Greater employee engagement helps fuel financial preparedness

Employers rightly view a robust benefits package supporting the physical, mental, and financial health of their employees as an essential tool for recruitment and retention. Likewise, employees are taking a more holistic view of compensation when weighing employment offers.

Benefits represent 31% of employers' overall compensation cost (with the remaining 69% salary), making it a clear win-win when employees understand and take advantage of the full suite of perks their employers are providing. However, research shows employees have difficulty understanding how to take full advantage of their benefits.

Findings from our 2023 stress, finances and well-being report  establish that increased awareness of the benefits offered and an uptick in employee engagement seems to deepen the relationship between employees and their employer while helping lead to better financial outcomes. 

While our focus is working with our plan sponsors to apply these learnings to their retirement offerings, the tactics we use to increase awareness, engagement and adoption may be broadly applicable across the spectrum of employee benefits.

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Communication is key, engagement is essential
Workers who engage with a financial wellness program (57%) or have developed a financial plan for retirement (62%) are more likely to have a positive view of their financial situation than those (45%) who haven't taken any proactive steps. Additionally, the vast majority (86%) who have taken both steps in combination with working with a financial professional feel their financial situation is excellent or good. 

What's more, increased engagement translates into a noticeable bump in the average contribution rate in employer-sponsored retirement plans. In fact, the average rate is 9.4% for workers who opened six or more personalized retirement and wellness emails from their plan provider during the previous year — more than 20% higher than the 7.8% average contribution for those who opened only one or two.

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Employers can be rewarded with a less stressed and more productive workforce if they can effectively encourage employees to engage with their finances through workplace benefits, including financial wellness programs. More than four out of five workers (82%) said access to financial wellness resources helps decrease financial stress levels, with 40% reporting that they'd be more productive at work if they weren't so worried about money.

Next steps for employee benefits professionals
With the connection between engagement and positive outcomes better understood, here are three steps employee benefits professionals can consider to help drive employee behavior.

1. Evaluate the benefits your company is offering to employees 
To encourage positive outcomes, it's critical to focus on the resources that have the greatest likelihood to change behaviors. Our research has shown that access to professional advice as well as retirement planning and financial wellness tools can be the most effective combination.

2. Set benchmark goals and regularly measure progress
Identifying key metrics, including plan participation and retirement readiness rates, as well as any troubling indicators, such as the percentage of participants who have taken a loan or hardship withdrawal, is an essential step toward a goals-driven approach. Doing so allows you to identify where you stand and focus on the steps needed to move the needle. Understanding how your organization is performing against industry peers and reviewing underlying trends is an actionable opportunity from the robust data that's often available.

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3. Regularly review your communications strategy and revise as needed
Sending generic emails firm-wide is not nearly as effective as personalized communications based on observed behaviors and desired outcomes. For example, targeted campaigns focused on people who recently signed up for a plan or opened an email but didn't take action can be an effective way to boost engagement. 

Employee benefits professionals play a critical role in helping improve the financial outcomes of their employees. Understanding the tactics that increase engagement is an important step toward encouraging the behaviors that may strengthen financial well-being.