retention, and what employers should be offering in this space.
Financially stressed employees spend 20 hours a month of work time trying to solve their financial problems, according to the Chartered Institute of Personnel and Development/Benefex Reward Management Survey 2012.
Further, Ernst & Young estimates workers with low-to-moderate wellbeing scores – including physical, emotional and financial health – cost employers $12bn every year in lost productivity. And with more than a third of Australian workers in that low-to-moderate wellbeing category, that’s a 12–27% loss in potential productivity.
It’s simple. People perform better when they’re happier. Whether looking at entrepreneurial start-ups or large, established enterprises, the same holds true: people are more productive and creative when they have more positive emotions. In fact, Professor Teresa Amabile of Harvard Business School found that, if happier on a given day, people are not only more likely to come up with a new idea or solve a complex problem that same day but will also do so the next day.
For Australian employers looking to address financial wellbeing, superannuation represents a logical first port of call. While super has long been a fundamental component of the employee benefits stable, both the increases to mandatory Super Guarantee (SG) contributions and potential changes to the taxation of super benefits have brought super to the fore and presented both an opportunity, and a threat, for employers.
The question is, how can you turn a mandatory benefit such as superannuation into a retention tool?
With the mandatory SG increases beginning to roll out, starting with an increase from 9% to 9.25% on 1 July 2013 (to become 12% by 2019), organisations have been considering various approaches in regard to funding. In our first-hand experience of running financial wellbeing programs, we’ve seen a trend that, regardless of whether the company plans to absorb future increases, the majority of employees, specifically the sub-40-year-old demographic, prefer to focus this additional take-home pay on reducing debt, such as the home mortgage. In fact, having enough money to pay the bills during a sudden drop in income is the top financial worry for Australians today, according to the latest MetLife Employee Benefits Trends Study.
For employers willing to absorb the increases, there is an opportunity to link the extra contribution to a tangible benefit such as covering some of the employee’s insurance premiums held within their super. In our experience, if there is no link to a personal tangible benefit, then these additional payments, although appreciated closer to retirement, are not seen as a benefit now. In fact, they could be used to retain and inspire top talent. In this scenario there is also a positive opportunity to start the insurance conversation and discuss how the additional contributions can help protect the employee’s family and income.
The key is to first ensure there is personal value for employees in the benefits you are offering them; and importantly, these benefits must be articulated in a clear and engaging way. It’s not about holding a ‘lunch and learn’ session every month, to which four staff members turn up. It’s about providing bespoke financial literacy that directly addresses the real needs and issues impacting your people.
Alisdair Barr is the Managing Director of Future Map, the fun and dynamic financial wellbeing program assisting organisations in better engaging their talent through providing practical and fun financial and life planning skills. Contact Alisdair on 0405 138 613 or email firstname.lastname@example.org. Full article in HCMag.com