Financial stress can expand far beyond people’s wallets and into their workplace. According to the latest study by the International Foundation of Employee Benefit Plans, 96% of employers indicated that employees’ personal finance issues are impacting their job performance in some way.
However, the same study found that employee financial education programs can have a major impact on bringing workers closer to financial wellness. According to the survey, 66% of employers with a financial education program in place say their employees were more financially savvy, and 71% said their employees were more prepared for retirement than when a program wasn’t offered. Of those not offering such a program, only 38% of employers considered their workforce financially savvy, and 57% of them said their employees at normal retirement age were prepared for retirement.
Still, no two employee populations are the same and different components of financial education programs can have varying degrees of success depending on employee demographics. Nonetheless, the study concluded that the most successful programs are time-tested, customizable initiatives backed by leadership and held down with patience.
The firm found that employers reporting successful financial education programs conducted surveys to gauge their employees’ financial wellbeing and to identify the topics that needed to be covered such as investing, budgeting and saving. None of the employers with unsuccessful programs did this. Moreover, companies also saw some success by customizing these programs for different groups based on age or income level.
The most successful programs involved multiple components such as free personal consultation services, classes and workshops, web-based online resources, workbooks and calculators.
Time was also a huge factor with programs running for at least 10 years being more successful than those that have only been carried out for one to two years. One reason may be that time can provide employers with opportunities to analyze the success of these programs and adapt it as they see fit.
“‘Good things come with time’ holds true for many things, including financial education programs,” explains Julie Stich, CEBS, associate vice president of Content at the International Foundation. “A program is likely to be more successful the longer it is in place and, according to the report, it takes more than five years to be reported as successful.”
About 49% of programs running for at least 10 years were deemed successful, as opposed to programs running one-to-two years (5%) or those running less than one year (3.9%).
“Financial education programs lead to fewer employees reporting financial distress, calling in sick, being distracted and snapping at colleagues and customers,” says Stich. “And that, ultimately, means a more productive work environment.”
More information about the report “A Closer Look: What’s Working in Workplace Financial Education?” can be found at ifebp.org.