Financial Education in the Workplace - lessons learned
Over the past few years, the need for financial education in the UK workplace has developed from a 'nice to have' to a compelling business requirement. The FSA are urging companies to consider their responsibilities in this area and have raised serious concerns about the level of financial capability of people living in the UK - personal debt has exceeded £1.3 trillion and polls show that more than 80% of people believe their pension arrangements will fail to provide them with an acceptable standard of living following retirement.
The benefits to both companies and employees are clear: employees in control of their financial health and future are happier and more productive. Where employees fully understand the value of share plans and other benefits, companies are able to realise the full potential of providing competitive benefits packages to employees.
At Copperfield Communication, we've been developing financial education programmes with our clients for some time. With this experience have come some valuable lessons and we would like to share a few of these with you now:
Establish a business case
Much of the reasoning behind providing employee financial education has been based on the softer benefits and an almost paternalistic approach by the company to employee welfare. We believe that it is necessary to take a commercial view regarding the investment; companies are commercial enterprises and serious initiatives live and die on the cost-benefit analysis.
Copperfield see three clear business cases:
i. Maximise ROI on employee benefit
A considerable amount is invested in employee benefits, from pay through pensions and share plans. This investment is made for clear strategic business reasons: employee acquisition, retention, motivation and engagement. If the employee does not fully understand the value of these benefits, return on this substantial investment can be seriously compromised. Copperfield believe the relatively small incremental investment in an education programme to increase employee understanding is a 'no brainer'.
ii. Risk management
We are seeing an increase in legal action brought against employers on behalf of disgruntled employees on the basis of insufficient financial education in the workplace. As a result, some companies (particularly in the US) are investing in clear and 'provable' employee education programmes to protect themselves from such claims - whether of substance or not.
iii. Increase productivity
Recent academic research, particularly that of Professor E.Thomas Garman of Virginia Tech, has shown that there is a real and measurable loss of productivity in organisations due to the effects of financial distress and distraction amongst the workforce. AXA in the UK has found similar and has shown that 3.8 million people take time off work because of money worries. The research indicates that a good financial education programme can go a long way to alleviating such distress and so actually contribute to a measurable increase in corporate productivity.
Establish a baseline and specify objectives
Understanding your audience, their needs and preferences and their levels of financial literacy, is critical to developing an effective financial education programme. Using this information to segment your employee population based on needs can lead to a more refined and effective programme. Use structured focus group and survey projects to establish a starting point and help define your objectives - the measurements upon which the success of the programme may be assessed.
Be creative!
This can be pretty dry stuff at the best of times. A good financial education programme is only successful if it really engages and even entertains employees as they learn. This is by no means easy, but in our view, is one of the key areas where most programmes fail. The business case demands that we get employees engaged in the programme. It's not good enough to simply put the information out there and hope the horses come to drink.
Avoid information overload
People learn over time. Trying to load all the facts and figures into a few event-based communications simply does not work. Take into account which media and channels will work best in your organisation. Figure out how to use these over time to build financial knowledge, literacy and capability in the employee population. A seminar or booklet can be an effective element, but does not a programme make.
Establish a Curriculum - and plan WELL ahead
Possibly the most important lesson we've learned. A financial education programme is not simply communication around the company's financial products. It takes a step beyond promoting understanding of financial products so that the individual employee may personalise these in the context of their own situation and ambitions. This requires education in areas such as saving and investing, debt and credit, general financial literacy, business terminology, etc. Just as a good teacher would not dream of entering the school year without a well developed lesson plan, we would not start such a programme without having all elements and learning objectives well specified in advance.
For more information on our approach to financial education in the workplace please email: info@copperfieldcommunication.co.uk