There is no question that financial wellness programs have many benefits for an organization and its employees. 80% of employees live paycheck to paycheck. Allowing employees to increase their financial knowledge and better prepare their finances decreases stress and increases workplace productivity. With consideration of a workplace program, companies want to know the return on investment before starting a program.
6 Steps to Calculating the ROI of a Financial Wellness Program
1. Ask Questions Specific to Your Company
- What value would your company place on reducing stress in the workplace when relating to lost productivity?
- How much profit and lost productivity is lost when employees are showing absenteeism or leaving for the day?
- How important is it for your company to reduce employee turnover?
- What opportunities can be created that helps employees drive revenue and lower organization costs?
2. Collect Human Resources Data
Employers need to consider factors like absenteeism, 401(k) participation, benefits participation, including medical and HSA, employee turnover, and many more to determine ROI. What factors that are measured from this data will be up to the organization, but to get the cost of each, multiply the hours from each factor by the average HR employee wage.
3. Survey Your Employees Anonymously
Once employers ask the right questions, similar to the ones above, it’s time to create an anonymous survey to deliver to employees. Distributing this survey and asking questions about the company as a whole, company culture, barriers and issues, and presentism will all narrow down accurate information and collecting the right data. For example, to determine the amount spent on distracted employees, multiply the hours by the average employee wage.
4. Start Your Financial Wellness Program
By having the data from employees’ attitudes and asking the right questions, it’s time to roll out the financial wellness program.
5. Collect More Data and Make Calculations
By collecting data after a given time, there will be a change in prior data collection, which will help determine the ROI. After collecting data again, it’s time to make calculations. Below are examples of factors that can be calculated for the ROI.
- Absenteeism: Before sick days – after sick days x average daily employee pay = answer
- 401(k) participation: Difference between before and after pretax dollars invested in 401(k) x % of social security payroll tax (6.2) = answer
- Turnover: Before turnover rate – after turnover rate x cost of recruiting and training new employees (suggested average is $4,129 per employee)
6. Calculate the ROI
Add up the savings in all of the factors calculated in Step 5, divided by the program’s cost x 100 = ROI.
Determining the ROI can help employers project potential cost-saving factors for an organization. Also, the ROI of creating a stress-free work environment will be a large benefit. Click here for more information on financial wellness programs and Financial Fitness Group’s Financial Fitness ACADEMY™.