Why employers need to think beyond salary and traditional benefits to stay competitive
Sarah Herd is a financial education expert based at Wren Sterling’s London office. She helps clients design and deliver effective workplace benefit strategies that support the attraction and retention of staff for organisations both large and small.
The term ‘financial education’ is a relatively new term to many employers, but to a rapidly changing workforce, it is a term that is starting to represent a significant commitment by an employer to the financial literacy of the workforce.
What is financial education?
Succinctly, financial education is about empowering people to make financial decisions. It’s a programme of work delivered by an employer, often with help from subject matter experts and consultants, to help their people make decisions about their finances confidently.
Financial education is also about educating the employer, not just the employees. An employer’s existing benefit strategy may be outdated and doesn’t suit today’s workforce. Therefore, getting an employer to understand this is the first hurdle and first part of the education process.
Ultimately, financial education should lead to having a workforce that better understands their finances and appreciates their employer’s efforts in facilitating that.
It’s a simple equation, because stress is in the top five reasons for both short-term and long-term absence, and money concerns is the biggest cause of stress in the UK.
What is a wellbeing strategy?
Very often, when looking at financial education, a natural spin-off is wellbeing. The key question to ask is whether the employer is taking care of the physical and mental needs of its workforce.
It’s founded on the belief that a workplace culture focusing on wellbeing benefits both employees and employers.
The end goal is to get the absolute best out of the employees and make it an enjoyable place to work, ultimately improving the performance of the business. For some employers, it can be a bit of a leap of faith, but that’s where advisers come in. We can guide employers and make sure they’re getting return on their investment through reduced recruitment costs, reduced absences, and increased efficiency. This is a commercial decision after all, not a nice-to-have.
What’s making financial education more relevant to businesses?
The relevance of financial education is increasing because we’re seeing huge changes in the workplace. Employers are looking to respond to common challenges such as retention and attracting new talent. Because the dominant generations are now Generation Y and Generation Z, businesses are looking at alternatives, cognisant of their different demands. Do 20 year olds with no family and no mortgage really value or want Death in Service ahead of lifestyle benefits? Possibly not, but unless a business asks itself that sort of question, nothing changes. Markedly different generations with different wants and needs, different sectors, different geographies, and different earnings capabilities all influence the make-up of benefit strategies.
It is clichéd, but we’re looking at softer approaches for younger generations. Feeling valued by an employer really counts now, and so does providing a range of workplace benefits that meet their lifestyle requirements. It’s like anything else in life – if you’re not providing it and someone else is, then you’re uncompetitive.
How are providers enabling the market to change?
One way that providers are helping employers to move with the times is through intervention tactics and value-added services. For example, intervening before people go off sick or become stressed by offering services such as Employee Assistance Programmes. It’s down to us as advisers to make sure the employer is aware of the services available to them and to help them make most appropriate use of the services.
The missing link is communication and that’s where the role of the adviser is so crucial.
We look at the whole end-to-end process – from reviewing existing policies and communication practices to ensuring there’s a regular communications programme that encompasses measuring engagement. We’re then looking at refining benefits and communication to maximise the investment the employer is making. There’s an argument that the ultimate measure of this is business performance.
Looking at smaller organisations, how can they attract and retain talent using wellbeing and financial education, when perhaps they don’t have the luxury of an in-house team dedicated to this?
Everyone is talking about new generations coming through. We’re moving away from the baby boomer job-for-life culture to Generation Z, who are likely to work for multiple employers, including SMEs. Their expectations are different and it’s not just about basic pay.
A big driver for this has been auto enrolment. Businesses might have assumed that the younger generation would have opted out in greater numbers than they have done. In fact, we’re seeing a rise in engagement among younger workers who are thinking about their future.
Auto enrolment is providing a platform for organisations to start the conversation about what their employees want from their employer – and to let them know what’s available. In my opinion, there’s a dearth of places for employees to go to for financial advice, and their employer – as their pension provider – is as good a starting point as any other.
SMEs definitely can compete, especially with the help of corporate consultants and providers. For example, there’s professional development available with some policies. Smaller companies may be run by line managers, who themselves may not have been trained as managers. Rather they will have been good at their job and gradually risen to take on more responsibility. Again, there are providers who do offer HR advice, legal advice, line manager training, and support. It’s our job to make sure they’re aware of these and taking the opportunity to upskill their workforce.
Everything we’ve discussed sounds like it would work best as a long-term strategy. Is that your experience of the most effective financial education and wellbeing strategies?
Absolutely. This isn’t the kind of business that’s transactional. As an adviser, you might not be hands-on all the time, but you’re aware of changes in the external environment that will affect businesses, and conveying the impact is important. Similarly, by understanding changes in the business itself, we’re able to view those in the context of the workplace benefits that have been installed and to ensure plans are continually relevant.
Even if a client wants a light touch relationship, it’s still our responsibility to bring these things to their attention and to ask every 6 or 12 months whether everything is still alright.
With some clients, I’m referred to as their professional adviser. This gives the client, their board, and their employees comfort that they’ve got the benefit of external perspective and up-to-date market knowledge.
What do you expect to change in the next few years?
Technology and communication are the big ones for me. Products probably won’t change, but how they’re delivered will. Workplace education, understanding benefits, and return on investment should become easier to measure through improvements to technology and communication.
There will be an increase in take-up of flexible benefits at the smaller end of the corporate market. If there’s demand for new products and services, they will evolve – like gym memberships, free coffees, and health-based rewards. These are relatively new products, but they’re increasingly commonplace in the market.
In the modern workplace culture, people are more aggressive and assertive in their job-hunting and are asking “What can you do for me?” rather than saying “Thank you for a job for life”.
Benefits can drive loyalty, but again we come back to people understanding what they’re being given.
I expect providers will make flexible benefits more available to SMEs. Can there be more pooling of companies with similar profiles, giving them a broader range of benefits to make them more competitive in the market? I think SMEs need to address this to level the playing field.
It might sound trivial and people reading this might wonder whether a free gym membership or discounted travel really makes a difference? They might wonder whether a rise in salary, which could supplement these things, is just a better option? But it’s about more than that – it’s demonstrating that the business cares, and that is what can really drive retention and loyalty in 2018.
What is Wren Sterling’s financial education service?
Wren Sterling’s six-point plan makes sure our clients’ financial education strategy is truly aligned to the make-up and requirements of the workforce, starting with a free, no-obligation appointment.
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