How do companies measure the success of their financial well-being programs?

Nov 8 / Peter Waitzman

How do companies measure the success of their financial well-being programs?

In today's fast-paced world, financial well-being is a top priority for individuals and organizations. Employers are increasingly investing in financial wellness programs to help employees manage their finances, lower stress levels, and improve overall productivity. However, understanding and measuring their success is key to making these programs genuinely effective. In this comprehensive guide, we explore the critical metrics that can help employers assess the impact of their financial wellness programs and improve their employees' lives.

Use and Engagement: The First Step to Success

One of the fundamental metrics in evaluating the effectiveness of financial wellness programs is user engagement. These programs can only make a difference if employees actively participate. To measure engagement, employers should:

  • Track User Sign-ups: Monitor the number of employees enrolling in financial wellness offerings.

  • Completion Rates: Evaluate the percentage of employees completing tutorials and related activities.

  • Steps Toward Financial Management: Assess employees' progress in taking measurable steps toward improving their financial well-being.

Positive Indicators: Building Financial Health

Employees' participation in financial wellness programs can positively impact their financial health. To gauge this, employers can examine data related to employee benefits and payroll, looking for the following indicators:

  • Increased Enrollment: Determine whether more workers are signing up for health savings accounts (HSAs), automatic savings, and retirement plans.

  • Maximum Contributions: Measure the number of employees contributing the maximum to retirement plans and HSAs.

  • Utilization of Safety Nets: Observe how many employees take advantage of employer-sponsored group life, disability, and other safety net coverages.

Negative Indicators: Identifying Financial Hardship

Conversely, negative indicators can provide insights into employees' financial hardships. Employers should review payroll and 401(k) plan data to identify issues like:

  • Outstanding 401(k) Loans: The number of employees with outstanding 401(k) loans.

  • Hardship Withdrawals: Frequency of 401(k) hardship withdrawals and loan defaults.

  • Emergency Loans: Monitor the number of emergency or payday loans employees take.

  • Pay Garnishments: Analyze the number, frequency, and reasons for pay garnishments.

The Impact on Retention

While it's challenging to establish a direct link between financial wellness and employee retention, holistic wellness benefits can contribute to overall job satisfaction and retention rates. Financial wellness program initiatives are significant since employees stay with employers who care about their well-being.

Absenteeism, Productivity, and Healthcare Costs

Financial stress can lead to increased absenteeism, reduced productivity, and higher healthcare costs. Employers should examine data related to the following:

  • Disability and Workers' Compensation Claims: Evaluate claims related to stress-related illnesses to measure the impact of financial wellness benefits.

  • Healthcare Benefits Claims: Monitor healthcare benefits claims to understand how financial wellness programs affect employee well-being.

Front-line Feedback: A Valuable Perspective

To better understand the effectiveness of financial wellness programs, employers should actively seek feedback from employees and front-line managers. They can provide valuable insights into how workers benefit from these efforts and where improvements may be needed.

In conclusion, a successful financial wellness program is not just about offering the right resources but also about measuring their impact effectively. By focusing on these key metrics, employers can improve their employees' financial well-being and enhance their organization's overall success. Remember, data-driven decisions in the financial wellness program pave the way to a brighter financial future for all.