Employees are worried about money and it is affecting their health, relationships and productivity at work.
Financial education is often seen as the most effective route to engaging employees with budgeting, saving and investing, yet today’s workers are subject to a deluge of information. They are time poor and their attention has become a stretched resource.
Traditional approaches appear to have failed to capture employee’s attention - with only 19% of workers happy with current communication strategiesi.
There are several reasons behind ineffectual communication. First is taking a one-dimensional approach and relying on just one medium, tool or technique to engage with employees.
Second is the incorrect assumption that individuals with shared ages have shared experiences. Typically communication has been targeted at traditional segmentation groups, rather than understanding that all ages and socio-economic classes experience financial strain which do not necessarily replicate the difficulties facing those of their peers.
Timing is also an issue. Too often little thought has been given to targeting communication at a relevant time for employees which would encourage them to take positive action.
Effective communication needs to move towards a multi-layered approach which caters to the individual’s situation and experience.
Research shows that using just one tool or technique to communicate with employees resulted in just 51% engagement with benefits. Increasing the number of communication tools to four or more resulted in an engagement level of 87%ii.
We suggest a unique approach to communication which is based on three steps:
Forward looking employers are already putting our communication approach to the test and the results are powerful.
We have created a new way to deliver the retirement saving message to today’s workforce by combining the latest technology with behavioural science, founded by Professor Shlomo Benartzi.
Early adoption of targeted, personalised tech-based communications by one company resulted in more than two-fifths of employees increasing their pension contributions; a step that will go a long way towards closing the retirement savings gapiii.
Having understood the importance of timing, education and empowerment in pension communication, the employer sent their workforce a link to an online personalised video.
During the 90-second video employees receive a personalised summary of their pension plan including a breakdown of total contributions. The video makes clear the value of both employer and employee contributions in addition to investment growth.
Most importantly, the employee is given the projected income they can expect from retirement and how this compares with their current take home pay.
If the forecast income is below expectations, the employee is guided to a link where they can immediately increase contributions.
More than 71% of employees watched the video which led to 45% of the workforce making an increase in pension contributionsiv.
There are six principles on which an effective communication strategy is built.
The first is tailoring the message to the individuals and to the employers. Employees need personalisation to value what they are receiving while the business needs to ensure a return on investment.
Second is to be holistic. Communication needs to go beyond pensions and cover the whole breadth of financial matters.
Third is a just-in-time delivery mechanism. This ensures messages are sent to coincide with a life event such as buying a home or approaching retirement.
Fourth and fifth are to keep the message relevant and emotive. Financial decision making is often dominated by psychology rather than education. Employees need to connect with the message if they are to take the next steps.
Finally communication should be action linked to allow people towards making a positive change immediately.
Financial communication has moved on. Effective strategies are based on insights taken from workforce data and then tailored to individual needs.
Today’s forward thinking employers recognise that to secure return on investment for their employee benefit packages they need to understand their employees and speak to them directly.
New tools and techniques are in place and these are working. It is time to get on board.
Six Principles for Effective Financial Communication
|1. Personalise the message|
|2. Just in time delivery to encourage behavioural change|
|3. Holistic approach covering all financial matters|
|6. Action linked|
i Thomsons, 2016
ii Thomsons, 2016
iii Mercer, 2017
iv Mercer, 2017
We invite you to contact us for more detail about how a Financial Wellness programme could help you to grow your business.