Managing personal finances is a key life skill - but employees shouldn't have to do it on their own

Staff should have details of their benefits available at their fingertips.

By Niall O'Callaghan Partner, Mercer

WHAT CAN EMPLOYERS do to help employees manager their health and wealth?

The available research tells a difficult story: One in five people will develop depression at some point in their lives, Ireland is set to become one of Europe’s most obese countries within 10 years and more than half of all employees in Ireland have expressed concern about their ability to pay household bills.

Personal financial management and managing health and well-being are key life skills for any individual, but they shouldn’t have to do it on their own.

Government can play a role through information campaigns and the tax regime, but so can progressive employers, who are increasingly recognising the need to provide better support to employees who spend more time at work than with family or friends.

Real help has to go beyond the basics of an employee health insurance programme or pension plan provision. Passive provision isn’t enough and employers need to be more proactive about how they engage with their employees on these issues and more creative and flexible in the programmes they provide.

Behavioural psychology demonstrates time and time again that communication on employee well-being and benefits is most effective if it is timely and personal.

For example, rather than preaching periodically about the benefits of pension adequacy, employers should look to remind an employee about the logic of increasing their pension contributions at the same time as a pay increase.

This becomes even more effective if the communication is customised to reflect their existing contributions, the size of their savings pot, and the scenarios for different levels of increases. Getting this right can enhance the health, happiness and well-being of employees which in turn can help improve employee engagement and productivity.

Retaining employees

Taking a more holistic and customised approach to benefits provision can also play an important role in attracting and retaining talented employees. Any recruiter in the technology, biopharma or financial services sectors will know how difficult it is to get the right people, and how important it is to retain them once on the team.

It’s not easy for an employer to get it right though, particularly given some of the complex characteristics of today’s labour force:

  • Increased diversity: For the first time, we now have five generations working together – all with different benefits needs and communications preferences.
  • Increased mobility: The job for life culture has all but disappeared as employees today understand that their role, industry and employer may change several times over the course of their working life. This can lead to the postponement of engagement and action on such things as pension saving in earlier career stages.
  • The rise of the individual: The digital age means that we increasingly expect – and even demand – to have it our way, whether transacting, communicating, working, or simply enjoying leisure time. Millennials and Generation Z behind them lead the way, but the impact extends well beyond these two demographics.

Digital tools

One solution is to use online and digital tools more effectively in the delivery of employee benefits.

Employees are now used to using their smartphones and tablets to do their grocery shopping, order a taxi, or check their bank balance. They are also ready to use engaging online tools to manage their employee benefits package.

Well-designed benefits platforms and tools now mean companies can let employees tweak their benefits or change their pension asset allocation with the swipe of a finger.

The plans can be more personalised as employees add personal financial and health data. This information can be used to nudge employees at critical moments; provide access to timely, appropriate advice; and encourage and reward actions that improve well-being.

In turn, the data generated can provide important insights into usage and trends that can help employers to ensure that their benefits programmes remain relevant and valued.

From an employer perspective, the advantage of using this approach is that it provides cost and process efficiencies whilst at the same time expanding employee access to an appropriate range of fixed and voluntary benefits.

From an employee perspective, it solves the stress and anxiety that is often associated with managing health and financial well-being.

Niall O’Callaghan is a partner at Mercer.

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