As the workforce becomes increasingly mobile, the competition for attracting and retaining employees is becoming fiercer. Employee retention is becoming a bigger, more expensive problem in every industry.
So how much does the loss of an employee cost U.S. employers on average?
- Incalculable. The last employee who left took the key to the restroom.
- Saves money. I can’t wait for my do-nothing brother-in-law to vamoose.
The Work Institute, a leading authority in workforce intelligence, reports that the loss of an employee on average costs employers $15,000.1 In 2018, 41.4 million U.S. workers voluntarily left their jobs for other employment, representing a 27 percent turnover rate. The total cost of that turnover is projected by the Work Institute to be $617 billion, three-quarters of which is considered preventable.
“There are plenty of people to do all the work that needs to be done; they’re just working somewhere else,” says Work Institute president Danny Nelms in the 2019 Retention Report. “The secret to attracting and keeping them is right in front of you. You need only to listen, understand, and act on what they are willing to tell you.”
Increasingly, employees are telling employers that one of the benefits they want most at the workplace is help with their financial problems. It’s why the MassMutual Financial Wellness Trend Study found that 53 percent of employers implement financial wellness programs to attract and retain employees.
Sure, sometimes employees simply leave for an opportunity at a better job, more compensation or because they didn’t like their boss. So tell me, why did you make your brother-in-law a supervisor?
But there’s no doubt that financial wellness programs are becoming a bigger factor at the workplace. A significant majority of employers — 69 percent — agreed that employers must offer financial wellness programs to be competitive in in hiring and retaining employees, MassMutual’s study finds. So where to start? If you don’t already have a program, how do you put one in place? And if you do have a financial wellness program, how do you make it more effective?
Establishing an effective financial wellness program starts with a simple three step process:
- Assessing employees’ needs
- Creating multiple launch points for the program
- Measuring and refining the program to obtain the desired results.
MassMutual has developed a checklist as a guide:
Step 1: Assess Employee Needs
Like any program created for employees, success is achieved if and only if employees actually make use of it. That takes employee engagement. It also takes analysis.
Start by working with your retirement plan’s relationship manager, financial advisor or both to analyze your retirement plan data for insights into plan participation and how employees are utilizing or underutilizing their plan. If employees are off track on being able to retire at age 65 may be indicative of deeper financial issues. Look for other issues such as employees taking emergency loans or withdrawals, low participation rates or meager contributions.
But retirement is only the start. Survey employees to better understand their pressing financial needs and priorities, their education and informational needs, and any roadblocks that may be keeping them from participating fully in their retirement and benefits plans. The assessment may uncover opportunities to make your financial wellness program more relevant.
Step 2: Create multiple launch points
Each employee must be addressed as an individual whose financial needs and path to financial wellness can be distinctly different from other employees, even those of a similar age or life stage. That’s why offering multiple access points to a financial wellness program may increase opportunities to participate and, ultimately, encourage healthy financial behaviors.
A multi-channel approach that meets participants at their particular life stage, in their preferred communication style, and at their own level of knowledge is best. Some employees prefer group meetings or one-on-one sessions while others would rather connect online, on the phone or on their mobile device. One size does not fit all.
Step 3: Measure and refine
How well are your efforts to boost financial wellness paying off? A well-designed financial wellness plan may reduce employer’s long-term costs by not only reducing turnover but also by ameliorating employees’ distracting financial problems and helping them retire when they desire. But it’s important to set reasonable expectations and to establish benchmarks for gauging a program’s effectiveness.
As in most team environments, the success of one teammate can beget the success of others. Encouraging employees who make use of the financial wellness benefits and tools to share their successes and express their ideas and opinions can be contagious. Their feedback may provide valuable input to improve the plan. It also can provide a powerful motivator for other employees to take greater advantage of what you have to offer.
So now that you know both the costs of employee turnover and the benefits of implementing a financial wellness program, it’s time to have that heart-to-heart with your brother-in-law. Sometimes employment mobility has its advantages.
Then speak with your financial advisor about starting a financial wellness program or revisiting your existing program to ensure it’s delivering what your employees need. Helping employees build a better, stronger financial foundation can ultimately help them achieve greater financial security and find one less reason to move on from their current job.
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1 Work Institute, “2019 Retention Report.”