More Companies Offering Financial Education in the Workplace

Companies are struggling to sustain employee morale as our country's recession affects everyone very personally. One of the main threats to employee morale is the financial stress they suffer, much of which is caused by a near 30% decrease in their investments, ever-present layoffs and pay/benefits changes. An October 2008 survey of 248 U.S. based companies by Watson-Wyatt consulting firm, found nearly one quarter of companies plan layoffs, hiring freezes and increases to employee contributions to healthcare premiums within the next 12 months.

This financial stress is frequently brought into the workplace further affecting companies' bottom-line through reduced productivity. So how do companies cost-effectively sustain employee morale during this turbulent economic time?

Many companies are addressing this issue by offering their employees educational opportunities on financial literacy. A November 2008 study conducted by the Society for Human Resource Management (SHRM), found 83% of companies consider offering their employees financial literature/worshops in the workplace.

Advice Wanted

It turns out employees are asking for financial literacy programs as well. The 6th Annual MetLife Study of Employee Benefits Trends conducted at the end of 2007 found that growing financial distress caused 44% of employees to want financial guidance & advice available through their workplace (up from 31% the year prior). Bill Mullaney, president of MetLife Institutional Business stated:

"This increased employee appetite for advice at the workplace is a significant development. It presents a tremendous opportunity for U.S. employers to optimize the real and perceived value of their benefit plans. Having a benefit program that meets the diverse needs of their employees-and communicating more frequently about benefit offerings-can result in improved employee retention, which continues to dominate employers' minds as their top benefits objective."

Companies Win by Offering Financial Education

The 2007 best practices guide, The Principal® 10 Best Companies for Employee Financial Security, indicated companies who offered their employees financial education in the workplace enjoyed a 7.7% voluntary turnover ratio, compared to the national average of 21.6%. Leaders within these companies believe this sort of benefit helps them recruit & retain the best talent, cut training costs, and improve customer service & productivity.

What Makes a Good Financial Literacy Program?

1. Personalization

Financial literacy programs must appeal to different employee segments. Different topics should be offered to appeal from Gen Y'ers to Baby Boomers.

2. Communication

Voluntary benefit programs need to be properly communciated to employees so they take full advantage of the program's benefits. This means voluntary educational workshops, literature or guidance must be frequent and easily accessible.

3. Measurable

The success behind offering financial literacy courses should be measured every 12-24 months to ensure employees and companies are getting the most out of the program. Success can be measured by tracking (1) employee satisfaction with the educational material (2) employee absenteeism (3) employee retention (4) employee productivity, etc.

There are various for-profit and non-profit organizations who offer financial literacy classes. HomeBenefitIQ is an example of such a program available to organizations and companies in the Austin area. HomeBenefitIQ is offered by a group of local professionals who donate their time to the community to help promote education & awareness in the homeownership & personal finance aspect of people's lives. Examples of the many classes available through HomeBenefitIQ are: Becoming Financially Fit, Buying Your First Home, and Estate Planning 101.

White House Asks HR Professionals to Help Promote Financial Literacy

The important role companies play in promoting financial education has been recognized by the White House. Janet Parker was invited by President Bush to represent SHRM and the HR Profession on the President's Advisory Council on Financial Literacy. Parker's appointment to the council's board recognizes the important role HR plays in helping people plan for the financial future (view a video of her remarks).